EXHIBIT 10.21
================================================================================
CREDIT AGREEMENT
AMONG
STYLING TECHNOLOGY CORPORATION,
AND
CREDIT AGRICOLE INDOSUEZ, NEW YORK BRANCH,
AS AGENT,
AND
THE LENDING INSTITUTIONS LISTED HEREIN
DATED AS OF DECEMBER 10, 1997
$75,000,000
================================================================================
TABLE OF CONTENTS
SECTION 1. Amount and Terms of Credit...................................... 1
1.01. Commitments........................................ 1
1.02. Minimum Amount of Each Borrowing;
Maximum Number of Borrowings..................... 4
1.03. Notice of Borrowings............................... 5
1.04. Disbursement of Funds.............................. 6
1.05. Notes.............................................. 7
1.06. Pro Rata Borrowings................................ 9
1.07. Interest........................................... 9
1.08. Capital Requirements...............................10
1.09. Total Loan Commitments; Limitations on
Outstanding Loan Amounts.........................10
1.10. Letters of Credit..................................11
1.11. Conversions; Continuations.........................20
1.12. Special Provisions Governing LIBOR Loans...........21
1.13. Interest Periods...................................26
SECTION 2. Commitments.....................................................27
2.01. Voluntary Reduction of Commitments.................27
2.02. Mandatory Adjustments of Commitments, etc..........27
2.03. Commitment Commission..............................28
SECTION 3. Payments........................................................29
3.01. Voluntary Prepayments..............................29
3.02. Mandatory Prepayments..............................30
3.03. Method and Place of Payment........................33
3.04. Net Payments.......................................34
SECTION 4. Conditions Precedent............................................35
4.01. Conditions Precedent to Initial Loans..............35
4.02. Conditions Precedent to All Loans..................44
4.03. Additional Conditions Precedent to
Acquisition Term Loans..........................46
4.04. Conditions Precedent to All Letters of Credit......49
SECTION 5. Representations, Warranties and Agreements......................49
5.01. Status.............................................50
5.02. Corporate Power and Authority; Business............50
5.03. No Violation.......................................51
5.04. Litigation.........................................51
5.05. Use of Proceeds....................................51
5.06. Governmental Approvals, etc........................52
5.07. Investment Company Act.............................52
5.08. Public Utility Holding Company Act.................53
5.09. True and Complete Disclosure.......................53
5.10. Transaction........................................53
5.11. Financial Condition; Financial Statements;
Projections......................................54
5.12. Security Interests.................................56
5.13. Tax Returns and Payments...........................57
5.14. ERISA..............................................57
5.15. Subsidiaries.......................................58
5.16. Patents, etc.......................................59
5.17. Compliance with Laws, etc..........................59
5.18. Properties.........................................60
5.19. Securities.........................................60
5.20. Collective Bargaining Agreements...................60
5.21. Indebtedness Outstanding; Prior Liens..............60
5.22. Environmental Protection...........................61
5.23. Environmental Investigations.......................63
SECTION 6. Affirmative Covenants...........................................63
6.01. Information Covenants..............................63
6.02. Books, Records and Inspections.....................68
6.03. Maintenance of Property; Insurance.................69
6.04. Payment of Taxes...................................69
6.05. Corporate Franchises...............................70
6.06. Compliance with Statutes, etc......................70
6.07. ERISA..............................................70
6.08. Performance of Obligations.........................71
6.09. End of Fiscal Years; Fiscal Quarters...............71
6.10. Use of Proceeds....................................71
6.11. Interest Rate Protection...........................72
6.12. Equal Security for Loans and Notes; No
Further Negative Pledges........................72
6.13. Lender Meeting.....................................72
6.14. Pledge of Additional Collateral....................72
6.15. Security Interests.................................73
6.16. Subsidiary Guarantees..............................74
6.17. Environmental Events...............................74
6.18. Landlord Lien Assurance............................75
SECTION 7. Negative Covenants..............................................75
7.01. Conduct of Business................................75
7.02. Amendments or Waivers of Certain Documents.........75
7.03. Liens..............................................76
7.04. Indebtedness.......................................78
7.05. Capital Expenditures...............................79
7.06. Advances, Investments and Loans....................80
7.07. Prepayments of Indebtedness, etc...................81
7.08. Dividends, etc.....................................81
7.09. Transaction with Affiliates........................82
7.10. Total Interest Coverage Ratio......................82
7.11. Fixed Charge Coverage Ratio........................83
7.12. Leverage Ratios....................................84
7.13. Minimum Consolidated EBITDA........................86
7.14. Issuance of Subsidiary Stock.......................87
7.15. Disposition of Assets..............................87
7.16. Contingent Obligations.............................90
7.17. ERISA..............................................90
7.18. Merger and Consolidations..........................91
7.19. Sale and LeaseBacks...............................91
7.20. Sale or Discount of Receivables....................92
7.21. Xxxx Payments......................................92
SECTION 8. Events of Default...............................................92
8.01. Payments...........................................92
8.02. Representations, etc...............................92
8.03. Covenants..........................................93
8.04. Default Under Other Agreements.....................93
8.05. Bankruptcy, etc....................................93
8.06. ERISA..............................................94
8.07. Security Documents.................................95
8.08. Guarantees.........................................95
8.09. Judgments..........................................95
8.10. Ownership..........................................96
SECTION 9. Definitions.....................................................97
SECTION 10. The Agent......................................................128
10.01. Appointment.......................................128
10.02. Delegation of Duties..............................129
10.03. Exculpatory Provisions............................129
10.04. Reliance by the Agent.............................130
10.05. Notice of Default.................................130
10.06. NonReliance on Agent and Other Banks..............131
10.07. Indemnification...................................131
10.08. The Agent in Its Individual Capacity..............132
10.09. Successor Agent...................................132
10.10. Resignation by Agent..............................133
SECTION 11. Miscellaneous..................................................133
11.01. Payment of Expenses, etc..........................133
11.02. Right of Setoff...................................134
11.03. Notices...........................................135
11.04. Benefit of Agreement..............................136
11.05. No Waiver; Remedies Cumulative....................138
11.06. Payments Pro Rata.................................138
11.07. Calculations; Computations........................139
11.08. Governing Law; Submission to Jurisdiction;
Venue...........................................139
11.09. Counterparts......................................140
11.10. Effectiveness.....................................140
11.11. Headings Descriptive..............................141
11.12. Amendment or Waiver...............................141
11.13. Survival..........................................141
11.14. Domicile of Loans.................................141
11.15. Waiver of Jury Trial..............................141
11.16. Independence of Covenants.........................142
Annex I List of Banks
Annex II Bank Addresses
Schedule 4.01(t)(i) List of Mortgaged Real Property
Schedule 5.15 Subsidiaries
Schedule 5.19 Securities
Schedule 5.20 Schedule of Collective Bargaining Agreements
Schedule 5.21(a) Schedule of Existing Debt
Schedule 5.21(b) Prior Liens
Schedule 5.22 Environmental
Schedule 5.24 Certain Liens
Schedule 6.01(i) Summary of Corporate Insurance Policies
Exhibit A1 Form of A Term Note
Exhibit A2 Form of B Term Note
Exhibit A3 Form of Acquisition Term Note
Exhibit B Form of Revolving Note
Exhibit C1 Form of Opinion of X'Xxxxxx, Cavanagh, Anderson,
Xxxxxxxxxxxxx & Xxxxxxxx
Exhibit C2 Form of Local Counsel Opinions
Exhibit D Form of Mortgage
Exhibit E Form of Subsidiary Guarantee
Exhibit F1 Form of Borrower Securities Pledge Agreement
Exhibit G1 Form of Borrower Intellectual Property Security Agreement
Exhibit G2 Form of Subsidiary Intellectual Property Security Agreement
Exhibit H1 Form of Borrower General Security Agreement
Exhibit H2 Form of Subsidiary General Security Agreement
Exhibit I1 Form of Notice of Assignment
Exhibit I2 Form of Assignment and Assumption Agreement
Exhibit J Form of Notice of Borrowing
Exhibit K Form of Borrowing Base Certificate
Exhibit L Form of Officers' Certificate Regarding Environmental Review
Exhibit M Form of Officers' Solvency Certificate
Exhibit N Form of Landlord Lien Assurance
Exhibit O Form of Officers' Certificate Regarding Conditions Precedent
CREDIT AGREEMENT, dated as of December 10, 1997, among STYLING
TECHNOLOGY CORPORATION, a Delaware corporation (the "Borrower"), the lending
institutions listed in Annex I (each a "Bank" and, collectively, the "Banks")
and CREDIT AGRICOLE INDOSUEZ ("Indosuez"), as agent for the Banks (in such
capacity "Agent") and as collateral agent for the Banks (in such capacity, the
"Collateral Agent"). Unless otherwise defined herein, all capitalized terms used
herein and defined in Section 9 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower has entered into an Asset Purchase Agreement
(the "Asset Purchase Agreement") with Inverness Corporation and Inverness (UK)
Limited (the "Sellers"), to effect the purchase by the Borrower of certain of
the assets of Inverness (the "Transaction");
WHEREAS, the Borrower desires (i) to incur the Initial Loans from the
Banks, the proceeds of which will be applied to repay outstanding Indebtedness,
to finance the Transaction and to pay certain fees and expenses related thereto
and (ii) to incur further Loans from the Banks, the proceeds of which will be
used (a) to provide working capital for the Borrower and its Subsidiaries and
for general corporate purposes and (b) with respect to the Acquisition Term
Loans, to provide financing for acquisitions, subject to the conditions set
forth herein;
WHEREAS, the Guarantors, in accordance with the terms and conditions
hereinafter set forth, have agreed to guarantee the obligations of the Borrower
hereunder; and
WHEREAS, the Banks are willing to make available the credit facilities
provided for herein.
NOW, THEREFORE, IT IS AGREED:
-2-
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01. COMMITMENTS. Subject to and upon the terms and conditions herein
set forth, each Bank severally agrees (i) in the case of any Borrowing under the
A Term Loan Facility or the B Term Loan Facility, in each case, on the Closing
Date, (ii) in the case of any Borrowing under the Revolving Portion, at any time
and from time to time after the Closing Date and prior to the Revolving Loan
Commitment Termination Date and (iii) in the case of any Borrowing under the
Acquisition Portion, at any time and from time to time after the Closing Date
and prior to the Acquisition Term Loan Commitment Termination Date, to make a
Loan or Loans to the Borrower, which Loans shall be drawn under the Loan
Facility (including the Acquisition Portion, the Revolving Portion and the Term
Portion thereof), as set forth below.
(a) Loans under the Term Portion of the Loan Facility (each a
"Term Loan" and, collectively, the "Term Loans") may be made under the
A Term Loan Facility (each an "A Term Loan" and, collectively, the "A
Term Loans") and the B Term Loan Facility (each a "B Term Loan" and,
collectively, the "B Term Loans"). Once repaid, Term Loans may not be
reborrowed.
(i) Each A Term Loan under the A Term Loan Facility (a)
shall be made as a single drawing on the Closing Date in an
amount not to exceed the Total A Term Loan Commitment; PROVIDED,
that the full amount of the Total B Term Loan Commitment has been
used on the Closing Date, (b) shall initially be made as Base
Rate Loans and, 30 days after the Closing Date or such earlier
time as the Agent may agree (but in no event later than
completion of the syndication), at the option of the Borrower and
subject to the terms hereof, thereafter may be converted into
LIBOR Loans; PROVIDED that all Term Loans made by all Banks
pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Loans of the
same Type and (c) shall not exceed for any Bank at any time
outstanding that aggregate principal amount which equals the A
Term Loan Commitment of such Bank.
(ii) Each B Term Loan under the B Term Loan Facility (a)
shall be made as a single drawing on the Closing Date in an
amount not to exceed the Total B Term Loan Commitment, (b) shall
-3-
initially be made as Base Rate Loans and, 30 days after the
Closing Date or such earlier time as the Agent may agree (but in
no event later than completion of the syndication), at the option
of the Borrower and subject to the terms hereof, thereafter may
be converted into LIBOR Loans; PROVIDED that all Term Loans made
by all Banks pursuant to the same Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Loans
of the same Type and (c) shall not exceed for any Bank at any
time outstanding that aggregate principal amount which equals the
B Term Loan Commitment of such Bank.
(b) Loans under the Revolving Portion of the Loan Facility (each
a "Revolving Loan" and, collectively, the "Revolving Loans") (i) shall
be made at any time and from time to time after the Closing Date and
prior to the Revolving Loan Commitment Termination Date, (ii) shall
initially be made as Base Rate Loans and, 30 days after the Closing
Date or such earlier time as the Agent may agree (but in no event
later than completion of the syndication), shall be made at the option
of the Borrower either as Base Rate Loans or as LIBOR Loans; PROVIDED
that all Revolving Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Loans of the same Type, (iii) may be repaid and
reborrowed in accordance with the provisions hereof, (iv) shall not
exceed for any Bank at any time outstanding the Revolving Loan
Commitment of such Bank at such time and (v) shall not in any case be
made if the aggregate principal amount of Revolving Loans then
outstanding, after giving effect to the Revolving Loan requested by
the relevant Notice of Borrowing, plus the then outstanding Letters of
Credit Usage, after giving effect to the issuance of all Letters of
Credit subject to outstanding requests for issuance, would exceed the
lesser of the Borrowing Base as shown in the Borrowing Base
Certificate that was last required to be delivered pursuant to Section
6.01 or the Total Revolving Loan Commitment then in effect.
(c) Loans under the Acquisition Portion of the Loan Facility
(each an "Acquisition Term Loan") (i) shall be made to the Borrower
after the Closing Date and prior to the Acquisition Term Loan
Commitment Termination Date (the date of each such Borrowing of an
Acquisition Term Loan, an "Acquisition Term Loan Closing Date") to
-4-
effect acquisitions, (ii) shall initially be made as Base Rate Loans
and, 30 days after the Closing Date or such earlier time as the Agent
may agree (but in no event later than completion of the syndication),
shall be made at the option of the Borrower either as Base Rate Loans
or as LIBOR Loans, (iii) shall not exceed for any Bank at any time
outstanding the Acquisition Term Loan Commitment of such Bank at such
time, and (iv) shall not be made pursuant to a particular Notice of
Borrowing if the aggregate principal amount of Acquisition Term Loans
made since the Closing Date, after giving effect to the Acquisition
Term Loan requested by such Notice of Borrowing, would exceed the
Total Acquisition Term Loan Commitment.
(d) At any Acquisition Term Loan Closing Date, Acquisition Term
Loans made by the Borrower on such date shall automatically convert
into Term Loans (each such conversion, a "Conversion Event"). Such
Acquisition Term Loans shall be added to the Total A Term Loan
Commitment and A Term Loans and the Total B Term Loan Commitment and B
Term Loans, respectively, in an amount equal to the product of (a) the
Acquisition Term Loans made on such date and (b) a fraction, the
numerator of which is the outstanding principal amount of such A Term
Loans or B Term Loans, as the case may be, immediately before such
Conversion Event and the denominator of which is the outstanding
principal amount of Term Loans immediately before such Conversion
Event. Upon conversion, such Acquisition Term Loans shall be
henceforth considered A Term Loans and B Term Loans, as the case may
be.
(e) Upon any Conversion Event, the Scheduled A Term Loans
Principal Payments and the Scheduled B Term Loans Principal Payments
shall be increased by adding to each Principal Payment Date the
product of (a) the amount of such Acquisition Term Loans converted to
A Term Loans or B Term Loans, as the case may be, pursuant to such
Conversion Event and (b) a fraction, the numerator of which is equal
to the amount of such Scheduled A Term Loans Principal Payment or
Scheduled B Term Loans Principal Payment, as the case may be, then
remaining on each Principal Payment Date, and the denominator of which
is the amount of all Scheduled A Term Loans Principal Payments and
Scheduled B Term Loans Principal Payments, as the case may be,
remaining before such Conversion Event.
-5-
1.02. MINIMUM AMOUNT OF EACH BORROWING; MAXIMUM NUMBER OF BORROWINGS.
The minimum aggregate principal amount of a Borrowing of Loans shall be the
Minimum Borrowing Amount and, if greater, shall be in integral multiples of
$100,000; PROVIDED, HOWEVER, that the Borrowing of the A Term Loan portion and
the B Term Loan portion of the Initial Loans shall be in an aggregate principal
amount of $25,000,000 and $25,000,000, respectively; PROVIDED, FURTHER, HOWEVER,
that the Banks' Acquisition Term Loan Commitment shall terminate, on a PRO RATA
basis for each Bank, with respect to any portion of the Total Acquisition Term
Loan Commitments not utilized by the Borrower prior to the Acquisition Term Loan
Commitment Termination Date. The minimum aggregate principal amount of a
Borrowing of Revolving Loans shall be the Minimum Borrowing Amount (other than a
Borrowing of Base Rate Loans such that the total amount of Revolving Loans to be
outstanding after giving effect to such Borrowing shall be equal to the Total
Revolving Commitment) and, if greater, shall be in integral multiples of
$100,000. More than one Borrowing may be incurred on any date; provided that at
no time shall there be outstanding more than eight Borrowings of LIBOR Loans.
1.03. NOTICE OF BORROWINGS. Whenever the Borrower desires that the
Banks make the Initial Loans, an Authorized Officer of the Borrower shall give
the Agent at the Agent's Office prior to Noon (New York time) at least two
Business Days' prior written notice (or telephone notice promptly confirmed in
writing) of such Borrowing. Whenever the Borrower desires that the Banks make
Base Rate Loans under the Revolving Portion or the Acquisition Portion of the
Loan Facility after the Closing Date an Authorized Officer of the Borrower shall
give the Agent at the Agent's Office prior to Noon (New York time) on the
proposed date of such Borrowing prior written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing of Base Rate Loans.
Whenever the Borrower desires that the Banks make LIBOR Loans under the
Revolving Portion or the Acquisition Portion of the Loan Facility it shall give
the Agent at the Agent's Office prior to 10:00 A.M. (New York time) at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing of LIBOR Loans. Each such notice,
which shall be substantially in the form of EXHIBIT J hereto (each a "Notice of
Borrowing"), shall be irrevocable, shall be deemed a representation by the
Borrower that all conditions precedent to such Borrowing have been satisfied and
shall specify (i) whether such Borrowing is to be made from the A Term Loan
Facility, the B Term Loan Facility, the Acquisition Term Loan Facility or the
-6-
Revolving Loan Facility, (ii) the aggregate principal amount in Dollars of the
Loans to be made pursuant to such Borrowing, all of which shall be specified in
such manner as is necessary to comply with all limitations on Term Loans,
Acquisition Term Loans and Revolving Loans outstanding hereunder, including
without limitation, in the case of the Revolving Loans availability under the
Borrowing Base, and (iii) the date of Borrowing (which shall be a Business Day).
The Agent shall as promptly as practicable give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters covered by the
Notice of Borrowing.
1.04. DISBURSEMENT OF FUNDS. (a) No later than 3:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available to the Agent in New York its PRO RATA portion of each Borrowing
requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund under any
Borrowing on or after the Closing Date in immediately available funds to the
Agent to the account specified therefor by the Agent or if no account is so
specified at the Agent's Office and the Agent will make such funds available to
the Borrower by depositing to the account specified therefor by the Borrower or
if no account is so specified to its account at the Agent's Office the aggregate
of the amounts so made available in the type of funds received. Unless the Agent
shall have been notified by any Bank prior to the date of any such Borrowing
that such Bank does not intend to make available to the Agent its portion of the
Borrowing or Borrowings to be made on such date, the Agent may assume that such
Bank has made such amount available to the Agent on such date of Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank and the Agent has made such corresponding amount available to the
Borrower, the Agent shall be entitled to recover such amount from such Bank. If
such Bank does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from such Bank or the Borrower, as the case may be,
-7-
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such amount is recovered by the Agent, at a rate PER ANNUM equal to (x) if paid
by such Bank, the Federal Funds Rate or (y) if paid by the Borrower (and/or one
or more other Credit Parties), the then applicable rate of interest, calculated
in accordance with Section 1.07, for the respective Loans. The Agent shall also
be entitled to recover from any Bank an amount equal to any other losses
incurred by the Agent as a result of the failure of such Bank to provide such
amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitment hereunder or to prejudice any rights which
the Borrower or any other Credit Party may have against any Bank as a result of
any default by such Bank hereunder.
1.05. NOTES. (a) The Borrower's obligation to pay the principal of and
interest on all the Loans made to it by each Bank shall be evidenced: (i) if A
Term Loans, by a promissory note (each, an "A Term Note" and, collectively, the
"A Term Notes") duly executed and delivered by the Borrower, substantially in
the form of EXHIBIT A1 hereto, each with blanks appropriately completed in
conformity herewith; (ii) if B Term Loans, by a promissory note (each, a "B Term
Note" and, collectively, the "B Term Notes") duly executed and delivered by the
Borrower, substantially in the form of EXHIBIT A2 hereto, each with blanks
appropriately completed in conformity herewith; (iii) if Acquisition Term Loans,
by a promissory note (each, an "Acquisition Term Note" and, collectively, the
"Acquisition Term Notes") duly executed and delivered by the Borrower,
substantially in the form of Exhibit A3 hereto; and (iv) if Revolving Loans, by
a promissory note (each, a "Revolving Note" and, collectively, the "Revolving
Notes") duly executed and delivered by the Borrower substantially in the form of
EXHIBIT B hereto, with blanks appropriately completed in conformity herewith.
(b) The A Term Note of the Borrower issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Effective Date, (iii) be in a stated principal amount equal to the A Term
Loan Commitment of such Bank and be payable in the aggregate principal amount of
the A Term Loans evidenced thereby, (iv) mature, with respect to each Loan
evidenced thereby, on the Final A Term Loan Maturity Date, (v) be subject to
-8-
mandatory prepayment as provided in Section 3.02, (vi) bear interest as provided
in the appropriate clause of Section 1.07 in respect of the Base Rate Loans and
the LIBOR Loans, as the case may be, evidenced thereby and (vii) be entitled to
the benefits of this Agreement and the other applicable Credit Documents.
(c) The B Term Note of the Borrower issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Effective Date, (iii) be in a stated principal amount equal to the B Term
Loan Commitment of such Bank and be payable in the aggregate principal amount of
the B Term Loans evidenced thereby, (iv) mature, with respect to each Loan
evidenced thereby, on the Final B Term Loan Maturity Date, (v) be subject to
mandatory prepayment as provided in Section 3.02, (vi) bear interest as provided
in the appropriate clause of Section 1.07 in respect of the Base Rate Loans and
the LIBOR Loans, as the case may be, evidenced thereby and (vii) be entitled to
the benefits of this Agreement and the other applicable Credit Documents.
(d) The Acquisition Term Note of the Borrower issued to each Bank
shall (i) be executed by the Borrower, (ii) be payable to the order of such Bank
and be dated the Effective Date, (iii) be in a stated principal amount equal to
the Acquisition Term Loan Commitment of such Bank and be payable in the
aggregate principal amount of the Acquisition Term Loan evidenced thereby, (iv)
be subject to conversion into an A Term Note and a B Term Note upon a Conversion
Event pursuant to Section 1.01(d), at which time, at the option of such Bank,
the Borrower shall issue new A Term Notes and new B Term Notes to each such Bank
holding Acquisition Term Loan Commitments, in an amount equal to such
Acquisition Term Loans so converted, and shall issue a new Acquisition Term Note
to such Bank reflecting the decrease in such Bank's Acquisition Term Loan
Commitment and such Bank shall return the replaced A Term Note, B Term Note and
Acquisition Term Note to the Borrower, and (v) be entitled to the benefits of
this Agreement and the other applicable Credit Documents.
(e) The Revolving Note of the Borrower issued to each Bank shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Effective Date, (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such Bank and be payable in the aggregate principal
amount of the Revolving Loans evidenced thereby, (iv) mature, with respect to
each Loan evidenced thereby, on the Revolving Loan Maturity Date, (v) be subject
-9-
to mandatory prepayment as provided in Section 3.02, (vi) bear interest as
provided in the appropriate clause of Section 1.07 in respect of the Base Rate
Loans and LIBOR Loans, as the case may be, evidenced thereby and (vii) be
entitled to the benefits of this Agreement and the other applicable Credit
Documents.
(f) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's or any Credit Party's obligations
hereunder or under the other applicable Credit Documents in respect of such
Loans.
1.06. PRO RATA BORROWINGS. All Borrowings under this Agreement shall
be loaned by the Banks PRO RATA on the basis of their A Term Loan Commitments, B
Term Loan Commitments, Acquisition Term Loan Commitments or Revolving Loan
Commitments, as the case may be. No Bank shall be responsible for any default by
any other Bank in its obligation to make Loans hereunder and each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to fulfill its commitments hereunder.
1.07. INTEREST. (a) The unpaid principal amount of each Base Rate Loan
shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) (or unless sooner converted into a LIBOR
Loan) at a rate PER ANNUM which shall at all times be equal to the sum of (i)
the Base Rate in effect from time to time and (ii) the applicable Interest
Margin.
(b) The unpaid principal amount of each LIBOR Loan shall bear interest
from the date of the Borrowing thereof until maturity (whether by acceleration
or otherwise) (or unless sooner converted to a Base Rate Loan) at a rate PER
ANNUM equal to the sum of (i) the relevant LIBOR Rate and (ii) the applicable
Interest Margin.
(c) The unpaid principal amount of each Loan, upon the occurrence and
during the continuance of an Event of Default, overdue principal and, to the
extent permitted by law, overdue interest in respect of each Loan shall bear
interest at a rate PER ANNUM equal to 2% plus the rate (including any applicable
margin) in effect from time to time.
-10-
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day of
each March, June, September and December beginning December 31, 1997; (ii) in
respect of each LIBOR Loan, in arrears on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period in excess of three
months, on each date occurring at threemonth intervals after the first date of
such Interest Period; and (iii) in respect of each Loan, on any prepayment (on
the amount prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand. Notwithstanding the foregoing, interest payable
at the rate provided in Section 1.07(c) shall be payable on demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 11.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing of
LIBOR Loans for any Interest Period, shall promptly notify the Borrower and the
Banks thereof. Such determination shall, absent manifest error, be final,
conclusive and binding upon all parties hereto.
1.08. CAPITAL REQUIREMENTS. If any Bank shall have determined that the
adoption or effectiveness after the Effective Date of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or such Bank's parent with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency
(including in each case any such change proposed or published prior to the date
hereof but taking effect thereafter), has or would have the effect of reducing
the rate of return on such Bank's or such Bank's parent's capital or assets as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such Bank's parent could have achieved but for such adoption,
effectiveness or change or as a consequence of an increase in the amount of
capital required to be maintained by such Bank (including in each case, without
limitation, with respect to any Bank's Commitment or any Loan), then from time
to time, within 15 days after demand by such Bank (with a copy to the Agent),
the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such Bank's parent, as the case may be, for such
-11-
reduction. Each Bank, upon determining in good faith that any additional amounts
will be payable pursuant to this Section 1.08, will give written notice thereof
to the Borrower, which notice shall set forth in reasonable detail the basis of
the calculation of such additional amounts.
1.09. TOTAL LOAN COMMITMENTS; LIMITATIONS ON OUTSTANDING LOAN AMOUNTS.
The original amount of the (i) Total Commitments is $75,000,000, (ii) Total A
Term Loan Commitment is $25,000,000, (iii) Total B Term Loan Commitment is
$25,000,000, (iv) Total Acquisition Term Loan Commitment is $12,500,000 and (v)
Total Revolving Loan Commitment is $12,500,000, including up to $5,000,000 of
Letters of Credit. Anything contained in this Agreement to the contrary
notwithstanding, (a) in no event shall the sum of the aggregate principal amount
of all Term Loans, Acquisition Term Loans and Revolving Loans of any Bank at any
time exceed such Bank's portion of the Total Commitments, (b) in no event shall
the sum of the aggregate principal amount of all Term Loans, Acquisition Term
Loans and Revolving Loans from all Banks at any time exceed the Total
Commitments and (c) in no event shall the Total Utilization of Revolving Loan
Commitments and Letters of Credit Usage exceed the lesser of the Total Revolving
Loan Commitments or the Borrowing Base.
-12-
1.10. LETTERS OF CREDIT.
(a) LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower set forth herein and in the other Credit Documents, in addition to
requesting that the Banks make Revolving Loans pursuant to Section 1.03, the
Borrower may request, in accordance with the provisions of this Section 1.10,
that one or more Issuing Banks issue Letters of Credit for the account of the
Borrower; PROVIDED that (i) the Borrower shall not request that any Bank issue
any Letter of Credit and a Bank shall not issue any Letter of Credit, if after
giving effect to such issuance the sum of (A) the Letters of Credit Usage on the
date of such issuance, after giving effect to the issuance of all Letters of
Credit subject to outstanding requests for issuance of a Letter of Credit, plus
(B) the aggregate principal amount of Revolving Loans then outstanding, after
giving effect to the making of all Revolving Loans then requested by all
outstanding but unfunded Notices of Borrowing, would exceed the lesser of the
Borrowing Base as would be shown in the Borrowing Base Certificate that was last
required to be delivered pursuant to Section 6.01 or the Total Revolving Loan
Commitment then in effect, (ii) in no event shall any Issuing Bank issue (A) any
Letter of Credit having an expiration date later than thirty (30) Business Days
prior to the Revolving Loan Maturity Date, after giving effect to any possible
renewal of such Letter of Credit pursuant to the proviso to the following clause
(ii)(B), (B) subject to the foregoing clause (ii)(A), any Letter of Credit
having an expiration date more than one year after its date of issuance;
PROVIDED that, subject to the foregoing clause (ii)(A), this clause (B) shall
not prevent any Issuing Bank from issuing a Letter of Credit containing a
provision to the effect that such Letter of Credit will automatically be renewed
annually for a period not to exceed one year, so long as such renewable Letter
of Credit provides that it shall not at any time be renewed for an additional
year if (I) the Borrower notifies the Issuing Bank in writing one Business Day
prior to the applicable renewal date that the Borrower elects to allow the
Letter of Credit to expire without being renewed, or (II) the Issuing Bank or
the Required Banks notify the Borrower in writing, PRIOR to the date set forth
in such Letter of Credit as the date by which the beneficiary thereof is to be
notified whether such Letter of Credit is to be renewed, that such Letter of
Credit shall not be so renewed, in which case such Letter of Credit shall not be
so renewed, (C) any Letter of Credit the initial stated amount of which is less
than $5,000, or (D) any Letter of Credit (I) which is governed by laws other
than the laws of the State of New York, without regard to the principles of
-13-
conflicts of laws, or (II) as to which the beneficiary is not required, by
acceptance of the Letter of Credit, to be subject to the exclusive jurisdiction
of any competent state or federal court in the State of New York with regard to
such Letter of Credit and (iii) the Borrower shall not request that any Issuing
Bank issue and no Issuing Bank shall issue any Letter of Credit if, after giving
effect to such issuance and the issuance of all other requested Letters of
Credit, the then outstanding Letters of Credit Usage in respect of all Letters
of Credit would exceed $5,000,000. The issuance of any Letter of Credit in
accordance with the provisions of this Section 1.10 shall be given effect in the
calculation of the aggregate principal amount of Revolving Loans outstanding and
the Letters of Credit Usage and shall require the satisfaction of each condition
set forth in Sections 4.01, 4.02 and 4.04.
Immediately upon the issuance of each Letter of Credit in compliance
with this Agreement, each Bank other than the Issuing Bank or Banks shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Bank a participation (such participation of each Bank in each Letter of Credit
being hereinafter referred to as its "Letter of Credit Participation") in such
Letter of Credit and each drawing thereunder in an amount equal to such Bank's
PRO RATA share (determined on the basis of such Bank's Revolving Loan
Commitment) of the maximum amount which is or at any time may become available
to be drawn thereunder.
Each Letter of Credit may provide that the Issuing Bank may (but shall
not be required to) pay the beneficiary thereof upon the occurrence of an Event
of Default and the acceleration of the maturity of the Revolving Loans or, if
payment is not then due to the beneficiary, provide for the deposit of funds in
an account to secure payment to the beneficiary and that any funds so deposited
shall be paid to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Issuing Bank for distribution to the
Banks (or, if all Obligations shall have been paid in full, to the Borrower) if
no payment to the beneficiary has been made and the final date available for
drawings under the Letter of Credit has passed. Each payment or deposit of funds
by an Issuing Bank as provided in this paragraph shall be treated for all
purposes of this Agreement as a drawing duly honored by such Issuing Bank under
the related Letter of Credit.
-14-
(b) REQUEST FOR ISSUANCE. Whenever the Borrower desires the issuance
of a Letter of Credit, it shall deliver to the Agent a request for issuance of a
Letter of Credit no later than Noon (New York time) at least three Business
Days, or such shorter period as may be agreed to by any Issuing Bank in any
particular instance, in advance of the proposed date of issuance. The request
for issuance with respect to any Letter of Credit shall specify (i) the proposed
date of issuance (which shall be a business day under the laws of the
jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the face amount
of such Letter of Credit, (iii) the expiration date of such Letter of Credit and
(iv) the name and address of the beneficiary of such Letter of Credit. As soon
as practicable after delivery of such request for issuance of a Letter of
Credit, the Issuing Bank for such Letter of Credit shall be determined as
provided in Section 1.10(c). Prior to the date of issuance, the Borrower shall
specify a precise description of the documents and the verbatim text of any
certificate to be presented by the beneficiary of such Letter of Credit which,
if presented by such beneficiary prior to the expiration date of the Letter of
Credit, would require the Issuing Bank to make payment under the Letter of
Credit; PROVIDED that the Issuing Bank, in its sole judgment, may require
changes in any such documents and certificates; and PROVIDED, FURTHER, that no
Letter of Credit shall require payment against a conforming draft to be made
thereunder earlier than Noon in the time zone of the Issuing Bank on the
Business Day (which shall be a business day under the laws of the jurisdiction
of the Issuing Bank) next succeeding the Business Day (which shall be a Business
Day under the laws of the jurisdiction of the Issuing Bank) that such draft is
presented. In determining whether to pay under any Letter of Credit, the Issuing
Bank shall be responsible only to determine that the documents and certificates
required to be delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of Credit.
Promptly after receipt of a request for issuance of a Letter of Credit and the
determination of the Issuing Bank thereof, the Agent shall notify each Bank of
the proposed issuance, the identity of the Issuing Bank and the amount of each
other Bank's respective participation therein, determined in accordance with
Section 1.10(a).
-15-
(c) DETERMINATION OF ISSUING BANK.
(1) Upon receipt by the Agent of a request for issuance pursuant to
Section 1.10(b) with respect to a Letter of Credit, in the event the Agent
elects to issue such Letter of Credit, the Agent shall so notify the Borrower,
and the Agent shall be the Issuing Bank with respect thereto. In the event that
the Agent, in its sole discretion, elects not to issue such Letter of Credit,
the Agent shall promptly so notify the Borrower, and the Borrower may request
any other Bank to issue such Letter of Credit. Each such Bank so requested to
issue such Letter of Credit shall promptly notify the Borrower and the Agent
whether or not, in its sole discretion, it has elected to issue such Letter of
Credit, and any such Bank that so elects to issue such Letter of Credit shall be
the Issuing Bank with respect thereto. In the event that each other Bank elects
not to issue such Letter of Credit, the Agent agrees to issue such Letter of
Credit and to be the Issuing Bank with respect thereto. No Issuing Bank shall
issue any Letter of Credit denominated in a currency other than Dollars.
(2) Each Issuing Bank that elects to issue a Letter of Credit shall
promptly give written notice to the Agent and each other Bank of the information
required under Section 1.10(b)(i)(iv) relating to the Letter of Credit.
(d) PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the event of
any request for drawing under any Letter of Credit by the beneficiary thereof,
the Issuing Bank shall notify the Borrower and the Agent on or before the date
on which such Issuing Bank intends to honor such drawing, and the Borrower shall
reimburse such Issuing Bank on the day on which such drawing is honored in an
amount in same day funds equal to the amount of such drawing; PROVIDED that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
the Borrower shall have notified the Agent and such Issuing Bank prior to Noon
(New York time) on the Business Day of the date of such drawing that the
Borrower intends to reimburse such Issuing Bank for the amount of such drawing
with funds other than the proceeds of Revolving Loans, the Borrower shall be
deemed to have timely given a Notice of Borrowing to the Agent requesting the
Banks to make Revolving Loans on the date on which such drawing is honored in an
amount equal to the amount of such drawing, and (ii) subject to satisfaction or
waiver of the conditions specified in Section 4.02, the Banks shall, on the date
of such drawing, make Revolving Loans that are Base Rate Loans in the amount of
such drawing, the proceeds of which shall be applied directly by the Agent to
-16-
reimburse such Issuing Bank for the amount of such drawing; and FURTHER PROVIDED
that if, for any reason, proceeds of Revolving Loans are not received by such
Issuing Bank on such date in an amount equal to the amount of such drawing, the
Borrower shall reimburse such Issuing Bank, on the Business Day (which shall be
a business day under the laws of the jurisdiction of such Issuing Bank)
immediately following the date of such drawing, in an amount in same day funds
equal to the excess of the amount of such drawing over the amount of such
Revolving Loans, if any, that are so received, plus accrued interest on such
amount at the rate set forth in Section 1.10(f)(1)(i).
(e) PAYMENT BY BANKS. In the event that the Borrower shall fail to
reimburse an Issuing Bank as provided in Section 1.10(d) in an amount equal to
the amount of any drawing honored by such Issuing Bank under a Letter of Credit
issued by it, such Issuing Bank shall promptly notify each Bank of the
unreimbursed amount of such drawing and of such Bank's respective participation
therein. Each Bank shall make available to such Issuing Bank an amount equal to
its respective participation in same day funds, at the office of such Issuing
Bank specified in such notice, not later than 1:00 P.M. (New York time) on the
Business Day (which shall be a business day under the laws of the jurisdiction
of such Issuing Bank) after the date notified by such Issuing Bank. In the event
that any Bank fails to make available to such Issuing Bank the amount of such
Bank's participation in such Letter of Credit as provided in this Section
1.10(e), such Issuing Bank shall be entitled to recover such amount on demand
from such Bank together with interest at the customary rate set by the Agent for
the correction of errors among banks for three Business Days and thereafter at
the Federal Funds Rate. Each Issuing Bank shall distribute to each other Bank
which has paid all amounts payable by it under this Section 1.10(e) with respect
to any Letter of Credit issued by such Issuing Bank such other Bank's PRO RATA
share of all payments received by such Issuing Bank from the Borrower in
reimbursement of drawings honored by such Issuing Bank under such Letter of
Credit when such payments are received. Nothing in this Section 1.10(e) shall be
deemed to relieve any Bank from its obligation to pay all amounts payable by it
under this Section 1.10(e) with respect to any Letter of Credit issued by an
Issuing Bank or to prejudice any rights that the Borrower or any other Bank may
have against a Bank as a result of any default by such Bank hereunder.
-17-
(f) COMPENSATION.
(1) The Borrower agrees to pay the following amounts with respect to
all Letters of Credit:
(i) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by such Issuing Bank in
respect of each such drawing from and including the date of the drawing
through the date such amount is reimbursed by the Borrower (including any
such reimbursement out of the proceeds of Revolving Loans pursuant to
Section 1.10(d)) at a rate which is equal to the interest rate then
applicable to Base Rate Loans for the period from the date of such drawing
to and including the first Business Day after the date of such drawing and
thereafter at a rate equal to 2% PER ANNUM in excess of the rate of
interest otherwise payable under this Agreement for Base Rate Loans during
such period; PROVIDED that amounts reimbursed after 1:00 p.m. (New York
time) on any date shall be deemed to be reimbursed on the next succeeding
Business Day; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with such Issuing Bank's standard schedule
for such charges in effect at the time of such amendment, transfer or
drawing, as the case may be.
(2) The Borrower agrees to pay to the Agent for distribution to each
Bank in respect of each Letter of Credit outstanding such Bank's PRO RATA share
of a commission equal to 2.00% PER ANNUM of the maximum amount available from
time to time to be drawn under such outstanding Letters of Credit, payable in
arrears on and through the last day of each fiscal quarter of the Borrower and
calculated on the basis of a 365day year and the actual number of days elapsed.
Upon the happening and during the continuance of an Event of Default described
in Section 8.01, the commission referred to in the preceding sentence shall be
4.00% PER ANNUM.
(3) The Borrower agrees to pay to each Issuing Bank in respect of each
Letter of Credit on the date of issuance a commission equal to (i) with respect
to any Standby Letter of Credit, 0.25% PER ANNUM of the maximum amount available
at any time to be drawn under such Letter of Credit issued by such Issuing Bank,
payable in arrears on and through the last day of each fiscal quarter of the
-18-
Borrower and calculated on the basis of a 365day year and the actual number of
days elapsed and (ii) with respect to any Commercial Letter of Credit, on the
issuance date thereof, the greater of (A) 0.25% PER ANNUM of the minimum amount
available to be drawn under such Letter of Credit or (B) $250.
Amounts payable under clauses (1)(i) and (2) of this Section 1.10(f)
shall be paid to the Agent on behalf of the Banks. The Agent shall distribute
promptly to each Bank its PRO RATA share of such amount. Amounts payable under
clauses (1)(ii) and (3) of this Section 1.10(f) shall be paid directly to the
Issuing Bank.
(g) OBLIGATIONS ABSOLUTE. The obligation of the Borrower to reimburse
each Issuing Bank for drawings made under the Letters of Credit issued by it and
the obligations of the Banks under Section 1.10(e) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
(2) the existence of any claim, setoff, defense or other right that
the Borrower or any Affiliate of the Borrower or any other Person may have
at any time against a beneficiary or any transferee of any Letter of Credit
(or any persons or entities for whom any such beneficiary or transferee may
be acting), such Issuing Bank, any Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction;
(3) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) payment by such Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document that does
not comply with the terms of such Letter of Credit;
(5) any other circumstance or happening whatsoever that is similar to
any of the foregoing; or
-19-
(6) the fact that a Default or Event of Default shall have occurred
and be continuing.
(h) ADDITIONAL PAYMENTS. If by reason of (a) any change after the
Effective Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by any Issuing Bank or any Bank with any
direction, request or requirement (whether or not having the force of law)of any
governmental or monetary authority including, without limitation, Regulation D:
(i) such Issuing Bank or any Bank shall be subject to any tax, levy,
charge or withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its obligations
under this Section 1.10, whether directly or by such being imposed on or
suffered by such Issuing Bank or any Bank;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued
by such Issuing Bank or participations therein purchased by any Bank; or
(iii) there shall be imposed on such Issuing Bank or any Bank any
other condition regarding this Section 1.10, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Issuing Bank or any Bank of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
the amount receivable in respect thereof by such Issuing Bank or any Bank, then
and in any such case such Issuing Bank or such Bank shall, as promptly as
practical after the additional cost is incurred or the amount received is
reduced, notify the Borrower and the Borrower shall pay on demand such amounts
as such Issuing Bank or such Bank may specify to be necessary to compensate such
Issuing Bank or such Bank for such additional cost or reduced receipt, together
with interest on such amount from the date demanded until payment in full
thereof at a rate PER ANNUM equal at all times to the rate applicable to Base
Rate Loans then in effect; PROVIDED, HOWEVER, that the failure of any Bank to
timely give such notice shall not affect the obligations of the Borrower to pay
-20-
such amounts. A certificate in reasonable detail as to the amount of such
increased cost or reduced receipt, submitted to the Borrower and the Agent by
that Issuing Bank or any Bank, as the case may be, shall, absent manifest error,
be final, conclusive and binding for all purposes.
(i) INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES. In addition to
amounts payable as elsewhere provided in this Section 1.10, without duplication,
the Borrower hereby agrees to protect, indemnify, pay and save each Issuing Bank
(and if the other Banks have been requested to participate pursuant to Section
1.10(e), the Banks) harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) which such Bank may
incur or be subject to as a consequence, direct or indirect, of (i) the issuance
of the Letters of Credit or (ii) the failure of such Issuing Bank to honor a
drawing under any 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").
As between the Borrower and each Issuing Bank, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by such Issuing Bank at the Borrower's request by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Bank shall not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance of
such Letters of Credit, even if it should in fact prove to be in any or all
respects 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 such 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 any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they are 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
-21-
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of such Issuing Bank, including, without
limitation, any Government Acts. None of the above shall affect, impair, or
prevent the vesting of any of such Issuing Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Bank in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith, shall not put such Issuing Bank
under any resulting liability to the Borrower.
Notwithstanding anything to the contrary contained in this Section
1.10, the Borrower shall have no obligation to indemnify any Issuing Bank in
respect of any liability incurred by such Issuing Bank arising solely out of and
to the extent of the gross negligence or willful misconduct of such Issuing Bank
or out of the wrongful dishonor by such Issuing Bank of a proper demand for
payment under the Letters of Credit issued by it.
1.11. CONVERSIONS; CONTINUATIONS. The Borrower shall have the option
to convert on any Business Day commencing on the earlier of receipt of the
Agent's approval or 30 days after the Closing Date (but in no event later than
completion of the syndication) all or a portion (which portion shall not be less
than the Minimum Borrowing Amount) of the outstanding principal amount of the
Loans owing by the Borrower pursuant to a single Portion of the Loan Facility
into a Borrowing or Borrowings pursuant to such Portion of another Type of Loan,
or to continue all or a portion of such Borrowings as the same Type of Loan;
PROVIDED that (i) except as otherwise provided in Section 1.12(b), LIBOR Loans
may be converted into Base Rate Loans or continued as LIBOR Loans only on the
last day of an Interest Period applicable to such LIBOR Loans, (ii) no such
partial conversion of LIBOR Loans shall reduce the outstanding principal amount
of LIBOR Loans under the Loan Facility (or Portion thereof) made pursuant to a
single Borrowing to less than the Minimum Borrowing Amount, (iii) one Type of
Loan may only be continued as or converted into LIBOR Loans if no Default or
Event of Default is in existence on the date of the conversion or continuation,
(iv) Borrowings resulting from conversions or continuations pursuant to this
-22-
Section 1.11 shall be limited in amount and number as provided in Section 1.02
and (v) all or a portion of the outstanding principal amount of Base Rate Loans
may not be converted into LIBOR Loans if such Base Rate Loans or portions
thereof will mature within 30 days of such proposed conversion. Each such
conversion (or continuation) shall be effected by the Borrower by giving the
Agent at the Agent's Office prior to 10:00 A.M. (New York time) at least three
Business Days' (or one Business Day in the case of a conversion into Base Rate
Loans) prior written notice (or telephonic notice promptly confirmed in writing)
(each a "Notice of Conversion/Continuation") specifying the Loans to be so
converted or continued, the Type of Loans to be converted into or continued and,
if to be converted into or continued as LIBOR Loans, the Interest Period to be
initially applicable thereto. The Agent shall give each Bank notice as promptly
as practicable of any such proposed conversion or continuation affecting any of
its Loans. Notwithstanding the foregoing or the provisions of Section 1.13, if a
Default or Event of Default is in existence on the last day of any Interest
Period in respect of any Borrowing of LIBOR Loans, such Loans may not be
continued as LIBOR Loans but instead shall be automatically converted on the
last day of such Interest Period into Base Rate Loans. If no Notice of
Conversion/Continuation has been duly delivered with respect to a LIBOR Loan on
or before the third Business Day prior to the last day of the Interest Period
applicable thereto, such LIBOR Loan shall be automatically converted into a Base
Rate Loan.
1.12. SPECIAL PROVISIONS GOVERNING LIBOR LOANS. Notwithstanding any
other provisions of this Agreement, the following provisions shall govern with
respect to LIBOR Loans as to the matters covered:
(a) On an Interest Rate Determination Date, the Agent shall determine
(which determination shall, absent demonstrable error, be final, conclusive
and binding upon all parties hereto) the interest rate which shall apply to
the LIBOR Loans for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the Borrower thereof and
to each Bank.
(b) In the event that (x) in the case of clause (i) below, the Agent
or (y) in the case of clause (ii) or (iii) below, any Bank shall have
-23-
determined (which determination shall, absent demonstrable error, be final,
conclusive and binding upon all parties hereto):
(i) on any date for determining the LIBOR Rate for any Interest
Period that, by reason of any changes arising on or after the
Effective Date affecting the interbank LIBOR market, adequate and fair
means do not exist for ascertaining the applicable interest rate on
the basis provided for in the definition of LIBOR Rate;
(ii) at any time that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any LIBOR Loans or its obligation to make LIBOR Loans
because of (x) any change since the Effective Date (including changes
proposed or published prior to the Effective Date) in any applicable
law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order) (such as, for example, but not limited to, a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the LIBOR Rate), including a change in the basis of
taxation of payments to any Bank of the principal of or interest on
the Loans or any other amounts payable hereunder (except for changes
in the rate of tax on, or determined by reference to, the net income
or profits of such Bank pursuant to the laws of the jurisdiction in
which it is organized or in which its principal office or applicable
lending office is located or any subdivision thereof or therein)
and/or (y) other circumstances affecting such Bank, the interbank
LIBOR market, or the position of such Bank in such market; or
(iii) at any time that the making or continuance of any LIBOR
Loan has become unlawful by compliance by such Bank in good faith with
any law, governmental rule, regulation, guideline or order (or would
conflict with any such governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply
-24-
therewith would not be unlawful), or has become impracticable as a
result of a contingency occurring after the Effective Date which
materially and adversely affects the interbank LIBOR market;
then, and in any such event, the Agent in the case of clause (i) above or such
Bank in the case of clause (ii) or (iii) above shall promptly give notice (by
telephone confirmed in writing) in accordance with Section 1.12(h) hereof to the
Borrower of the Loan affected and, in the case of clause (ii) or (iii) to the
Agent, of such determination (which notice the Agent shall promptly transmit to
each of the other Banks). Thereafter (x) in the case of clause (i) above, LIBOR
Loans shall no longer be available until such time as the Agent notifies the
Borrower and the Banks that the circumstances giving rise to such notice by the
Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion/Continuation given by the Borrower with respect to the borrowing of
or conversion into (or continuation of) LIBOR Loans which have not yet been
incurred shall be deemed rescinded by the Borrower, (y) in the case of clause
(ii) above, the Borrower shall pay to such Bank, within 10 Business Days after a
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its reasonable discretion shall determine) as shall be required to
compensate such Bank for such increased costs or reductions in amounts
receivable hereunder (a written notice pursuant to Section 1.12(h) hereof as to
the additional amounts owed to such Bank, setting forth in reasonable detail the
basis for the calculation thereof, submitted to the Borrower shall, absent
demonstrable error, be final, conclusive and binding upon all parties hereto)
and (z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.12(c) as promptly as possible and, in any event,
within the time period required by law.
(c) At any time that any LIBOR Loan is affected by the circumstances
described in Section 1.12(b)(ii) or (iii), the Borrower may (and in the case of
a LIBOR Loan affected pursuant to Section 1.12(b)(iii) shall) either (i) if a
Notice of Borrowing or Notice of Conversion/Continuation has been given with
respect to the affected LIBOR Loan, cancel said Notice of Borrowing or Notice of
Conversion/Continuation by giving the Agent telephonic notice (confirmed
-25-
promptly in writing) thereof on the same date (if the Borrower has been notified
by not later than 3:00 P.M., New York time, or the next Business Day if
otherwise) that the Borrower was notified by a Bank pursuant to Section
1.12(b)(ii) or (iii), or (ii) if the affected LIBOR Loan is then outstanding,
upon at least three Business Days' notice to the Agent, require the affected
Bank to convert each such LIBOR Loan into a Base Rate Loan, or prepay such LIBOR
Loan; PROVIDED that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.12(c); and
PROVIDED, FURTHER, that the Borrower shall compensate any such affected Banks as
set forth in Section 1.12(f).
(d) Anything herein to the contrary notwithstanding, if on any
Interest Rate Determination Date no LIBOR Rate is available by reason of the
inability of the Agent to determine such interest rate in accordance with the
definition thereof, the Agent shall give the Borrower and each Bank prompt
notice thereof and the Loans requested to be made as LIBOR Loans shall, subject
to the applicable notice requirements, be made as Base Rate Loans.
(e) Each Bank agrees that, as promptly as practicable after it becomes
aware of the occurrence of any event or the existence of a condition that would
cause it to be an affected Bank under Section 1.12(b) (ii) or (iii), it will, to
the extent not inconsistent with such Bank's internal policies or any legal or
regulatory restrictions, use reasonable efforts to make, fund or maintain the
affected LIBOR Loans of such Bank through another lending office of such Bank if
as a result thereof the additional moneys which would otherwise be required to
be paid in respect of such Loans pursuant to Section 1.12(b)(ii) would be
materially reduced or the illegality or other adverse circumstances which would
otherwise require conversion or prepayment of such Loans pursuant to Section
1.12(b)(iii) would cease to exist, and if, as determined by such Bank, in its
reasonable discretion, the making, funding or maintaining of such Loans through
such other lending office would not otherwise materially adversely affect such
Loans or such Bank. The Borrower hereby agrees to pay all reasonable expenses
incurred by any Bank in utilizing another lending office of such Bank pursuant
to this Section 1.12(e).
-26-
(f) The Borrower shall compensate each Bank, within 10 Business Days
after a written request by that Bank (which request shall be accompanied by a
written notice pursuant to Section 1.12(h) setting forth in reasonable detail
the basis for the calculation of such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, such factors as any
interest paid by that Bank to lenders of funds borrowed by it to make or carry
its LIBOR Loans and any loss sustained by that Bank in connection with
reemployment of such funds (based upon the difference between the amount earned
in connection with reemployment of such funds and the amount payable by the
Borrower if such funds had been borrowed or remained outstanding)) which that
Bank may sustain with respect to the Borrower's LIBOR Loans: (i) if for any
reason (other than a default or error by that Bank) a Borrowing of any such
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or a Notice of Conversion/Continuation or in a telephonic request for borrowing
or conversion or continuation, or a successive Interest Period in respect of any
such LIBOR Loan does not commence after notice therefor is given pursuant to
Section 1.11, (ii) if any prepayment or conversion (as required by Sections 3.01
and 3.02, by acceleration or otherwise) of any of such Bank's LIBOR Loans to the
Borrower occurs on a date which is not the last day of the Interest Period
applicable to that Loan, (iii) if any prepayment of any such Bank's LIBOR Loans
to the Borrower is not made on any date specified in a notice of prepayment
given by the Borrower, or (iv) as a consequence of any other failure by the
Borrower to repay such Bank's LIBOR Loans to the Borrower when required by the
terms of this Agreement.
(g) Any Bank claiming any additional amounts payable pursuant to this
Section 1.12 agrees to use reasonable efforts (consistent with such Bank's
internal policies, legal and regulatory restrictions and commercial
considerations) to designate a different lending office if the making of such a
designation would avoid the need for, or reduce the amount of, any such
additional amounts and would not, in the reasonable judgment of such Bank, be in
any way otherwise disadvantageous to such Bank.
(h) Each Bank shall notify the Borrower of any event occurring after
the date hereof entitling such Bank to compensation under the foregoing
paragraphs of this Section 1.12 as promptly as practicable. Each Bank will
-27-
furnish to the Borrower a certificate setting forth in reasonable detail the
basis and amount of each request by such Bank for compensation under this
Section 1.12. Determinations by any Bank for purposes of this Section 1.12,
including of the effect of any regulatory change pursuant to Section 1.12(b)(ii)
on its costs of maintaining Loans or its obligation to make Loans, or on amounts
receivable by it in respect of Loans, and of the amounts required to compensate
such Bank under this Section 1.12, shall be made on a reasonable basis.
1.13. INTEREST PERIODS. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion/Continuation in respect of the making of, or
conversion into or continuation of, a Borrowing of LIBOR Loans, it shall have
the right to elect, by giving the Agent written notice (or telephonic notice
promptly confirmed in writing), the Interest Period applicable to such
Borrowing, which Interest Period shall, at the option of such Borrower, be a
one, two, three or six month period. Notwithstanding anything to the contrary
contained above:
(a) the initial Interest Period for any Borrowing of LIBOR Loans
shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall
commence on the date on which the next preceding Interest Period
expires;
(b) if any Interest Period relating to a Borrowing of LIBOR Loans
begins on a date for which there is no numerically corresponding date
in the calendar month in which such Interest Period ends, such
Interest Period shall end on the last Business Day of such calendar
month;
(c) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED that if any Interest Period in
respect of a LIBOR Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the
next preceding Business Day;
-28-
(d) no Interest Period shall extend beyond, as applicable, the
Final A Term Loan Maturity Date (in the case of A Term Loans), the
Final B Term Loan Maturity Date (in the case of B Term Loans) or the
Final Revolving Loan Maturity Date (in the case of Revolving Loans);
and
(e) no Interest Period with respect to any Borrowing of LIBOR
Loans shall extend beyond any date upon which the Borrower thereof is
required to make a scheduled payment of principal with respect to the
Term Loans or the Acquisition Term Loans if, after giving effect to
the selection of such Interest Period, the aggregate principal amount
of A Term Loans, B Term Loans and Acquisition Term Loans maintained as
LIBOR Loans with Interest Periods ending after such date of scheduled
payment of principal would exceed the amount of A Term Loans, B Term
Loans and Acquisition Term Loans respectively, permitted to be
outstanding after such scheduled payment of principal.
SECTION 2. COMMITMENTS.
2.01. VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in writing)
to the Agent at the Agent's Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate the unutilized portion available to the
Borrower of either or both of (i) the Total Revolving Loan Commitment and (ii)
the Total Acquisition Term Loan Commitments, in each case, in part or in whole;
PROVIDED that (x) any such termination shall permanently reduce the Revolving
Loan Commitment or Acquisition Term Loan Commitment, as applicable, of each of
the Banks on a PRO RATA basis and (y) any partial reduction pursuant to this
Section 2.01 shall, in each case, be in the amount of at least $100,000 and
integral multiples of $100,000 in excess of that amount; PROVIDED, FURTHER, that
(A) the Total Revolving Loan Commitment shall not be reduced to an amount less
than the aggregate Total Utilization of Revolving Loan Commitments and Letters
of Credit Usage then outstanding and (B) the Total Acquisition Term Loan
Commitments shall not be reduced to an amount less than the aggregate
Acquisition Term Loans then outstanding (giving effect to the conversion
described in Section 1.01(d)).
2.02. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC.
(a) The Total Revolving Loan Commitment shall terminate on the
Revolving Loan Commitment Termination Date.
-29-
(b) The Total A Term Loan Commitment shall be reduced (i) on the
Closing Date to the amount of A Term Loans then outstanding and (ii) on the date
on which any payments of principal on the A Term Loans are made (other than
pursuant to Section 3.02(A)(a)) in an aggregate amount equal to such payments.
(c) The Total B Term Loan Commitment shall be reduced (i) on the
Closing Date to the amount of B Term Loans then outstanding and (ii) on the date
on which any payments of principal on the B Term Loans are made (other than
pursuant to Section 3.02(A)(a)) in an aggregate amount equal to such payments.
(d) The Total Acquisition Term Loan Commitments shall terminate on the
earlier of (i) the Acquisition Term Loan Commitment Termination Date and (ii)
the voluntary reduction by the Borrower pursuant to Section 2.01 of the
Acquisition Term Loan Commitment to zero and any amounts not borrowed with
respect to the Acquisition Term Loans on or before such date shall cease to be
available.
(e) The Total Acquisition Term Loan Commitments shall be reduced on
the date of each Conversion Event in an aggregate amount equal to the principal
amount of Acquisition Term Loans converted into Term Loans.
(f) The Total Revolving Loan Commitment shall be permanently reduced
in the amount and at the time of any payment on the Loans required to be applied
to the Revolving Loans or Revolving Loan Commitments or to cash collateralize
Letters of Credit pursuant to Section 3.02(B)(a).
(g) Each reduction or termination of the A Term Loan Commitment, the B
Term Loan Commitment, the Acquisition Term Loan Commitment or the Total
Revolving Loan Commitment pursuant to this Section 2.02 shall apply
proportionately to the A Term Loan Commitment, the B Term Loan Commitment, the
Acquisition Term Loan Commitment or the Revolving Loan Commitment, as the case
may be, of each Bank.
2.03. COMMITMENT COMMISSION. The Borrower agrees to pay the Agent a
commitment commission ("Commitment Commission") for the account of each Bank for
the period from and including the Effective Time to but not including the later
of the dates on which the Total Revolving Loan Commitments and the Total
Acquisition Term Loan Commitments have been terminated, computed at a rate equal
-30-
to 1/2% PER ANNUM on the daily average Unutilized Commitment of such Bank.
Accrued Commitment Commission shall be due and payable in arrears on the last
Business Day of each December, March, June and September commencing March 1998
and on each of (i) the Revolving Loan Commitment Termination Date, (ii) the
Acquisition Term Loan Commitment Termination Date and (iii) the date on which
both the Total Revolving Loan Commitments and the Total Acquisition Term Loan
Commitments have been terminated pursuant to the terms of this Agreement, in
each case, based on the actual number of days elapsed over a year of 360 days.
SECTION 3. PAYMENTS.
3.01. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Term Loans, Acquisition Term Loans, and Revolving Loans incurred by it in
whole or in part from time to time, without premium or penalty (except for LIBOR
Loans breakage costs, if any) on the following terms and conditions: (i) the
Borrower shall give the Agent at the Agent's Office written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay the
Loans and the amount of such prepayment and, in the case of LIBOR Loans, the
specific Borrowing or Borrowings pursuant to which they were made, which notice
shall be given by the Borrower at least one Business Day prior to the date of
such prepayment and which notice shall promptly be transmitted by the Agent to
each of the Banks; (ii) each partial prepayment of any Borrowing shall be in an
aggregate principal amount of at least $100,000 and integral multiples of
$100,000 in excess of that amount; PROVIDED that no partial prepayment of LIBOR
Loans made pursuant to a single Borrowing under the Loan Facility (or Portion
thereof) shall reduce the outstanding Loans made pursuant to such Borrowing to
an amount less than the Minimum Borrowing Amount; (iii) LIBOR Loans may only be
prepaid pursuant to this Section 3.01 on the last day of an Interest Period
applicable thereto; and (iv) each prepayment in respect of any Term Loans made
pursuant to a Borrowing shall be applied PRO RATA to the A Term Loans and B Term
Loans. Voluntary prepayments of Loans under the A Term Portion of the Loan
Facility shall be applied without penalty or premium except for LIBOR breakage
costs, if any, to the prepayment of the outstanding principal amount of A Term
Loans PRO RATA to all remaining Scheduled A Term Loans Principal Payments such
that each Scheduled A Term Loans Principal Payment then remaining shall be
reduced by an amount equal to the product of (A) such payment and (B) a fraction
of which the numerator is equal to the amount of such Scheduled A Term Loans
Principal Payment then remaining and the denominator is equal to the amount of
all Scheduled A Term Loans Principal Payments remaining. Voluntary prepayments
of Loans under the B Term Portion of the Loan Facility shall be applied without
penalty or premium except for LIBOR breakage costs, if any, to the prepayment of
the outstanding principal amount of B Term Loans PRO RATA to all remaining
-31-
Scheduled B Term Loans Principal Payments such that each Scheduled B Term Loans
Principal Payment then remaining shall be reduced by an amount equal to the
product of (A) such payment and (B) a fraction of which the numerator is equal
to the amount of such Scheduled B Term Loans Principal Payment then remaining
and the denominator is equal to the amount of all Scheduled B Term Loans
Principal Payments remaining.
3.02. MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) The Borrower shall prepay the outstanding principal amount of
the A Term Loans, the B Term Loans or the Revolving Loans on any date
on which the aggregate outstanding principal amount of such Loans
(after giving effect to any other repayments or prepayments on such
day and together with the outstanding principal amount of Letters of
Credit Usage) exceeds the Total A Term Loan Commitment, the Total B
Term Loan Commitment, the Total Acquisition Term Loan Commitments or
the Total Revolving Loan Commitment, as the case may be, in the amount
of such excess.
(b) If the aggregate principal amount of outstanding Revolving
Loans and Letters of Credit Usage exceeds the Borrowing Base as set
forth in the most recent Borrowing Base Certificate required to be
delivered pursuant to Section 6.01 of this Agreement, then the
Borrower shall prepay Revolving Loans in a principal amount equal to
such excess no later than two (2) Business Days after the Borrower has
delivered, or was required to deliver, such Borrowing Base Certificate
to the Agent and the Banks.
(c) The Borrower shall cause to be paid Scheduled A Term Loans
Principal Payments on the A Term Loans until the A Term Loans are paid
in full in the amounts and at the times specified in the definition of
Scheduled A Term Loans Principal Payments to the extent that
prepayments have not previously been applied to such Scheduled A Term
Loans Principal Payments (and such Scheduled A Term Loans Principal
Payments have not otherwise been reduced) pursuant to the terms
hereof.
(d) The Borrower shall cause to be paid each Scheduled B Term
Loans Principal Payment on the B Term Loans until all B Term Loans are
paid in full in the amounts and at the times specified in the
definition of Scheduled B Term Loans Principal Payments to the extent
that prepayments have not previously been applied to such Schedule B
Terms Loans Principal Payments (and such Scheduled B Term Loans
Principal Payments have not otherwise been reduced) pursuant to the
terms hereof.
-32-
(e) After the Closing Date, on the date of receipt thereof by the
Borrower and/or any of its Subsidiaries of Net Cash Proceeds or Net
Financing Proceeds (other than Indebtedness permitted by Section
7.04), an amount equal to 100% of such Net Cash Proceeds (PROVIDED,
HOWEVER, that this Section 3.02(A)(e) shall not apply if such Net Cash
Proceeds aggregate less than $300,000) or Net Financing Proceeds shall
be applied as provided in Section 3.02(B).
(f) On the date which is 90 days after the last day of each
fiscal year of the Borrower, commencing with December 31, 1997, an
amount equal to 75% of the Borrower's Excess Cash Flow for such fiscal
year shall be applied as provided in Section 3.02(B).
(g) On the date of the receipt thereof by the Borrower and/or any
of its Subsidiaries, an amount equal to 75% of the cash proceeds
received by such Person (net of underwriting discounts and commissions
and other reasonably incurred costs and expenses directly associated
therewith) of the sale after the Closing Date of equity (other than
upon the exercise of warrants or the exercise of stock options by
employees or directors of the Borrower) (PROVIDED, HOWEVER, that if
the remaining 25% of the net proceeds received (the "Remaining
Amount") is not used within 12 months of the receipt thereof to
finance Acquisitions, the Remaining Amount will be applied as provided
in Section 3.02(B)) shall be applied as provided in Section 3.02(B).
(h) At the Agent's discretion, one Business Day after the date of
receipt thereof by the Borrower and/or any of its Subsidiaries, an
amount equal to 100% of any insurance proceeds (less reasonably
incurred costs to recover) received less any portion of such proceeds
not in excess of $300,000, so long as there exists no Event of
Default, that is promptly applied to repair or replace the damaged
property shall be applied as provided in Section 3.02(B).
(i) If any of the Mortgaged Real Property is the subject of a
Taking or Destruction and either the Borrower or its applicable
Subsidiary has elected not to effect a Restoration or neither the
Collateral Agent nor the Borrower or its applicable Subsidiary, as the
case may be, has elected to effect a Restoration, in each case, in
accordance with the provisions of the applicable Mortgage, then on the
-33-
first Business Day following the last day the Borrower or its
applicable Subsidiary can elect to effect a Restoration (in the event
that the Borrower or its applicable Subsidiary has the right to make
such an election) or, in the event that the Borrower or its applicable
Subsidiary does not have the right to make an election to effect a
Restoration, the day the Collateral Agent has notified the Borrower or
its applicable Subsidiary that a Restoration will not be required in
the case of any of the Mortgaged Real Property being the subject of a
Taking or Destruction, an amount equal to the applicable Net Award or
Net Proceeds, as the case may be, as a result of such Taking or
Destruction, shall be applied as provided in Section 3.02(B).
(j) One Business Day after the receipt thereof by the Borrower
and/or any of its Subsidiaries, an amount equal to 100% of (i) any
surplus assets of any Pension Plan returned to the Borrower or such
Subsidiary or (ii) any tax refund made to the Borrower or such
Subsidiary (PROVIDED, HOWEVER, that this clause 3.02(A)(j)(ii) shall
only apply for tax refunds in excess of $300,000) shall be applied as
provided in Section 3.02(B).
(B) APPLICATION:
(a) Prepayments to be applied pursuant to this Section 3.02(B)(a)
shall be applied, without penalty or premium except for LIBOR breakage
costs, if any, as follows: (i) first, on a PRO RATA basis between the
A Term Loans and the B Term Loans in each case, in inverse order of
maturity with respect to the remaining Scheduled A Term Loans
Principal Payments and the remaining Scheduled B Term Loans Principal
Payments; (ii) second, to prepay Revolving Loans and to permanently
reduce the Revolving Loan Commitment in the amount prepaid; (iii)
third, to cash collateralize Letters of Credit in a manner reasonably
satisfactory to the Agent; and (iv) fourth, the Acquisition Term Loan
Commitment, if any, and, thereafter, the Revolving Loan Commitment
will be permanently reduced in an amount equal to the amount otherwise
required to be prepaid. Amounts applied pursuant to this Section
3.02(B) may not be reborrowed.
(b) With respect to each prepayment of Loans required by Section
3.02(A), the Borrower shall give the Agent two Business Days notice
-34-
and may designate the specific Borrowing or Borrowings which are to be
prepaid; PROVIDED that (i)(x) LIBOR Loans may be designated for
prepayment pursuant to this Section 3.02 only on the last day of an
Interest Period applicable thereto unless all LIBOR Loans with
Interest Periods ending on such date of required prepayment and all
Base Rate Loans have been or are concurrently being paid in full and
(y) if any prepayment of LIBOR Loans made pursuant to a single
Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than $100,000, such Borrowing shall
immediately be converted into Base Rate Loans; and (ii) each
prepayment of any Loans made pursuant to a single Borrowing shall be
applied PRO RATA among such Loans. In the absence of a designation by
the Borrower, the Agent shall, subject to the above, make such
designation in its sole discretion. All prepayments shall include
payment of accrued interest on the principal amount so prepaid, shall
be applied to the payment of interest before application to principal
and shall include amounts payable, if any, under Section 1.12(f).
3.03. METHOD AND PLACE OF PAYMENT. (a) Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Agent, for the ratable account of the Banks entitled thereto, not later than
1:00 P.M. (New York time) on the date when due and shall be made in immediately
available funds in lawful money of the United States of America to the account
specified therefor by the Agent or if no account has been so specified at the
Agent's Office, it being understood that written notice by the Borrower to the
Agent to make a payment from the funds in the Borrower's account at the Agent's
Office shall constitute the making of such payment to the extent of such funds
held in such account. The Agent will thereafter cause to be distributed on the
same day (if payment is actually received by the Agent in New York prior to 1:00
P.M. (New York time) on such day) funds relating to the payment of principal or
interest or fees ratably to the Banks entitled to receive any such payment in
accordance with the terms of this Agreement. If and to the extent that any such
distribution shall not be so made by the Agent in full on the same day (if
payment is actually received by the Agent prior to 1:00 P.M. (New York time) on
such day), the Agent shall pay to each Bank its ratable amount thereof and each
such Bank shall be entitled to receive from the Agent, upon demand, interest on
such amount at the Federal Funds Rate for each day from the date such amount is
paid to the Agent until the date the Agent pays such amount to such Bank.
-35-
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 P.M. (New York time) shall be deemed to have been made on the
next succeeding Business Day. Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
3.04. NET PAYMENTS. All payments by the Borrower under this Agreement
and/or under any Credit Document shall be made without setoff or counterclaim
and in such amounts as may be necessary in order that all such payments (after
deduction or withholding for or on account of any present or future taxes,
levies, imposts, duties or other charges of whatsoever nature imposed by any
Governmental Authority, other than any tax on or measured by the net income of a
Bank pursuant to the income tax laws of the jurisdictions where such Bank's
principal or lending office is located (collectively, "Taxes")) shall not be
less than the amounts otherwise specified to be paid under this Agreement and/or
under any Credit Document. If the Borrower is required by law to make any
deduction or withholding on account of Taxes from any payment due hereunder or
under the Notes, then (a) the Borrower shall timely remit such Taxes to the
Governmental Authority imposing the same and (b) the amount payable hereunder or
under the Notes will be increased to such amount which, after deduction from
such increased amount of all amounts required to be deducted or withheld
therefrom, will not be less than the amount otherwise due and payable. Without
prejudice to the foregoing, if any Bank or the Agent is required to make any
payment on account of Taxes, the Borrower will, upon notification by the Bank or
the Agent promptly indemnify such person against such Taxes, together with any
interest, penalties and expenses payable or incurred in connection therewith.
The Borrower shall also reimburse each Bank, upon the written request of such
Bank, for taxes imposed on or measured by the net income of such Bank pursuant
to the laws of the jurisdiction in which the principal office or lending office
of such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction as such Bank shall determine are payable by
such Bank in respect of Taxes paid to or on behalf of such Bank pursuant to this
Section 3.04. For purposes of this Section, the term "Taxes" includes interest,
penalties and expenses payable or incurred in connection therewith. A
-36-
certificate as to any additional amounts payable to a Bank under this Section
3.04 submitted to the Borrower by such Bank shall, absent manifest error, be
final, conclusive and binding for all purposes upon all parties hereto. With
respect to each deduction or withholding for or on account of any Taxes, the
Borrower shall promptly furnish to each Bank such certificates, receipts and
other documents as may be required (in the judgment of such Bank) to establish
any tax credit to which such Bank may be entitled.
SECTION 4. CONDITIONS PRECEDENT.
4.01. CONDITIONS PRECEDENT TO INITIAL LOANS. The obligations of the
Banks to make the Initial Loans to the Borrower hereunder are subject, at the
time of the making of each such Initial Loan (except as otherwise hereinafter
indicated), to the substantially contemporaneous satisfaction of the following
conditions:
(a) OFFICERS' CERTIFICATE. On the Closing Date, the Agent shall
have received certificates dated such date signed by appropriate
officers of each of the Credit Parties, in the form of Exhibit O
hereto, stating that all of the applicable conditions set forth in
Sections 4.01, 4.02, 4.03 and, if applicable, 4.04 (in each case
disregarding any reference therein that such condition be deemed
satisfactory by the Agent and/or the Required Banks) have been
satisfied or waived as of such date.
(b) OPINIONS OF COUNSEL. On the Closing Date, the Agent shall
have received an opinion or opinions addressed to each of the Banks
and dated the Closing Date, each in form and substance satisfactory to
the Agent, from (i) X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx &
Xxxxxxxx, P.A., counsel to each Credit Party, which opinion shall be
in the form of EXHIBIT C1 hereto, and (ii) local counsel to the
Borrower in certain jurisdictions in which Collateral is located,
which opinions shall be in the form of EXHIBIT C2 hereto.
(c) CORPORATE PROCEEDINGS. All corporate and legal proceedings
and all instruments and agreements in connection with the transactions
contemplated by the Documents shall be satisfactory in form and
substance to the Agent, and the Agent shall have received all
information and copies of all certificates, documents and papers,
-37-
including records of corporate proceedings and governmental approvals,
if any, which the Agent reasonably may have requested from any Credit
Party or any Affiliate of either thereof in connection therewith, such
documents and papers where appropriate to be certified by proper
corporate or governmental authorities. Without limiting the foregoing,
the Agent shall have received (i) evidence satisfactory to them that
the Boards of Directors or Board of Managers, as the case may be, of
each Credit Party and any Affiliate thereof, shall have approved the
transactions contemplated by the Documents, (ii) resolutions of the
Boards of Directors or Board of Managers, as the case may be, of each
Credit Party, and any Affiliate thereof approving and authorizing such
documents and actions as are contemplated hereby in form and substance
reasonably satisfactory to the Agent including without limitation the
execution and delivery of all Documents to be executed by such Person,
certified by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment, and
(iii) signature and incumbency certificates of officers of each Credit
Party and any Affiliate thereof executing instruments, documents or
agreements required to be executed in connection with the transactions
contemplated by the Documents.
(d) TRANSACTION DOCUMENTS; TRANSACTION.
(i) Full, complete and accurate copies of the Transaction
Documents shall have been provided to the Agent. The Transaction
Documents and any amendments thereto shall be in form and
substance satisfactory to the Agent, and each of the Transaction
Documents required to be executed and delivered on or prior to
the Closing Date shall have been duly authorized, executed and
delivered by each of the parties thereto and shall be in full
force and effect. No term or provision of the Transaction
Documents shall have been modified, and no condition to the
consummation of the Transaction shall have been waived, in either
case in a manner detrimental to any Credit Party, by any of the
parties thereto. Each Credit Party and any of their Affiliates
shall have in all material respects done and performed such acts
and observed such covenants which each is required to do or
perform under the Transaction Documents and in order to
consummate the Transaction on or prior to the Effective Date.
-38-
(ii) Each Credit Party shall have provided evidence
satisfactory in form and substance to the Agent that the
Transaction has been consummated.
(e) ORGANIZATIONAL DOCUMENTATION, ETC.
(i) On or prior to the Closing Date, the Banks shall have
received copies of true and complete certified copies of the following
documents of each Credit Party, the provisions of which shall be
reasonably satisfactory to the Agent:
(A) Each such Person's respective Certificate or
Articles of Incorporation or Certificate of Formation, which
shall be certified and be accompanied by a good standing
certificate, if any, from the jurisdiction of its
organization and good standing certificates, if any, from
the jurisdictions in which it is qualified to do business as
a foreign corporation, each to be dated a recent date prior
to the Closing Date; and
(B) Each such Person's respective Bylaws or Operating
Agreement, certified as of the Closing Date by its corporate
secretary.
(ii) The corporate, management and capital structure of the
Borrower shall be reasonably satisfactory to the Agent in all
respects.
(f) CREDIT DOCUMENTS. Each of this Agreement and each other Credit
Document shall (i) be in form and substance satisfactory to the Agent and
(ii) have been, on or prior to the Closing Date, duly authorized, executed
and delivered by each of the parties signatory thereto.
(g) NOTES. There shall have been delivered to the Agent for the
account of each of the Banks the Term Notes, the Acquisition Term Notes and
the Revolving Notes executed by the Borrower in the amounts and maturities
and as otherwise provided herein.
(h) CERTAIN FEES. All costs, fees and expenses (including, without
limitation, legal fees and expenses) payable to Indosuez by the Borrower
-39-
pursuant to the letter agreements between the Borrower and Indosuez dated
October 23, 1997 shall have been paid in full and the Borrower shall have
paid or have caused to be paid the commitment and other fees and expenses
(including, without limitation, reasonable legal fees and expenses of the
Agent) contemplated hereby and/or in connection with the other Documents.
(i) FINANCIAL STATEMENTS, ETC. Prior to the Closing Date, the Agent
shall have received (i) audited financial statements including a balance
sheet and statements of income and cash flow of Borrower and its
Subsidiaries for the period from the commencement of operations to December
31, 1996 and unaudited financial statements of the Borrower and its
Subsidiaries for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997, (ii) audited financial statements of each of the
Predecessor Companies for the last two full fiscal years preceding December
31, 1996 (one year for Kotchammer Investments, Inc.), (iii) reviewed
financial statements of ABBA for its fiscal years ended September 30, 1994
and 1995 and December 31, 1996 and unaudited financials for the three
months ended March 31, 1997, (iv) audited consolidated balance sheets of
Inverness as of December 31, 1995 and December 31, 1996, and the
consolidated statements of operations, stockholder's equity and cash flows
of Inverness for the years ended December 31, 1994, December 31, 1995 and
December 31, 1996 and unaudited financials for the nine months ended
September 30, 1997 and (v) the estimated PRO FORMA opening balance sheet,
reviewed by a "Big Six" accounting firm, of the Borrower as of September
30, 1997, after giving effect to the Transaction and the Borrowings under
this Agreement. The Borrower shall have delivered to the Agent
consolidating financial projections (including quarterly financial
projections for the fiscal year ended 1998) which give effect to the
Transaction and the Borrowings under this Agreement, accompanied by a
statement by the Borrower that such projections are based on assumptions
believed by it in good faith to be reasonable as to the future financial
performance of the Borrower, reasonably satisfactory to the Agent.
(j) INSURANCE. Set forth on SCHEDULE 6.01(I) is a summary of all
insurance policies maintained by the Credit Parties and their respective
-40-
Subsidiaries, and the insurance coverage provided for the Credit Parties
and their respective Subsidiaries by such insurance policies shall be
reasonably satisfactory to the Agent.
(k) PERFORMANCE BONDS. On the Closing Date, the Agent shall be
reasonably satisfied that the Borrower will be able to service and maintain
any performance bonds that may be required in the ordinary course of
business on reasonable terms and conditions.
(l) INDEBTEDNESS, ETC. On or prior to the Closing Date and except as
set forth on SCHEDULE 5.21(A), the Credit Parties and their respective
Subsidiaries shall have repaid or defeased all existing Indebtedness.
(m) SECURITY DOCUMENTS AND GUARANTEES. The Security Documents and the
Guarantees shall have been duly executed and delivered by the respective
parties thereto and there shall have been delivered to the Collateral Agent
(i) certificates representing all Pledged Securities (if certificated),
together with executed and undated stock powers and/or assignments in
blank, (ii) evidence of the filing of appropriate financing statements or
comparable documents under the provisions of the UCC and applicable
domestic or local laws, rules or regulations in each of the offices where
such filing is necessary or appropriate to grant to the Collateral Agent a
perfected first priority Lien in such Collateral superior to and prior to
the rights of all third persons, other than Prior Liens, and subject to no
other Liens, other than Liens expressly permitted by the applicable
Security Document, (iii) certified copies of Requests for Information (Form
UCC11 or the equivalent) or equivalent reports or lien search reports
listing all effective financing statements or comparable documents which
name any Credit Party or any of its Subsidiaries (prior to and after giving
effect to the Transaction) as debtor and which are filed in those
jurisdictions in which any of the Collateral is located and the
jurisdictions in which any Credit Party or any of its Subsidiaries
maintains its chief executive office, none of which shall encumber the
Collateral covered or intended or purported to be covered by the Security
Documents (other than Prior Liens) and (iv) evidence of the completion of
all recordings and filings of each Security Document and delivery of such
other security and other documents as may be necessary or, in the opinion
of the Collateral Agent, desirable to perfect the Liens created, or
purported or intended to be created, by the Security Documents.
-41-
(n) DUE DILIGENCE. Prior to the Closing Date, the Banks shall have
received an agreed upon procedures report from Xxxxxx Xxxxxxxx LLP in form
and substance satisfactory to the Agent and information sufficient to
reasonably satisfy the Banks as to Inverness's arrangements to source
future production in the Republic of China.
(o) CONSENTS, ETC. All material governmental and third party approvals
and consents (including, without limitation, all material approvals and
consents required in connection with any environmental statutes, rules or
regulations), if any, in connection with the Transaction, the transactions
contemplated by the Credit Documents and the Transaction Documents, and in
either case otherwise referred to herein or therein to be completed on or
before the Closing Date shall have been obtained and remain in effect, and
all applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains, prevents or imposes, in
the judgment of the Agent, materially adverse conditions upon the
consummation of the Transaction. There shall not exist any judgment, order,
injunction or other restraint issued or filed with respect to the making of
the Loans hereunder or the consummation of the Transaction.
(p) ENVIRONMENTAL REVIEW. At or prior to the Effective Date, there
shall have been delivered to the Agent for each of the Banks an Officers'
Certificate of the Borrower in substantially the form of EXHIBIT L hereto,
and the Agent shall be satisfied as to any environmental matters relating
to the properties of any Credit Party.
(q) BORROWING BASE CERTIFICATE. Prior to the initial Revolving Loan,
the Agent and the Banks shall have received and the Agent shall be
satisfied (both as to form and substance) with a Borrowing Base Certificate
which shall be prepared as of a date prior to the Effective Date that is
satisfactory to the Agent, which Borrowing Base Certificate shall indicate
that the Borrowing Base as of November 30, 1997, giving PRO FORMA effect to
the Inverness Acquisition, will exceed the Revolving Loan Borrowing to be
incurred on the Closing Date by at least $7,500,000.
-42-
(r) LEASES. All Capital Leases of the Credit Parties or their
respective Subsidiaries and all Operating Leases of the Credit Parties or
their respective Subsidiaries outstanding immediately prior to the
Transaction shall remain outstanding after giving effect to the
Transaction, on terms satisfactory to the Agent.
(s) SOLVENCY. On the Closing Date, the Banks shall have received an
Officers' Solvency Certificate in the form of EXHIBIT M hereto.
(t) CONDITIONS RELATING TO MORTGAGED REAL PROPERTY AND REAL PROPERTY.
On or prior to the Closing Date, the Borrower shall have caused to be
delivered to the Collateral Agent, on behalf of the Banks, the following
documents and instruments:
(i) Mortgages encumbering each Mortgaged Real Property set forth
on SCHEDULE 4.01(T)(I) in favor of the Collateral Agent, for the
benefit of the Banks, duly executed and acknowledged by the entity
holding title thereto, and otherwise in form for recording in the
recording office where each such Mortgaged Real Property is situated,
together with such certificates, affidavits, questionnaires or returns
as shall be required in connection with the recording or filing
thereof to create a lien under applicable law, and such UCC1 financing
statements and other similar statements as are contemplated by the
counsel opinions described in Section 4.01(b)(ii) in respect of such
Mortgage, all of which shall be in form and substance reasonably
satisfactory to the Collateral Agent, and any other instruments
necessary to grant a mortgage lien under the laws of any applicable
jurisdiction, which Mortgage and financing statements and other
instruments shall when recorded be effective to create a first
priority Lien on such Mortgaged Real Property subject to no Liens
other than Prior Liens;
(ii) with respect to each Mortgaged Real Property, such consents,
approvals, amendments, supplements, estoppels, tenant subordination
agreements or other instruments as necessary or required to consummate
the transactions contemplated hereby or as shall reasonably be deemed
-43-
necessary by the Collateral Agent in order for the owner or holder of
the fee or leasehold interest constituting such Mortgaged Real
Property to grant the Lien contemplated by the Mortgage with respect
to such Mortgaged Real Property;
(iii) with respect to each Mortgage, a policy (or commitment to
issue a policy) of title insurance insuring (or committing to insure)
the Lien of such Mortgage as a valid first mortgage Lien on the real
property and fixtures described therein in an amount not less than
115% of the fair market value thereof, which policies (or commitments)
shall (w) be issued by the Title Company, (x) include such reinsurance
arrangements (with provisions for direct access) as shall be
reasonably acceptable to the Collateral Agent, (y) contain a "tiein"
or "cluster" endorsement (if available under applicable law) (I.E.,
policies which insure against losses regardless of location or
allocated value of the insured property up to a stated maximum
coverage amount) and have been supplemented by such endorsements (or
where such endorsements are not available, opinions of special
counsel, architects or other professionals reasonably acceptable to
the Collateral Agent to the extent that such opinions can be obtained
at a cost which is reasonable with respect to the value of the real
property subject to such Mortgage) as shall be reasonably requested by
the Collateral Agent (including, without limitation, endorsements on
matters relating to usury, first loss, last dollar, zoning,
contiguity, revolving credit, doing business and socalled
comprehensive coverage over covenants and restrictions) and (z)
contain only such exceptions to title as shall be Prior Liens or are
otherwise reasonably agreed to by the Collateral Agent on or prior to
the Closing Date with respect to such Mortgaged Real Property;
(iv) with respect to each Mortgaged Real Property, policies or
certificates of insurance as required by the Mortgage relating
thereto, which policies or certificates shall comply with the
insurance requirements contained in such Mortgage;
(v) with respect to each Mortgaged Real Property, UCC, judgment
and tax lien searches (or foreign jurisdiction equivalents) confirming
that the personal property comprising a part of such Real Property or
Mortgaged Real Property is subject to no Liens other than Prior Liens;
-44-
(vi) with respect to each Mortgaged Real Property, such
affidavits, certificates, information (including financial data) and
instruments of indemnification (including, without limitation, a
socalled "gap" indemnification) as shall be required to induce the
Title Company to issue the policy or policies (or commitment) and
endorsements contemplated in subparagraph (iii) above;
(vii) evidence reasonably acceptable to the Collateral Agent of
payment by the appropriate Credit Party or Subsidiary thereof of all
applicable title insurance premiums, search and examination charges,
survey costs and related charges, mortgage recording taxes, fees,
charges, costs and expenses required for the recording of the
Mortgages and issuance of the title insurance policies referred to in
subparagraph (iii) above;
(viii) with respect to each Real Property or Mortgaged Real
Property, copies of all Leases, leases in which a Credit Party or
Subsidiary thereof holds the tenant's interest or other agreements
relating to possessory interests. To the extent any of the foregoing
affect any Mortgaged Real Property, such agreement shall be
subordinate to the Mortgage to be recorded against such Mortgaged Real
Property and otherwise acceptable to the Collateral Agent; and
(ix) with respect to each Mortgaged Real Property, an Officers'
Certificate or other evidence reasonably satisfactory to the
Collateral Agent that as of the date thereof there (x) has been issued
and is in effect a valid and proper certificate of occupancy or other
local equivalent, if any, for the use then being made of such
Mortgaged Real Property and that there is not outstanding any material
citation, violation or similar notice indicating that such Mortgaged
Real Property contains conditions which are not in compliance with
local codes or ordinances relating to building or fire safety or
-45-
structural soundness, (y) has not occurred any Taking or Destruction
of any Mortgaged Real Property or Real Property and (z) to the
knowledge of such officers, are no disputes regarding boundary lines,
location, encroachment or possession of any Real Property or Mortgaged
Real Property and no state of facts existing which could give rise to
any such claim.
(u) LABOR MATTERS. There shall be no labor disputes, strikes or work
stoppages, pending or threatened, involving any Credit Party or any of
their Subsidiaries that could reasonably be expected to adversely affect
the consummation of the Transaction or that could reasonably be expected to
have a Materially Adverse Effect.
(v) DISCHARGE OF CERTAIN INDEBTEDNESS. Except as set forth on
Schedules 5.21(a)(i) and 5.21(a)(ii), all principal amounts, prepayment
charges, if any, accrued interest, and fees, charges and other obligations
of the Borrower in respect of Existing Debt shall have been paid and
discharged in full, and the Agent shall have received the originals or
copies authenticated to its satisfaction of (i) all promissory notes
outstanding in connection therewith, duly cancelled by the respective
payees thereof, (ii) duly executed discharge letters and receipts
evidencing payment in full of all amounts due thereunder, (iii) duly
executed releases and UCC3 Termination Statements satisfactory in form and
substance to the Agent, effectively releasing and discharging all Liens
incurred in connection with such Existing Debt (including duly cancelled
stock powers), in proper form for filing or recording, as applicable, and
(iv) such other documents as the Agent may reasonably request in order to
evidence the discharge of such Existing Debt and the release of all Liens
in connection therewith.
The acceptance of the proceeds of each Borrowing of Initial Loans
shall constitute a representation and warranty by each Credit Party to each of
the Banks that all of the applicable conditions specified above have been
satisfied or waived as of that time and that, at the time of a Borrowing of such
Initial Loan (or substantially contemporaneous therewith), the conditions
specified in this Section 4.02 have been satisfied or waived. All of the
certificates, legal opinions and other documents and papers referred to in this
Section 4.01, unless otherwise specified, shall be delivered to the Agent at the
-46-
Agent's Office (or such other location as may be specified by the Agent) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be satisfactory in form and substance to the Agent.
4.02. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Banks
to make all Loans, including the Initial Loans, is subject, at the time of each
such Loan, to the satisfaction of the following conditions:
(a) EFFECTIVENESS. This Agreement shall have become effective as
provided in Section 11.10.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the
making of each Loan and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents in effect at
such time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and
as of the date of the making of such Loan, unless such representation and
warranty expressly indicate that it is being made as of any other specific
date in which case on and as of such other date.
(c) ADVERSE CHANGE, ETC. (i) Since December 31, 1996, nothing shall
have occurred or become known which the Required Banks or the Agent shall
have determined has a Materially Adverse Effect; such determination shall
be made both before (only for the Initial Loans) and after giving effect to
the Transaction and the making of the Loans hereunder.
(ii) All material governmental and third party approvals and consents
(including, without limitation, all material approvals and consents
required in connection with any environmental statutes, rules or
regulations), if any, in connection with the conduct of the business of
each Credit Party or its respective Subsidiaries shall have been obtained
and remain in effect.
(iii) There shall not exist any judgment, order, injunction or other
restraint issued or filed with respect to the making of any Loans hereunder
the effect of which judgment, order, injunction or restraint is adverse to
any Bank.
-47-
(d) DOCUMENTATION AND OPINIONS OF COUNSEL. The Agent shall have
received such documentation and opinion or opinions, addressed to each of
the Banks, from counsel to each Credit Party as may be reasonably required,
with reasonable notice under the circumstances, which shall be reasonably
satisfactory to the Agent, from (i) such counsel to each Credit Party and
(ii) appropriate local counsel, which opinions shall cover such matters as
reasonably requested by, and be in form and substance satisfactory to, the
Agent.
(e) MARGIN RULES. On the date of each Borrowing of Loans, neither the
making of any Loan nor the use of the proceeds thereof will violate the
provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(f) BORROWING BASE CERTIFICATE. The Agent shall have received and
shall be reasonably satisfied (both as to form and substance) with the
Borrowing Base Certificate last required to be delivered to the Banks.
(g) REAL PROPERTY DISCLOSURE. Each Credit Party shall have made all
notifications, registrations, and filings in accordance with all State and
Local Disclosure Requirements applicable to the Real Property, including
the use of forms provided by state or local agencies, where such forms
exist, whether to the Borrower or to or with the state or local agency to
the extent failure to make such filings could reasonably be expected to
have a Materially Adverse Effect.
The acceptance of the proceeds of each Borrowing of Loans shall
constitute a representation and warranty by each Credit Party to each of the
Banks that all of the applicable conditions specified in this Section 4.02 have
been satisfied or waived.
All of the certificates, legal opinions and other documents and papers
referred to in this Section 4.02, unless otherwise specified, shall be delivered
to the Agent at the Agent's Office (or such other location as may be specified
by the Agent) for the account of each of the Banks and in sufficient
counterparts for each of the Banks and shall be satisfactory in form and
substance to the Agent.
-48-
4.03. ADDITIONAL CONDITIONS PRECEDENT TO ACQUISITION TERM LOANS. The
obligations of the Banks to make the Acquisition Term Loans (which shall not
include a conversion or continuation of any such Loan), including any
Acquisition Term Loan made on the Closing Date, are subject to the satisfaction
of the following additional conditions:
(a) Each Acquisition Term Loan shall be made solely to effect a
Designated Acquisition;
(b) No later than 20 calendar days prior to the Acquisition Term Loan
Closing Date (except to the extent the Agent agrees to a shorter period),
the Agent shall have received (with sufficient copies for each Bank) each
of the following with respect to the consummation of the Designated
Acquisition to be financed with the proceeds of such Acquisition Term Loan:
(i) reasonable and satisfactory evidence that the Borrower has
completed customary and appropriate due diligence with respect to the
Designated Acquisition, including legal, accounting and operational
reviews;
(ii) a PRO FORMA Borrowing Base Certificate and a PRO FORMA
balance sheet and PRO FORMA consolidated statements of income and cash
flows of the Borrower and its Subsidiaries, after giving effect to the
consummation of the Designated Acquisition, as at the end of the most
recent month;
(iii) a certificate evidencing PRO FORMA covenant compliance
(PROVIDED, HOWEVER, that the Agent shall have the right to review and
approve any adjustments to historical financial statements used in
calculating such compliance), after giving effect to the Designated
Acquisition, as at the end of the most recent month, at levels not to
exceed the ratio set forth opposite such covenant below:
COVENANT RATIO
-------- -----
Senior Leverage Ratio 3.50:1.00
Total Leverage Ratio 4.25:1.00
-49-
(iv) a certificate of the chief executive officer or chief
financial officer of the Borrower with respect to the Designated
Acquisition,
(x) certifying to the preparation of the PRO FORMA financial
statements referenced in subclause (ii) and certifying that, both
before and after giving effect to such Designated Acquisition, no
Default or Event of Default shall exist, and that, on a PRO FORMA
basis, the Borrower and its Subsidiaries (including any direct or
indirect Subsidiary of the Borrower to be acquired in the
contemplated Designated Acquisition) will be in compliance with
the PRO FORMA covenants set forth in Section 4.03(b)(iii), as of
the end of the calendar quarter in which such Designated
Acquisition is to be consummated and setting forth the
calculations required to establish such PRO FORMA compliance; and
(y) certifying that the conditions set forth in each of
Sections 4.02 and 4.03 (other than the completion of filings and
recordings to be performed upon the Acquisition Term Loan Closing
Date) have been satisfied with respect to such proposed
Acquisition Term Loan Borrowing;
(c) On or before the applicable Acquisition Term Loan Closing
Date, the Borrower shall have complied, in all material respects, with
the provisions of Sections 6.15, 6.16 and 6.17 (including, if
reasonably requested by the Agent, an appropriate environmental review
of the Designated Acquisition entity from an environmental assessment
firm of national standing, in a form satisfactory to the Agent) as to
any property acquired or to be acquired in connection with such
Designated Acquisition, except for any such provisions with which
compliance is waived by the Agent in its sole discretion, including,
without limitation, that the Borrower and its Subsidiaries (including
any Subsidiary so acquired) shall execute and deliver to the Agent any
additional Security Documents (or Subsidiary Guarantees) required to
provide the Agent for the benefit of the Banks with a valid, perfected
security interest in any Collateral to be acquired in such Designated
Acquisition;
-50-
(d) There shall be delivered to the Agent (in each case, with
sufficient copies for each Bank) upon consummation of the Designated
Acquisition, a complete set of the documents effecting such
acquisition, together with all schedules and exhibits (including,
without limitation, the acquisition agreement);
(e) Any fees or expenses of the Agent or the Banks which are then
due and payable, whether due in connection with such Acquisition Term
Loan Borrowing or otherwise, shall have been paid in full prior to, or
simultaneously with, the Acquisition Term Loan Closing;
(f) Xxx Xxxxxxx shall remain, after giving effect to the
Designated Acquisition, the Chief Executive Officer of the Borrower
and Xx. Xxxxxxx shall retain at least 66 2/3% of his fully diluted
equity ownership (including shares underlying options) of the Company
as of the Closing Date, PROVIDED, HOWEVER, that this provision shall
in no way be construed to create any personal liability of Xxx
Xxxxxxx; and
(g) The Agent shall be reasonably satisfied with the final terms
and conditions of, and documentation relating to, the Designated
Acquisition (including, without limitation, all representations,
warranties and indemnities contained in such documentation), and the
Agent's continuing satisfaction with the capital, organizational and
management structure of the Borrower and its Subsidiaries (including
the ownership and corporate structure of each Subsidiary).
4.04. CONDITIONS PRECEDENT TO ALL LETTERS OF CREDIT. The right of the
Borrower to obtain the issuance of any Letter of Credit that the relevant
Issuing Bank determines to issue in its reasonable discretion hereunder is
subject to prior or concurrent satisfaction of all of the following conditions:
(A) REQUIRED DOCUMENTATION. On or prior to the date of issuance
of a Letter of Credit, the Agent shall have received, in accordance
with the provisions of Section 1.10(b), a request for issuance with
respect to such Letter of Credit (the furnishing by the Borrower of
each such request for issuance shall be deemed to constitute a
representation and warranty of the Borrower to the effect that the
conditions set forth in Sections 4.01 and 4.02 are satisfied as of the
-51-
date of delivery and will be satisfied on the relevant date of
issuance), all other information specified in Section 1.10(b), and
such other documents as the Issuing Bank may reasonably require in
connection with the issuance of such Letter of Credit.
(B) CONDITIONS. On the date of issuance of each such Letter of
Credit, all conditions precedent described in Sections 4.01 and 4.02
shall be satisfied to the same extent as though the issuance of such
Letter of Credit were the making of a Revolving Loan.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Agent and the Banks to enter into this Agreement and to make the
Loans provided for herein, the Borrower makes the following representations and
warranties to, and agreements with, the Agent and the Banks, all of which shall
survive the execution and delivery of this Agreement and the making of the Loans
(with the execution and delivery of this Agreement and the making of each Loan
thereafter being deemed to constitute a representation and warranty that the
matters specified in this Section 5 are true and correct in all material
respects both before and after giving effect to the Transaction and the related
transactions and as of the date of each such Loan unless such representation and
warranty expressly indicates that it is being made as of any specific date):
5.01. STATUS. Each Credit Party and each of its respective
Subsidiaries (i) is a duly organized and validly existing corporation or limited
liability company in good standing under the laws of the jurisdiction of its
organization; (ii) has the requisite corporate or other organizational power and
authority and has obtained all requisite governmental licenses, authorizations,
consents and approvals to own and operate its property and assets and to
transact the business in which it is engaged and presently proposes to engage,
except for those governmental licenses, authorizations, consents or approvals
the failure of which to be so obtained would not have a Materially Adverse
Effect and (iii) is duly qualified, or as of the Closing Date has taken
appropriate steps to qualify, and is authorized to do business, or as of the
Closing Date has taken appropriate steps to be authorized to do business, and is
in good standing in all jurisdictions where it is required to be so qualified
and where the failure to be so qualified would have a Materially Adverse Effect.
-52-
5.02. CORPORATE POWER AND AUTHORITY; BUSINESS. Each Credit Party and
each of its respective Subsidiaries has the requisite corporate or limited
liability company power and authority to execute, deliver and carry out the
terms and provisions of the Documents to which it is a party and has taken all
necessary corporate or limited liability company action to authorize the
execution, delivery and performance of the Documents to which it is a party.
Each Credit Party and each of its respective Subsidiaries has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Person enforceable
in accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
5.03. NO VIOLATION. Neither the execution, delivery and performance by
any Credit Party or its respective Subsidiaries of this Agreement or the other
Documents to which it is a party nor compliance with the terms and provisions
hereof and thereof, nor the consummation of the transactions contemplated herein
and therein (i) will contravene any applicable provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or (other than pursuant to the Security Documents)
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of any Credit Party or its
respective Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, agreement or other instrument to which any Credit Party or its
respective Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the charter or bylaws or the certificate of formation or operating
agreement, as applicable, of any Credit Party or its respective Subsidiaries,
except, in each case, where such contravention, conflict, inconsistency, breach,
default, creation, imposition, obligation or violation would not have a
Materially Adverse Effect.
5.04. LITIGATION. There are no actions, judgments, suits or
proceedings pending or, to the Borrower's knowledge, threatened with respect to
(i) the transactions contemplated by the Documents and (ii) any Credit Party or
its respective Subsidiaries which could reasonably be expected to have a
Materially Adverse Effect.
-53-
5.05. USE OF PROCEEDS.
(a) The proceeds of all A Term Loans and B Term Loans to be made to
the Borrower hereunder shall be utilized by the Borrower to finance the
Transaction, to repay certain Indebtedness and to pay related fees and expenses,
which such fees and expenses shall not exceed $3,000,000.
(b) The proceeds of all Acquisition Term Loans shall be utilized to
effect acquisitions in accordance with Section 4.03.
(c) The proceeds of the Revolving Loans shall be utilized for working
capital and other general corporate purposes but shall not be used to effect
acquisitions (it being understood that the Borrower may use or issue any of its
Capital Stock as full or partial consideration for any acquisitions otherwise
permitted by this Agreement).
(d) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
5.06. GOVERNMENTAL APPROVALS, ETC. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any third party or any foreign or domestic governmental
or public body or authority, or by any subdivision thereof (other than those
orders, consents, approvals, licenses, authorizations or validations which, if
not obtained or made, would not reasonably be expected to have a Materially
Adverse Effect or which have previously been obtained or made or filings to
perfect security interests granted pursuant to the Security Documents, which
will be accomplished on or prior to the Closing Date (unless otherwise agreed to
by the Agent)), is required to authorize or is required in connection with (i)
the execution, delivery and performance of any Document or the transactions
contemplated therein or (ii) the legality, validity, binding effect or
enforceability of any Document. At the time of the making of the Initial Loans,
there does not exist any judgment, order, injunction or other restraint issued
or filed with respect to the consummation of the Transaction or the making of
Loans or the performance by the Credit Parties or their respective Subsidiaries
of their respective obligations under the Documents.
-54-
5.07. INVESTMENT COMPANY ACT. No Credit Party or any of its respective
Subsidiaries is, or will be after giving effect to the transactions contemplated
hereby, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended,
or subject to any foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed or guarantee such indebtedness
as contemplated hereby or by any other Credit Document.
5.08. PUBLIC UTILITY HOLDING COMPANY ACT. No Credit Party or any of
its respective Subsidiaries is, or will be after giving effect to the
transactions contemplated hereby, a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.09. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the Credit
Parties in writing to any Bank (including, without limitation, all information
contained in the Credit Documents) for purposes of or in connection with this
Agreement or any transaction contemplated herein is (or was, on the date of
making the Initial Loans), and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any such Person in writing to any
Bank will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information not misleading at such time
in light of the circumstances under which such information was provided. The
projections and PRO FORMA financial information contained in such materials are
based on good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by the Banks that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There is no fact known to any officer of any Credit
Party which materially and adversely affects the business, operations, property,
assets, nature of assets, liabilities, condition (financial or otherwise) or
prospects of the Credit Parties, taken as a whole, which has not been disclosed
-55-
herein or in such other documents, certificates and written statements furnished
to the Banks for use in connection with the transactions contemplated hereby.
5.10. TRANSACTION. At the time of making the Initial Loans, all
necessary governmental and thirdparty approvals in connection with the
Transaction have been, or, prior to the time when required, will have been,
obtained and remain in effect, and all applicable waiting periods have, or,
prior to the time when required, will have, expired without, in all such cases,
any action being taken by any competent authority which is reasonably likely to
have a Materially Adverse Effect on the Transaction.
5.11. FINANCIAL CONDITION; FINANCIAL STATEMENTS; PROJECTIONS. (a) No
Credit Party is entering into the arrangements contemplated hereby and by the
other Credit Documents, or intends to make any transfer or incur any obligations
hereunder or thereunder with actual intent to hinder, delay or defraud either
present or future creditors. On and as of the Closing Date, on a PRO FORMA basis
after giving effect to the Transaction and to all Indebtedness incurred and
Liens and Guarantees created, or to be created, by each Credit Party or its
respective Subsidiaries in connection with the Transaction, (w) the Borrower
does not expect that final judgments against any Credit Party or its respective
Subsidiaries in actions for money damages with respect to pending or threatened
litigation will be rendered at a time when, or in an amount such that, such
Credit Party will be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be rendered and the cash available to each Credit Party or its
respective Subsidiaries, after taking into account all other anticipated uses of
the cash of such Credit Party or its respective Subsidiaries (including the
payments on or in respect of debts and insurance proceeds, including their
Contingent Obligations)); (x) no Credit Party or its respective Subsidiaries
will have incurred or intends to, or believes that it will, incur debts beyond
its ability to pay such debts as such debts mature (taking into account the
timing and amounts of cash to be received by such Credit Party or its respective
Subsidiaries from any source, and of amounts to be payable on or in respect of
debts of such Credit Party or its respective Subsidiaries and the amounts
referred to in the preceding clause (w)); (y) each Credit Party or its
respective Subsidiaries, after taking into account all other anticipated uses of
-56-
the cash of such Credit Party or its respective Subsidiaries, anticipates being
able to pay all amounts on or in respect of debts of such Credit Party or its
respective Subsidiaries when such amounts are required to be paid; and (z) each
Credit Party and its respective Subsidiaries will have sufficient capital with
which to conduct its present and presently proposed business and the property of
such Credit Party and its respective Subsidiaries does not constitute
unreasonably small capital with which to conduct its present or proposed
business. For purposes of this Section 5.11, "debt" means any liability on a
claim, and "claim" means a (i) right to payment whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. On the date of each Borrowing and the issuance of each Letter of
Credit (and after giving effect to all Borrowings and Letters of Credit as of
such date), the representations set forth in this Section 5.11(a) shall be true
and correct with respect to the Borrower on such date and any Credit Party which
is a guarantor with respect to any or all of such Borrowings or Letters of
Credit.
(b) The Borrower has heretofore delivered to the Banks the historical
financial statements set forth in Section 4.01(i). The financial statements
referred to in the preceding sentence were prepared in accordance with GAAP
consistently applied and fairly present the financial position and results of
operations of the Borrower for the periods covered thereby.
There has also been delivered the estimated PRO FORMA (after giving
effect to the Transaction) opening balance sheet, reviewed by a "Big Six"
accounting firm, of the Borrower and its Subsidiaries as of September 30, 1997,
which presents a good faith estimate of the consolidated PRO FORMA financial
position of the Borrower and its Subsidiaries for such periods. The assumptions
made in preparing such PRO FORMA balance sheet are reasonable as of the date of
such statements and as of the Closing Date and all material assumptions are set
forth therein. Except as contemplated hereby, since December 31, 1996 (on a PRO
FORMA basis after giving effect to the Transaction) no event or events have
occurred that could reasonably be expected to have a Materially Adverse Effect.
-57-
(c) There have heretofore been delivered to the Banks PRO FORMA
consolidating income projections for the Borrower and its Subsidiaries, PRO
FORMA consolidating balance sheet projections for the Borrower and its
Subsidiaries and PRO FORMA consolidating cash flow projections for the Borrower
and its Subsidiaries, all for the fiscal years ending December 31, 1997 through
December 31, 2004, inclusive (the "Projected Financial Statements"), which give
effect to the Transaction and all Indebtedness and Liens incurred or created in
connection with the Transaction. The assumptions made in preparing the Projected
Financial Statements are reasonable as of the date of such projections and as of
the Closing Date and all material assumptions with respect to the Projected
Financial Statements are set forth therein. The Projected Financial Statements
present a good faith estimate by the Borrower of the consolidated financial
information contained therein at the date thereof.
(d) As of the Closing Date, except as fully reflected or reserved
against in the financial statements and the notes thereto described in Section
5.11(b), to the knowledge of the Borrower there were no liabilities or
obligations with respect to the Borrower or its respective Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would reasonably
be expected to result in a Materially Adverse Effect on the Borrower and its
respective Subsidiaries, taken as a whole. As of the Closing Date, the Borrower
does not know of any basis for the assertion against any Credit Party or its
respective Subsidiaries of any liability or obligation of any nature whatsoever
that is not fully reflected in the financial statements described in Section
5.11(b) or (c), except as incurred by any Credit Party in connection with the
Transaction, which, either individually or in the aggregate, could reasonably be
expected to be material to such Credit Party and its respective Subsidiaries.
5.12. SECURITY INTERESTS. The Security Documents, when filed and/or
recorded, together with delivery to the Collateral Agent of any Collateral in
which a security interest is perfected by possession, will create, in favor of
the Collateral Agent for the benefit of the Banks, as security for the
obligations purported to be secured thereby, a valid and enforceable perfected
first priority security interest in and Lien upon all of the Collateral,
superior to and prior to the rights of all third persons and subject to no other
-58-
Liens except Prior Liens and other Liens expressly permitted by the applicable
Security Documents. The mortgagor under each Mortgage has good title to the
Mortgaged Real Property free and clear of all Liens other than Prior Liens and
other Liens expressly permitted by the applicable Security Documents. The
respective pledgor or assignor, as the case may be, has (or on and after the
time it executes the respective Security Document, will have) good title to all
items of Collateral (other than real property subject to a Mortgage) covered by
such Security Document free and clear of all Liens except Prior Liens and other
Liens expressly permitted by the applicable Security Documents. No filings or
recordings are required in order to perfect the security interests created under
any Security Document except for filings or recordings required in connection
with any such Security Document which shall have been made prior to or
contemporaneously with the execution and delivery thereof (unless otherwise
agreed to by the Agent).
5.13. TAX RETURNS AND PAYMENTS. Each of the Credit Parties and each of
its respective Subsidiaries has filed all tax returns required to be filed by it
and has paid all material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those contested in good
faith and for which adequate reserves have been established. Each of the Credit
Parties and each of its respective Subsidiaries has paid, or has provided
adequate reserves (in accordance with GAAP) for the payment of, all federal,
state, local and foreign income taxes (including, without limitation, franchise
taxes based upon income) applicable for all prior fiscal years and for the
current fiscal year to the date hereof. The Borrower does not know of any
proposed tax assessment against any Credit Party or any of its respective
Subsidiaries that could reasonably be expected to have a Materially Adverse
Effect which is not being actively contested in good faith by such Person to the
extent affected thereby in good faith and by appropriate proceedings; PROVIDED
that such reserves or other appropriate provisions, if any, as shall be required
in conformity with GAAP shall have been made or provided therefor. The PRO FORMA
financial statements delivered pursuant to Section 5.11(b) reflected all taxes
resulting from the transactions contemplated by the Transaction.
5.14. ERISA. (a) Each Credit Party, its respective Subsidiaries and
its respective ERISA Affiliates are in compliance in all material respects with
all applicable provisions of ERISA and the Code and the regulations and
published interpretations thereunder with respect to all employee benefit plans.
-59-
(b) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan which resulted or would result in a
material liability to any Credit Party, its respective Subsidiaries or its
respective ERISA Affiliates.
(c) The sum of the amount of unfunded benefit liabilities (determined
in accordance with Statement of Financial Accounting Standards No. 87) under all
Title IV Plans (excluding each Title IV Plan with an amount of unfunded benefit
liabilities of zero or less) is not more than $100,000. As of the Closing Date,
the sum of the amount of unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) under all Title IV Plans (excluding each Pension
Plan with an amount of unfunded benefit liabilities of zero or less) is not more
than $100,000.
(d) As of the Closing Date, none of the Credit Parties, their
respective Subsidiaries nor their respective ERISA Affiliates has any obligation
to contribute to or any liability or potential liability (including, but not
limited to, actual or potential withdrawal liability) with respect to any
Multiemployer Plan or any employee benefit plan of the type described in
Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code. None of the
Credit Parties, their respective Subsidiaries nor their respective ERISA
Affiliates has incurred or reasonably expects to incur any material withdrawal
liability under Section 4201 ET SEQ. of ERISA to any Multiemployer Plan or any
employee benefit plan of the type described in Sections 4063 and 4064 of ERISA
or in Section 413(c) of the Code.
(e) None of the Credit Parties, their respective Subsidiaries nor
their respective ERISA Affiliates has incurred any accumulated funding
deficiency (whether or not waived) with respect to any Pension Plan.
(f) None of the Credit Parties, their respective Subsidiaries nor
their respective ERISA Affiliates has or reasonably expects to become subject to
a Lien in favor of any Pension Plan under Section 302(f) or 307 of ERISA or
Section 401(a)(29) or 412(n) of the Code.
-60-
(g) Assuming that no portion of the Loans to be advanced hereunder is
attributable, directly or indirectly, to the assets of any employee benefit
plan, the execution, performance and delivery of the Credit Documents by any
party thereto will not constitute any prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code for which an exemption
therefrom is not available.
As used in this Section 5.14, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "employee benefit plan" has the meaning specified in
Section 3(3) of ERISA.
5.15. SUBSIDIARIES. After giving effect to the Transaction, all of the
outstanding units or common stock, as the case may be, of each Credit Party
shall be validly issued, fully paid and nonassessable and shall be owned
beneficially and of record by each Credit Party as set forth as SCHEDULE 5.15
hereto, subject to no Liens other than Liens in favor of the Collateral Agent.
Other than as set forth on SCHEDULE 5.19, after giving effect to the
Transaction, there shall be no preemptive rights on the part of any holder of
any class of securities of any Credit Party or other rights, such as warrants or
options, to acquire any class of securities of any Credit Party.
5.16. PATENTS, ETC. Each Credit Party or its respective Subsidiaries
owns or possesses adequate licenses or other rights to use all material patents,
patent applications, trademark registrations, trademark applications,
servicemark registrations, servicemark applications, trade names, copyright
registrations, trade secrets and know how (collectively, the "Intellectual
Property") that are necessary for the operation of its respective businesses as
presently conducted and as currently proposed to be conducted. No claim is
pending or, to the knowledge of each Credit Party and its respective
Subsidiaries, threatened to the effect that any Credit Party or its respective
Subsidiaries infringes upon or conflicts with the asserted rights of any other
person under any Intellectual Property, and, to the knowledge of each Credit
Party and its respective Subsidiaries, there is no basis for any such claim
(whether or not pending or threatened). No claim is pending or, to the knowledge
of each Credit Party and its respective Subsidiaries, threatened to the effect
that any such Intellectual Property owned or licensed by any Credit Party or its
respective Subsidiaries or which any Credit Party or its respective Subsidiaries
-61-
otherwise has the right to use, is invalid or unenforceable by such Credit Party
or its respective Subsidiaries, and, to the knowledge of each Credit Party and
its respective Subsidiaries, there is no basis for any such claim (whether or
not pending or threatened).
5.17. COMPLIANCE WITH LAWS, ETC. Each Credit Party and its respective
Subsidiaries is in material compliance with all laws and regulations in all
jurisdictions in which it is presently doing business, and each Credit Party and
its respective Subsidiaries will comply with all such laws and regulations which
may be imposed in the future in jurisdictions in which it or such Subsidiary may
then be doing business except to the extent the noncompliance with such laws and
regulations would not reasonably be expected to have a Materially Adverse
Effect. To its knowledge, no Credit Party is currently under investigation for
the violation of any crime the conviction for which would reasonably be expected
to have a Materially Adverse Effect.
5.18. PROPERTIES. Each Credit Party or its respective Subsidiaries has
good and marketable title to and beneficial ownership of all material properties
owned by it, including after the Closing Date all property reflected in the most
recent balance sheet referred to in Section 5.11(b) (except as sold or otherwise
disposed of since the date of such balance sheet in the ordinary course of
business), free and clear of all Liens, other than, in the case of property not
constituting Collateral, Permitted Encumbrances and, in the case of property
constituting Collateral, Prior Liens. Each Credit Party or its respective
Subsidiaries hold all material licenses, certificates of occupancy or operation
and similar certificates and clearances of municipal and other authorities
necessary to own and operate its properties in the manner and for the purposes
currently operated by such party. Each Real Property and each Mortgaged Real
Property is suitable for its intended purposes and is served by such utilities
as are necessary for the operation thereof. There are no actual, threatened or
alleged defaults of a material nature with respect to any Leases of Real
Property under which any Credit Party or any of its respective Subsidiaries is
lessor or lessee.
5.19. SECURITIES. Except as set forth on SCHEDULE 5.19 hereto, there
are not, as of the Effective Date, any existing options, warrants, calls,
subscriptions, convertible or exchangeable securities, rights, agreements,
commitments or arrangements for any Person to acquire any equity security of any
-62-
Credit Party or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any such equity security.
5.20. COLLECTIVE BARGAINING AGREEMENTS. Set forth on SCHEDULE 5.20
hereto is a list and description (including dates of termination) of all
collective bargaining or similar agreements between or applicable to any Credit
Party or its respective Subsidiaries as of the date hereof and any union, labor
organization or other bargaining agent in respect of the employees of any Credit
Party or its respective Subsidiaries on the date indicated in SCHEDULE 5.20
hereto.
5.21. INDEBTEDNESS OUTSTANDING; PRIOR LIENS.
(a) Set forth on SCHEDULE 5.21(A) hereto is a list and description of
(i) all Indebtedness of the Credit Parties and their respective Subsidiaries
(other than the Loans) that shall be outstanding immediately after the Closing
Date and (ii) all Indebtedness of the Credit Parties and their respective
Subsidiaries that was repaid, defeased, transferred or otherwise terminated on
the Closing Date.
(b) SCHEDULE 5.21(B) hereto sets forth a true list of all Liens other
than Permitted Encumbrances on the property of the Credit Parties immediately
following the Closing Date.
5.22. ENVIRONMENTAL PROTECTION. Except as set forth on SCHEDULE 5.22
hereto and except as would not have a Materially Adverse Effect,
(a) Each Credit Party and its respective Subsidiaries has
obtained all permits, licenses and other authorizations which are
required with respect to the operation of the business and assets, and
use, ownership and operation of Real Property of the Borrower and its
Subsidiaries, in each case taken as a whole, under any Environmental
Law and each such authorization is in full force and effect.
(b) Each Credit Party and its respective Subsidiaries are in
compliance with all terms and conditions of the permits, licenses and
authorizations specified in subsection 5.22(a) above, and are also in
compliance with, and not currently liable under, any Environmental
Laws applicable to it and its business, assets, operations and Real
Property.
-63-
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for information pending
or, to the knowledge of any Credit Party or any of its respective
Subsidiaries, threatened against any Credit Party or any of its
respective Subsidiaries under any Environmental Law.
(d) None of the Credit Parties nor any of its respective
Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (CERCLA),
or any comparable state law nor has any Credit Party or any of its
respective Subsidiaries received any notification that any Hazardous
Materials that it, or any of its Subsidiaries, or any of their
respective predecessors in interest has used, generated, stored,
treated, handled, transported or disposed of, or arranged for disposal
or treatment of, or arranged with a transporter for transport for
disposal or treatment of, have been found at any site at which any
governmental agency or private party is conducting or plans to conduct
a remedial investigation or other action pursuant to any Environmental
Law.
(e) There have been no releases (I.E., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of
Hazardous Materials by any Credit Party or any of its respective
Subsidiaries or, to the knowledge of the Credit Party after due
inquiry, their respective predecessors in interest on, at, upon, into
or from any of the Real Properties. To the knowledge of any Credit
Party and each of its respective Subsidiaries after due inquiry there
have been no such releases on, at, upon, under, from or into any real
property in the vicinity of any of the Real Properties that, through
soil, air, surface water or groundwater migration or contamination,
may have migrated to or under such Real Properties.
(f) No asbestos is present in, on, or at any Real Properties or
any facility or equipment of any Credit Party or any of its respective
Subsidiaries.
(g) No Real Properties of any Credit Party or any of its
respective Subsidiaries or any of their respective predecessors in
interest are (i) listed or formally proposed for listing on the
-64-
National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA or (iii)
included on any comparable lists maintained by any governmental
authority.
(h) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans
which could reasonably be expected to interfere with or prevent
compliance with any Environmental Law, or which could reasonably be
expected to give rise to any liability under any Environmental Law,
including, without limitation, liability under CERCLA or similar
state, local or foreign laws, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing or notice of
violation, notice of potential liability or investigation, based on or
related to the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport, shipping or handling, or the
emission, discharge, release or threatened release into the
environment, of any Hazardous Materials.
(i) No Lien has been recorded under any Environmental Law with
respect to any assets, facility, inventory or Real Property owned,
operated, leased or controlled by any Credit Party or any of its
respective Subsidiaries.
5.23. ENVIRONMENTAL INVESTIGATIONS. All environmental investigations,
studies, audits, assessments or reviews conducted of which any Credit Party has
knowledge in relation to the current or prior business or assets of any Credit
Party or any of its respective Subsidiaries or any Real Property, assets or
facility now or previously owned, operated, leased, used or controlled by any
Credit Party or any of its respective Subsidiaries have been delivered to the
Agent.
SECTION 6. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Effective Date and thereafter for so long as this Agreement is in
effect and until the Commitments have terminated and the Loans together with
interest and fees are paid in full and all other Obligations incurred hereunder,
to the extent then due and payable, are paid in full:
-65-
6.01. INFORMATION COVENANTS. The Borrower will furnish or cause to be
furnished to each Bank:
(a) As soon as available and in any event within 90 days after
the close of each fiscal year of the Borrower, the consolidating and
consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of such fiscal year and the related consolidating and
consolidated statements of income, of stockholders' equity and of cash
flows for such fiscal year, setting forth comparative consolidating
and consolidated figures for the preceding fiscal year and a report on
such consolidated balance sheets and financial statements by
independent certified public accountants of recognized national
standing, which report shall not be qualified as to the scope of audit
or as to the status of the Borrower and its Subsidiaries as a going
concern and shall state that such consolidated financial statements
present fairly the consolidated financial position of the Borrower and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except for such changes with which the independent certified public
accountants concur) and the examination by such accountants was
conducted in accordance with generally accepted auditing standards.
(b) As soon as practicable and in any event within 30 days after
the end of the each month ending after the Closing Date, (i) the
consolidating and consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such period and (ii) the related
statements of income and cash flows of the Borrower and its
Subsidiaries, in each case for such fiscal month and for the period
from the beginning of the then current fiscal year to the end of such
fiscal month, setting forth in comparative form the corresponding
periods of the prior fiscal year, the corresponding periods of the
current fiscal year's budget and a Management's Discussion and
Analysis for such financial statements covering the month then ended
and the year to date.
(c) Together with each delivery of financial statements of the
Borrower and its Subsidiaries pursuant to subsection (a) above, a
written statement by the independent public accountants giving the
report thereon (i) stating that their audit examination has included a
review of the terms of Sections 6, 7, 8 and 9 of this Agreement as
-66-
they relate to accounting matters but without having conducted any
special auditing procedures in connection therewith, (ii) stating
whether, in connection with their audit examination, any condition or
event which constitutes a Default or Event of Default has come to
their attention, and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof;
PROVIDED that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default
that would not be disclosed in the course of their audit examination,
and (iii) stating that based on their audit examination nothing has
come to their attention which causes them to believe that as of the
end of such fiscal year of the Borrower there existed a Default or an
Event of Default related to the breach of any covenant set forth in
Section 6 or 7 as they relate to accounting matters and if such a
condition or event has come to their attention, specifying the nature
and period of existence thereof and what action the Borrower has
taken, is taking and propose to take with respect thereto.
(d) At the time of the delivery of the financial statements
provided for in Sections 6.01(a) and (b), a certificate of the chief
financial officer, controller, chief accounting officer or other
Authorized Officer of the Borrower to the effect that no Default or
Event of Default exists, or, if any Default or Event of Default does
exist, specifying the nature and extent thereof and what actions have
been or will be taken in respect thereof, which certificate shall be
accompanied on a quarterly basis by a Compliance Certificate in a form
reasonably acceptable to the Agent setting forth the calculations
required to establish whether the Borrower was in compliance with the
covenants in this Agreement (including without limitation the
covenants set forth in Sections 7.05 and 7.10 through 7.13 inclusive)
as at the end of such fiscal period or year, as the case may be.
(e) Promptly upon receipt thereof, a copy, if any, of each annual
"management letter" submitted to the Borrower by its independent
accountants in connection with any annual audit made by them of the
books of the Borrower or any of its Subsidiaries.
(f) Promptly upon their becoming available, copies of all
consolidating and consolidated financial statements, reports, notices
and proxy statements sent or made available generally by the Borrower
-67-
or any Subsidiary of the Borrower to its security holders in their
capacity as such (other than to the Borrower or another Subsidiary) of
all regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Borrower or any of its Subsidiaries
with any securities exchange or with the SEC (including reports filed
on Forms 10Q and 10K) and of all press releases and other statements
made available generally by the Borrower or any Subsidiary of the
Borrower to the public concerning material developments in the
business of the Borrower and its Subsidiaries.
(g) Promptly upon any officer of the Borrower obtaining knowledge
(w) of any condition or event which constitutes a Default or Event of
Default, or becoming aware that any Bank has given any notice or taken
any other action with respect to a claimed Default or Event of Default
under this Agreement, (x) that any Person has given any notice to the
Borrower or taken any other action with respect to a claimed default
or event or condition of the type referred to in Section 8.04, or (y)
of a material adverse change in the business, operations, properties,
assets, nature of assets, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries, taken as a whole, an
Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action
taken by such holder or Person and the nature of such claimed Default,
Event of Default, event or condition, or material adverse change, and
what action the Borrower has taken, is taking and propose to take with
respect thereto.
(h) (w) Promptly upon any officer of the Borrower obtaining
knowledge of the institution of, or written threat of, any action,
suit, proceeding, governmental investigation or arbitration against or
affecting any Credit Party or its respective Subsidiaries or any
property of any Credit Party or its respective Subsidiaries not
previously disclosed to the Banks, which action, suit, proceeding,
governmental investigation or arbitration seeks (or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or
circumstances which seek) recovery from any Credit Party or its
-68-
respective Subsidiaries aggregating $500,000 or more (exclusive of
claims covered by insurance policies unless the insurers of such
claims have disclaimed coverage or reserved the right to disclaim
coverage on such claims), the Borrower shall give notice thereof to
the Banks and provide such other information as may be reasonably
available to enable the Banks and their counsel to evaluate such
matters; (x) as soon as practicable and in any event within 45 days
after the end of each fiscal quarter, the Borrower shall provide a
quarterly report to the Banks covering the institution of, or written
threat of, any action, suit, proceeding, governmental investigation or
arbitration (not previously reported) against or affecting any Credit
Party or its respective Subsidiaries or any property of any Credit
Party or its respective Subsidiaries not previously disclosed to the
Banks, which action, suit, proceedings, governmental investigation or
arbitration seeks (or in the case of multiple actions, suits,
proceedings, governmental investigations or arbitrations arising out
of the same general allegations or circumstances which seek) recovery
from any Credit Party or its respective Subsidiaries aggregating
$1,000,000 or more (exclusive of claims covered by insurance policies
unless the insurers of such claims have disclaimed coverage or
reserved the right to disclaim coverage on such claims), and shall
provide such other information at such time as may be reasonably
available to enable the Banks and their counsel to evaluate such
matters; (y) in addition to the requirements set forth in clauses (w)
and (x) of this Section 6.01(h), the Borrower upon request shall
promptly give notice of the status of any action, suit, proceeding,
governmental investigation or arbitration covered by a report
delivered to the Banks pursuant to clause (w) or (x) above to the
Banks and provide such other information as may be reasonably
available to them to enable the Banks and their counsel to evaluate
such matters; and (z) promptly upon any officer of the Borrower
obtaining knowledge of any dispute in respect of or the institution
of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration in respect of any material contract of
any Credit Party or its respective Subsidiaries, the Borrower shall
give notice thereof to the Banks and shall provide such other
information as may be reasonably available to enable the Banks and
their counsel to evaluate such matters.
-69-
(i) Within 15 days of any material changes to the terms of any
insurance policy as in effect on the Effective Date and described on
SCHEDULE 6.01(I) or any cancellation of any such policy without
replacement with a substantially similar policy, a report in form and
substance reasonably satisfactory to Agent outlining such changes or
the terms of the replacement policy, as the case may be.
(j) To the extent reasonably requested by the Agent, as soon as
practicable and in any event within ten days of the later of such
request and the making of any such amendment or waiver, copies of
amendments or waivers with respect to Indebtedness of any Credit Party
or its respective Subsidiaries.
(k) On or prior to January 31, 1998 and each December 31
thereafter, a consolidated plan/budget for each month in the
succeeding fiscal year prepared in accordance with the Borrower's
normal accounting procedures (and which will represent management's
reasonable estimate of the Borrower's projected performance during
such periods) applied on a consistent basis, including, without
limitation, (i) forecasted consolidated balance sheets, consolidated
statements of operations, of stockholders' equity and of cash flows of
the Borrower and its Subsidiaries on a consolidated basis for such
periods, (ii) the amount of forecasted capital expenditures for such
fiscal periods, (iii) forecasted compliance with Sections 7.05 and
7.107.13 and (iv) an appropriate discussion of the principal
assumptions on which such plan/budget is based; PROVIDED that if any
such forecast indicates that the Borrower may not be in compliance
with any provision of this Agreement at some future date, such
forecast shall not constitute a Default or an Event of Default or
anticipatory or other breach thereof. Together with each delivery of
financial statements pursuant to Sections 6.01(a) and (b), a
comparison of the current year to date financial results against the
plan/budget required to be submitted pursuant to this subsection (k)
shall be presented.
(l) Within ten (10) Business Days after the last Business Day of
each month, a borrowing base certificate in the form of EXHIBIT L
hereto (the "Borrowing Base Certificate") detailing the Borrower's
Eligible Accounts Receivable and Eligible Inventory as of the last day
-70-
of such month, certified as complete and correct on behalf of the
Borrower by the chief executive officer, chief financial officer,
controller or other Authorized Officer of the Borrower. In addition,
each Borrowing Base Certificate shall have attached to it such
additional schedules and/or other information as the Agent may
reasonably request. If the Borrower fails to deliver any such
Borrowing Base Certificate within twentyfive (25) days after the end
of any such month, then the Borrowing Base shall be deemed to be $0
until such time as the Borrower shall deliver such required Borrowing
Base Certificate.
(m) With reasonable promptness, such other information and data
with respect to any Credit Party or its respective Subsidiaries or any
other similar entity in which the Borrower has an investment, as from
time to time may be reasonably requested by the Agent.
6.02. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause each of its Subsidiaries to, keep true books of records and accounts in
which full and correct entries will be made of all of its business transactions,
and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Borrower will, and
will cause each of its Subsidiaries to, permit officers and designated
representatives of the Agent or any Bank to visit and inspect any of the
properties or assets of the Borrower or any of its Subsidiaries in whosesoever
possession, and to examine the books of account of the Borrower or any of its
Subsidiaries and discuss the affairs, finances and accounts of the Borrower or
any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants (in the presence of such officers), all at
such reasonable times and intervals and to such reasonable extent as the Agent
or any Bank may reasonably request.
6.03. MAINTENANCE OF PROPERTY; INSURANCE.
(a) The Borrower and its Subsidiaries will exercise commercially
reasonable efforts to maintain or cause to be maintained in good repair, working
order and condition (subject to normal wear and tear) all properties used in its
businesses and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof and will maintain and renew as
necessary all licenses, permits and other clearances necessary to use and occupy
such properties.
-71-
(b) Subject to the provisions of subsection 6.03(c) below, the
Borrower and its Subsidiaries will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations to
the extent that such types and such amounts of insurance are available at
commercially reasonable rates. The Borrower will, and will cause each of its
Subsidiaries to, furnish to each Bank, upon reasonable request, information as
to the insurance carried, and will not cancel, without replacement with a
substantially similar policy, any such insurance without the reasonable consent
of the Required Banks.
(c) The Borrower will, and will cause each of its Subsidiaries to,
maintain in full force the insurance coverages in respect of the Collateral as
set forth in the Security Documents.
6.04. PAYMENT OF TAXES. The Borrower will, and shall cause each of its
Subsidiaries to, pay and discharge all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any properties of the Borrower or any of its Subsidiaries or
cause a failure or forfeiture of title thereto; PROVIDED that neither the
Borrower nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings promptly instituted and diligently conducted, which
proceedings have the effect of preventing the forfeiture or sale of the property
or asset that may become subject to such Lien, if it has maintained adequate
reserves with respect thereto in accordance with and to the extent required
under GAAP.
6.05. CORPORATE FRANCHISES. The Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and authority, and its
Intellectual Property, except where such failure to keep in full force and
effect such rights and authority would not have a Materially Adverse Effect.
-72-
6.06. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) other than
noncompliance which could not reasonably be expected to have a Materially
Adverse Effect.
6.07. ERISA. The Borrower will furnish to each of the Banks:
(a) promptly upon the Borrower knowing or having reason to know
of the occurrence of any (i) Termination Event or (ii) "prohibited
transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code, in connection with any Pension Plan or any trust
created thereunder, which in the case of all such events described in
clause (i) or (ii) results or could reasonably be expected to result
in a liability of any Credit Party or its respective Subsidiaries in
the aggregate in excess of $100,000 or the imposition of a Lien on the
assets of a Credit Party, a written notice specifying the nature
thereof, what action such Credit Party, its respective Subsidiaries or
its respective ERISA Affiliates have taken, are taking or propose to
take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor, PBGC
or Multiemployer Plan sponsor with respect thereto; and
(b) with reasonable promptness copies of (i) all notices received
by any Credit Party, its respective Subsidiaries or its respective
ERISA Affiliates of PBGC's intent to terminate any Title IV Plan or to
have a trustee appointed to administer any Title IV Plan, the notice
of which event is required pursuant to the preceding paragraph (a);
(ii) upon the request of the Agent each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by any
Credit Party, its respective Subsidiaries or its respective ERISA
Affiliates with the Internal Revenue Service with respect to each
Pension Plan; (iii) upon the request of the Agent, the most recent
actuarial valuation report for each Title IV Plan which is then
maintained by any Credit Party, its respective Subsidiaries or its
respective ERISA Affiliates or as to which any Credit Party, its
respective Subsidiaries or its respective ERISA Affiliates has any
-73-
continuing funding obligations; and (iv) all notices received by any
Credit Party, its respective Subsidiaries or its respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA,
the notice of which event is required pursuant to the preceding
paragraph (a).
6.08. PERFORMANCE OF OBLIGATIONS. The Borrower will, and will cause
each of its Subsidiaries to, perform in all material respects all of their
respective obligations under the terms of each mortgage, indenture, security
agreement, other debt instrument and material contract by which they are bound
or to which they are a party, except where such nonperformance would not have a
Materially Adverse Effect.
6.09. END OF FISCAL YEARS; FISCAL QUARTERS. Each Credit Party will,
for financial reporting purposes, and will cause each of its Subsidiaries to,
have its (i) fiscal years end on December 31, and (ii) fiscal quarters end on
March 31, June 30, September 30, and December 31.
6.10. USE OF PROCEEDS. All proceeds of the Loans shall be used as
provided in Section 5.05.
6.11. INTEREST RATE PROTECTION. The Borrower shall, no later than 90
days after the Closing Date and after every Acquisition Term Loan Closing Date
and in respect of no less than 50% of the outstanding Term Loans as in effect
from time to time enter into Interest Rate Agreements reasonably acceptable to
the Agent for a period of not less than two years.
6.12. EQUAL SECURITY FOR LOANS AND NOTES; NO FURTHER NEGATIVE PLEDGES.
(a) If the Borrower or any of its respective Subsidiaries shall create or assume
any Lien upon any of its property or assets, whether now owned or hereafter
acquired and whether or not such property or assets constitutes Collateral,
other than Liens permitted by the applicable Security Document (unless prior
written consent to the creation or assumption thereof shall have been obtained
from the Agent and the Required Banks), the Borrower shall, and shall cause any
applicable Subsidiary to, make or cause to be made effective provisions whereby
the Obligations will be secured by such Lien equally and ratably with any and
-74-
all other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; PROVIDED that this covenant shall not be construed as consent by the
Agent and the Required Banks to any violation by the Borrower of the provisions
of Section 7.03.
(b) Except with respect to prohibitions against other encumbrances on
specific property encumbered to secure payment of particular Indebtedness
permitted hereunder (which Indebtedness relates solely to the acquisition or
improvement of such specific property), neither the Borrower nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
6.13. LENDER MEETING. The Borrower will participate in a meeting of
the Banks once during each fiscal year (commencing with the fiscal year ending
December 31, 1998) relating to the financial statements of the previous fiscal
year to be held at a location and a time selected by the Borrower and reasonably
acceptable to the Agent.
6.14. PLEDGE OF ADDITIONAL COLLATERAL. Subject to Section 6.12(b), and
in any event within 30 days after the acquisition by the Borrower or any of its
Subsidiaries of (i) Real Property, (ii) assets of the type that would have
constituted Collateral (pursuant to the appropriate Security Document on the
Closing Date or Effective Date, as applicable, executed by such Person) at the
Closing Date or the Effective Date or (iii) capital stock or other equity
interest of any Subsidiary (whether by capital contribution or acquisition)
(collectively, (i), (ii), (iii) and the assets of any Subsidiary described in
(iii), the "Additional Collateral"), the Borrower will, and will cause each of
its Subsidiaries to, take all necessary action, including the filing of
appropriate financing statements under the provisions of the UCC, applicable
foreign, domestic or local laws, rules or regulations in each of the offices
where such filing is necessary or appropriate, entering into or amending
Security Documents or, in the case the Borrower or any of its Subsidiaries
creates or acquires a Subsidiary, entering into such additional pledge
agreements and security agreements in form and substance satisfactory to the
Collateral Agent (and, in the case of the acquisition of Real Property,
satisfaction of the conditions set forth in Sections 4.01(b)(ii), 4.01(p) and
4.01(t) and, in the case of the acquisition of personal property, satisfaction
of the conditions set forth in Sections 4.01(b)(ii) and 4.01(m)), to grant to
-75-
the Collateral Agent a perfected first priority Lien, subject to Prior Liens and
other Liens permitted by the applicable Security Documents, in such Collateral
pursuant to and to the full extent required by the Security Documents and this
Agreement. All actions taken by the parties in connection with the pledge of
Additional Collateral, including, without limitation, costs of counsel for the
Agent or the Collateral Agent, shall be for the account of the Borrower, which
shall pay all sums due within 5 Business Days of demand.
6.15. SECURITY INTERESTS. The Borrower will, and will cause its
Subsidiaries to, perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or supplementation of
any financing statement and continuation statement) for filing in any
appropriate jurisdiction under the provisions of the UCC, local law or any
statute, rule or regulation of any applicable jurisdiction which are necessary
in order to maintain or confirm in favor of the Collateral Agent for the benefit
of the Banks a valid and perfected Lien on the Collateral and any Additional
Collateral, subject to no Liens except for Prior Liens and other Liens expressly
permitted by the applicable Security Documents. The Borrower shall, as promptly
as practicable after the filing of any financing statements, deliver or cause to
be delivered to the Agent acknowledgment copies of, or copies of lien search
reports confirming the filing of, financing statements duly filed under the UCC
of all jurisdictions as may be necessary or, in the reasonable judgment of the
Agent, desirable to perfect the Lien created, or purported or intended to be
created, by each Security Document.
6.16. SUBSIDIARY GUARANTEES. In the event the Borrower or any of its
Subsidiaries creates or acquires a Subsidiary, the Borrower will cause such
Subsidiary to execute and deliver to the Collateral Agent for the benefit of the
Banks a subsidiary guarantee, in form and substance satisfactory to the
Collateral Agent, guaranteeing the Obligations.
6.17. ENVIRONMENTAL EVENTS. (a) The Borrower will promptly give notice
to the Agent upon becoming aware thereof (i) of any violation of any
Environmental Law, (ii) of any inquiry, proceeding, investigation or other
action, including a request for information or a notice of potential liability
under any Environmental Law from any Person (in the case of each of clause (i)
and (ii), that which could reasonably be expected to result in a Materially
-76-
Adverse Effect) or (iii) of the discovery of the release or threatened release
of any Hazardous Material at, on, upon, under or from any of the Real Properties
or any facility or equipment thereat in excess of reportable quantities and
which must be reported under applicable Environmental Laws, or in a manner
and/or amount which could reasonably be expected to result in liability under
any Environmental Law, in each case which would have a Materially Adverse
Effect.
(b) In the event of the presence of any Hazardous Material on, at,
upon or under any of the Real Properties which is in violation of, or which
could reasonably be expected to result in liability under, any Environmental
Law, in each case which would have a Materially Adverse Effect, the Borrower or
any of its Subsidiaries, upon discovery thereof, shall take all necessary steps
to initiate and expeditiously complete all responsive, corrective and other
action required under any Environmental Law to mitigate and eliminate any such
adverse effect.
(c) The Borrower shall as promptly as practicable notify the Agent of
the occurrence of any event specified in Section 6.17(b) and shall thereafter
keep the Agent informed on a periodic basis of any actions taken in response to
such event and the results of such actions.
(d) The Borrower shall provide the Agent with copies of any notice,
submittal or documentation provided by the Borrower or any of its Subsidiaries
to any Governmental Authority or third party under any Environmental Law if the
matter which is the subject of the notice, submittal or other documentation
could reasonably be expected to result in a Materially Adverse Effect. Such
notice, submittal or documentation shall be provided to the Agent promptly and,
in any event, within 5 business days after such material is provided to the
Governmental Authority or third party.
6.18. LANDLORD LIEN ASSURANCE. The Borrower will use its best efforts
to obtain Landlord Lien Assurances, in the form of EXHIBIT N hereto, from the
landlords of leased Real Property of the Borrower and its Subsidiaries where
Inventory is located, it being understood that any Landlord Lien Assurances
(including those concerning warehouseman's Liens) previously delivered to the
Agent remaining in full force and effect are acceptable to the Agent.
-77-
SECTION 7. NEGATIVE COVENANTS. The Credit Parties hereby covenant and
agree that as of the Closing Date and thereafter for so long as this Agreement
is in effect and until the Commitments have terminated and the Loans together
with interest and fees are paid in full and all other Obligations incurred
hereunder, to the extent then due and payable, are paid in full:
7.01. CONDUCT OF BUSINESS. The Borrower will, and will cause each of
its Subsidiaries to, at all times take any and all such actions as may be
necessary or appropriate to permit the Borrower and its Subsidiaries to continue
to conduct its business in substantially the same manner as heretofore conducted
prior to the Transaction by the Borrower's predecessors. The Borrower will not,
and will not permit any of its Subsidiaries to, engage in any business other
than a business directly related to the manufacture and/or distribution of
beauty products, and lines of business reasonably related thereto.
7.02. AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS.
(a) No Credit Party or its respective Subsidiaries will amend or
otherwise change the terms of any Existing Debt in a manner adverse to the Banks
without the prior written consent of the Required Banks.
(b) After the Closing Date, no Credit Party or its respective
Subsidiaries will amend or otherwise change the terms of the Transaction
Documents in a manner adverse to the Banks without the prior written consent of
the Required Banks.
7.03. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit or
suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether now owned or hereafter acquired, or sell any such Collateral
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Collateral or assign any right to receive income, or file or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute, except for the Lien of the
Security Document relating thereto, Prior Liens applicable thereto and other
Liens expressly permitted by such Security Document. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets of the Borrower or
any Subsidiary which does not constitute Collateral whether now owned or
-78-
hereafter acquired, or sell any Collateral, property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets or assign any right to receive income, or file or permit the filing of
any financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute, except the following, which are herein
collectively referred to as "Permitted Encumbrances":
(a) Liens for taxes, assessments or governmental charges or
claims not yet delinquent or Liens for taxes, assessments or
governmental charges or claims being contested in good faith and by
appropriate proceedings for which adequate reserves, as may be
required by GAAP, have been established;
(b) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law (i) which were incurred in the
ordinary course of business, such as landlords', carriers',
warehousemen's and mechanics' Liens and other similar Liens arising in
the ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of
the Borrower or any of its Subsidiaries or (y) which are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property
or asset subject to such Lien or (ii) which do not relate to material
liabilities of the Borrower or any of its Subsidiaries and do not in
the aggregate materially detract from the value of the property and
assets of the Borrower and its Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or judgment
(including judgment or appeal bonds) not in excess of $250,000
individually or $500,000 in the aggregate for the Borrower and its
Subsidiaries (exclusive of any amount adequately covered by insurance
as to which the insurance company has acknowledged coverage) unless
the judgment it secures shall, within 60 days after the entry thereof,
not have been discharged or execution thereof not stayed pending
appeal, or shall not have been discharged within 30 days after the
expiration of any such stay;
-79-
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and returnofmoney bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money or the
equivalent);
(e) Subject to the provisions of Section 7.19 and, with respect
to any Mortgaged Real Property, to the provisions of any applicable
Mortgage, Leases with respect to the assets or properties of the
Borrower or any of its Subsidiaries entered into in the ordinary
course of the Borrower's or such Subsidiary's business and subordinate
in all respects to the Liens granted and evidenced by the Security
Documents;
(f) Easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with
the business of the Borrower or any of its Subsidiaries, in each case
incurred in the ordinary course of business and which do not
materially impair for its intended purposes the use or value of the
Real Property to which it relates;
(g) Liens securing the Indebtedness permitted by Section 7.04(i);
(h) Liens disclosed in Schedule 5.21(b); and
(i) Liens upon real or tangible personal property (including
Capital Leases) acquired by the Borrower or any of its Subsidiaries
after the date hereof; PROVIDED that (i) any such Lien is created
solely for the purpose of securing Indebtedness representing, or
incurred to finance, the cost of the item of property subject thereto,
(ii) the principal amount of the Indebtedness secured by such Lien is
at least 70%, and does not exceed 100% of the fair value (as
determined in good faith by the board of directors or members of the
appropriate entity) of the respective property at the time it was so
acquired, (iii) such Lien does not extend to or cover any other
property other than such item of property and (iv) the incurrence of
such Indebtedness secured by such Lien is permitted by Section 7.04.
-80-
The Borrower shall use its commercially reasonable best efforts to
obtain the waiver of any Lien referred to in clause (b)(i) above on or in
respect of any Equipment or Inventory. The term "Permitted Encumbrances" shall
mean, with respect to Mortgaged Real Property, Liens permitted under the
Mortgages.
7.04. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
PROVIDED that the aggregate principal amount of Indebtedness incurred
pursuant to this Agreement shall in no event exceed the Total
Commitments;
(b) Existing Debt and any refinancing thereof; PROVIDED that any
such refinancing of Existing Debt shall be on terms which, both taken
as a whole and specifically as such terms relate to the identity of
the obligors, repayments of principal, covenants, events of default
and security in property of the debtor, are in each event no more
favorable to the creditor than the correlative terms of the Existing
Debt;
(c) Interest Rate Agreements to the extent required by Section
6.11;
(d) $1,000,000 of principal Indebtedness in the aggregate
outstanding at any time for the Borrower and its Subsidiaries incurred
to finance the cost of the acquisition of real or tangible personal
property (including Capital Leases); PROVIDED that such Indebtedness
shall be at least 70% and shall not exceed 100% of the fair value of
such property; and PROVIDED, FURTHER, that such Indebtedness is not
secured by any Lien other than a Lien referred to in clause (g) of
Section 7.03;
(e) Contingent Obligations permitted by Section 7.16;
(f) Indebtedness issued to sellers in connection with an
acquisition, PROVIDED that such Indebtedness is unsecured, does not
-81-
provide for any cash interest payments prior to the Final B Term Loan
Maturity Date and contains subordination and other terms satisfactory
to the Agent, and PROVIDED, FURTHER, that the Borrower is in pro forma
compliance with Section 4.03(b) hereof;
(g) Indebtedness of the Borrower to any of its Wholly Owned
Subsidiaries or of any Subsidiary to the Borrower or another Wholly
Owned Subsidiary of the Borrower (but only so long as such
Indebtedness is held by the Borrower or its Wholly Owned Subsidiary);
(h) other unsecured Indebtedness not exceeding $750,000 in the
aggregate for the Borrower and its Subsidiaries at any time
outstanding; and
(i) Capital Leases and purchase money Indebtedness assumed in
connection with any acquisition not to exceed $2,000,000 in principal
outstanding at any time, PROVIDED that after giving effect to such
acquisition and the incurrence of such Indebtedness there is no
Default under this Agreement and the Borrower is in compliance with
Section 4.03(b).
7.05. CAPITAL EXPENDITURES. The Borrower will not, and will not permit
any of its Subsidiaries to, make Consolidated Capital Expenditures for any
purpose in excess of the amounts set forth below for the period set forth below:
PERIOD AMOUNT IN $
------ -----------
Closing Date to December 31, 1997....................... $500,000
Fiscal Year Ending December 31, 1998.................... $1,200,000
Fiscal Year Ending December 31, 1999.................... $1,500,000
Fiscal Year Ending December 31, 2000.................... $1,500,000
Fiscal Year Ending December 31, 2001.................... $1,500,000
Fiscal Year Ending December 31, 2002.................... $1,500,000
Fiscal Year Ending December 31, 2003.................... $1,500,000
Fiscal Year Ending December 31, 2004.................... $1,500,000
7.06. ADVANCES, INVESTMENTS AND LOANS. The Borrower will not, and will
not permit any of its Subsidiaries to, lend money or credit or make advances
(which shall not include progress payments made by any Credit Party to its
subcontractors in the ordinary course of business consistent with industry
practice) 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:
-82-
(a) investments in Cash and Cash Equivalents;
(b) receivables owing to them and advances to customers and
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;
(c) 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;
(d) the acceptance of a form of consideration other than Cash or
Cash Equivalents in connection with the sale or disposition of assets
to the extent provided in Section 7.15;
(e) investments to acquire Capital Stock of any other Person,
PROVIDED that immediately after the transaction such Person becomes
(i) a Subsidiary of the Borrower and (ii) a Credit Party, PROVIDED,
FURTHER, that the Borrower is in pro forma compliance with Section
4.03(b) hereof;
(f) investments in and advances to Credit Parties;
(g) loans and advances to employees for reasonable travel and
business expenses in the ordinary course;
(h) deposits for utilities, security deposits, leases and similar
prepaid expenses incurred in the ordinary course of business; and
(i) additional loans, advances and/or investments of a nature not
contemplated by the foregoing clauses (a) through (h); PROVIDED that
all loans, advances and investments made pursuant to this clause (i)
shall not exceed for the Borrower and its Subsidiaries (x) $500,000 in
the aggregate at any time outstanding for the twelve month period
ending December 31, 1998, (y) $1,000,000 in the aggregate at any time
outstanding for the twelve month period ending December 31, 1999 and
(z) $1,500,000 in the aggregate at any time outstanding for any period
thereafter.
-83-
7.07. PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to: (a) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms or
provisions, to the extent any such amendment or modification would be adverse to
the issuer thereof or to the interests of the Banks, of any of the Indebtedness
(or any agreement relating thereto) of the type described in Section 7.04(b),
(f) or (h); (b) make (or give any notice in respect of) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with any trustee with
respect thereto money or securities before such Indebtedness is due for the
purpose of paying such Indebtedness when due) or exchange of any such
Indebtedness; and/or (c) amend, modify or change any of its respective charter
documents, or any agreement entered into by the Borrower or its Subsidiaries
with respect to its equity securities, or enter into any new agreement with
respect to the equity securities of the Borrower or any Subsidiary the result of
which is reasonably likely to be adverse to the interests of the Banks (in their
capacity as such) hereunder, PROVIDED, that this clause (c) shall not restrict
the Borrower's ability to effect offerings of its equity securities.
7.08. DIVIDENDS, ETC. The Borrower will not, and will not permit any
of its Subsidiaries to, declare or pay any dividends or return any capital to,
its members or authorize or make any other distribution, payment or delivery of
property or cash to its members as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for any consideration, any of its
equity interest now or hereafter outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such equity interests), or make
any loans or advances to Affiliates (other than Credit Parties), or set aside
any funds for any of the foregoing purposes, or permit any of its Subsidiaries
to purchase or otherwise acquire for consideration any equity interest of the
Borrower or any other Subsidiary, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its equity interest) (all of the foregoing,
"Dividends"), except that any Subsidiary of the Borrower may pay Dividends to
its parent corporation if such parent corporation is (x) the Borrower or (y) a
WhollyOwned Subsidiary of the Borrower.
-84-
7.09. TRANSACTION WITH AFFILIATES. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any holder
of 5% or more of the equity securities of the Borrower or with any Affiliate of
the Borrower other than on terms and conditions substantially as favorable to
the Borrower or any Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm'slength transaction with a Person
other than a holder of 5% or more of the equity securities of the Borrower or an
Affiliate of the Borrower; PROVIDED that the foregoing restrictions shall not
apply to (i) transactions between or among the Borrower and its WhollyOwned
Subsidiaries, (ii) the payment of fees to Indosuez and its Affiliates for
financial services, such fees not to exceed Indosuez' usual and customary fees
for similar services and (iii) stock options issued to senior management of the
Borrower in the ordinary course of business.
7.10. TOTAL INTEREST COVERAGE RATIO. The ratio of (i) Consolidated
EBITDA to (ii) cash Consolidated Interest Expense for the Borrower set forth
below for the Test Period ending on each date listed below shall not be less
than the ratio set forth opposite such date below; that for any computation
pursuant to clause (ii) of the definition of Test Period, Consolidated Interest
Expense shall be equal to the product of the amount of Consolidated Interest
Expense since the Closing Date and a fraction, the numerator of which is 365 and
the denominator of which is the number of days elapsed during such period since
the Closing Date:
-85-
Test Period Ratio
----------- -----
March 31, 1998 ................................... 3.00:1.00
June 30, 1998 .................................... 3.00:1.00
September 30, 1998 ............................... 3.00:1.00
December 31, 1998 ................................ 3.00:1.00
March 31, 1999 ................................... 3.25:1.00
June 30, 1999 .................................... 3.25:1.00
September 30, 1999 ............................... 3.25:1.00
December 31, 1999 ................................ 3.25:1.00
March 31, 2000 ................................... 3.50:1.00
June 30, 2000 .................................... 3.50:1.00
September 30, 2000 ............................... 3.50:1.00
December 31, 2000 ................................ 3.50:1.00
March 31, 2001 ................................... 3.75:1.00
June 30, 2001 .................................... 3.75:1.00
September 30, 2001 ............................... 3.75:1.00
December 31, 2001 ................................ 3.75:1.00
March 31, 2002 ................................... 4.00:1.00
June 30, 2002 .................................... 4.00:1.00
September 30, 2002 ............................... 4.00:1.00
December 31, 2002 ................................ 4.00:1.00
March 31, 2003 ................................... 4.00:1.00
June 30, 2003 .................................... 4.00:1.00
September 30, 2003 ............................... 4.00:1.00
December 31, 2003 ................................ 4.00:1.00
March 31, 2004 ................................... 4.00:1.00
June 30, 2004 .................................... 4.00:1.00
September 30, 2004 ............................... 4.00:1.00
December 31, 2004 ................................ 4.00:1.00
7.11. FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Consolidated EBITDAC of the Borrower minus cash taxes to (ii) cash
Consolidated Interest Expense of the Borrower plus the amount of scheduled
mandatory payments on account of principal of Indebtedness of the Borrower for
the Test Period ending on each date listed below, to be less than the ratio set
forth opposite such date below; PROVIDED that for any computation pursuant to
clause (ii) of the definition of Test Period, Consolidated Interest Expense
shall be equal to the product of the amount of Consolidated Interest Expense
since the Closing Date and a fraction, the numerator of which is 365 and the
denominator of which is the number of days elapsed during such period since the
Closing Date:
-86-
Test Period Ratio
----------- -----
March 31, 1998 .....................................1.00:1.00
June 30, 1998 ......................................1.00:1.00
September 30, 1998 .................................1.00:1.00
December 31, 1998 ..................................1.00:1.00
March 31, 1999 .....................................1.00:1.00
June 30, 1999 ......................................1.00:1.00
September 30, 1999 .................................1.00:1.00
December 31, 1999 ..................................1.00:1.00
March 31, 2000 .....................................1.10:1.00
June 30, 2000 ......................................1.10:1.00
September 30, 2000 .................................1.10:1.00
December 31, 2000 ..................................1.10:1.00
March 31, 2001 .....................................1.20:1.00
June 30, 2001 ......................................1.20:1.00
September 30, 2001 .................................1.20:1.00
December 31, 2001 ..................................1.20:1.00
March 31, 2002 .....................................1.20:1.00
June 30, 2002 ......................................1.20:1.00
September 30, 2002 .................................1.20:1.00
December 31, 2002 ..................................1.20:1.00
March 31, 2003 .....................................1.20:1.00
June 30, 2003 ......................................1.20:1.00
September 30, 2003 .................................1.20:1.00
December 31, 2003 ..................................1.20:1.00
March 31, 2004 .....................................1.20:1.00
June 30, 2004 ......................................1.20:1.00
September 30, 2004 .................................1.20:1.00
December 31, 2004 ..................................1.20:1.00
7.12. LEVERAGE RATIOS.
(a) TOTAL LEVERAGE RATIO. The Borrower will not permit the ratio of
(i) Indebtedness of the Borrower and its Subsidiaries on each date listed below
to (ii) Consolidated EBITDA of the Borrower for the Test Period ending on each
date listed below to be more than the ratio set forth below; PROVIDED that the
portion of Indebtedness of the Borrower and its Subsidiaries which constitute
Revolving Loans shall be the average amount outstanding during the Test Period
ending on such date (with computations pursuant to clause (ii) of the definition
of Test Period being computed from the Closing Date):
-87-
Test Period Ratio
----------- -----
March 31, 1998 ....................................4.25:1.00
June 30, 1998 .....................................4.25:1.00
September 30, 1998 ................................4.25:1.00
December 31, 1998 .................................4.25:1.00
March 31, 1999 ....................................4.25:1.00
June 30, 1999 .....................................4.25:1.00
September 30, 1999 ................................4.00:1.00
December 31, 1999 .................................4.00:1.00
March 31, 2000 ....................................3.75:1.00
June 30, 2000 .....................................3.75:1.00
September 30, 2000 ................................3.75:1.00
December 31, 2000 .................................3.75:1.00
March 31, 2001 ....................................3.50:1.00
June 30, 2001 .....................................3.50:1.00
September 30, 2001 ................................3.50:1.00
December 31, 2001 .................................3.50:1.00
March 31, 2002 ....................................3.00:1.00
June 30, 2002 .....................................3.00:1.00
September 30, 2002 ................................3.00:1.00
December 31, 2002 .................................3.00:1.00
March 31, 2003 ....................................3.00:1.00
June 30, 2003 .....................................3.00:1.00
September 30, 2003 ................................3.00:1.00
December 31, 2003 .................................3.00:1.00
March 31, 2004 ....................................3.00:1.00
June 30, 2004 .....................................3.00:1.00
September 30, 2004 ................................3.00:1.00
December 31, 2004 .................................3.00:1.00
(b) SENIOR LEVERAGE RATIO. The Borrower will not permit the ratio of
(i) Senior Indebtedness of the Borrower and its Subsidiaries on each date listed
below to (ii) Consolidated EBITDA of the Borrower for the Test Period ending on
each date listed below to be more than the ratio set forth below; PROVIDED that
the portion of Senior Indebtedness of the Borrower and its Subsidiaries which
constitute Revolving Loans shall be the average amount outstanding during the
Test Period ending on such date (with computations pursuant to clause (ii) of
the definition of Test Period being computed from the Closing Date):
-88-
TEST PERIOD RATIO
----------- -----
March 31, 1998 .................................. 3.50:1.00
June 30, 1998 ................................... 3.50:1.00
September 30, 1998 .............................. 3.50:1.00
December 31, 1998 ............................... 3.50:1.00
March 31, 1999 .................................. 3.50:1.00
June 30, 1999 ................................... 3.50:1.00
September 30, 1999 .............................. 3.50:1.00
December 31, 1999 ............................... 3.25:1.00
March 31, 2000 .................................. 3.25:1.00
June 30, 2000 ................................... 3.25:1.00
September 30, 2000 .............................. 3.25:1.00
December 31, 2000 ............................... 3.00:1.00
March 31, 2001 .................................. 3.00:1.00
June 30, 2001 ................................... 3.00:1.00
September 30, 2001 .............................. 3.00:1.00
December 31, 2001 ............................... 2.50:1.00
March 31, 2002 .................................. 2.50:1.00
June 30, 2002 ................................... 2.50:1.00
September 30, 2002 .............................. 2.50:1.00
December 31, 2002 ............................... 2.50:1.00
March 31, 2003 .................................. 2.50:1.00
June 30, 2003 ................................... 2.50:1.00
September 30, 2003 .............................. 2.50:1.00
December 31, 2003 ............................... 2.50:1.00
March 31, 2004 .................................. 2.50:1.00
June 30, 2004 ................................... 2.50:1.00
September 30, 2004 .............................. 2.50:1.00
December 31, 2004 ............................... 2.50:1.00
7.13. MINIMUM CONSOLIDATED EBITDA. The Borrower will maintain a
Consolidated EBITDA of at least the amount set forth below for the Test Period
ending on each date listed below:
Minimum EBITDA
TEST PERIOD ($ MILLIONS)
----------- --------------
December 31, 1997 ..............................$14,500,000
March 31, 1998 .................................$14,500,000
June 30, 1998 ..................................$14,500,000
September 30, 1998 .............................$14,500,000
December 31, 1998 ..............................$15,000,000
March 31, 1999 .................................$15,000,000
June 30, 1999 ..................................$15,500,000
September 30, 1999 .............................$16,000,000
December 31, 1999 ..............................$16,000,000
-89-
March 31, 2000 .................................$17,000,000
June 30, 2000 ..................................$17,000,000
September 30, 2000 .............................$17,000,000
December 31, 2000 ..............................$18,000,000
March 31, 2001 .................................$19,000,000
June 30, 2001 ..................................$20,000,000
September 30, 2001 .............................$20,000,000
December 31, 2001 ..............................$21,000,000
March 31, 2002 .................................$22,000,000
June 30, 2002 ..................................$22,000,000
September 30, 2002 .............................$22,000,000
December 31, 2002 ..............................$23,000,000
March 31, 2003 .................................$24,000,000
June 30, 2003 ..................................$24,000,000
September 30, 2003 .............................$24,000,000
December 31, 2003 ..............................$24,000,000
March 31, 2004 .................................$24,000,000
June 30, 2004 ..................................$24,000,000
September 30, 2004 .............................$24,000,000
December 31, 2004 ..............................$24,000,000
7.14. ISSUANCE OF SUBSIDIARY STOCK. The Borrower will not, and will
not permit any of its Subsidiaries, directly or indirectly, to issue, sell,
assign, pledge or otherwise encumber or dispose of any shares of any
Subsidiaries' capital stock or other securities or equity interests (or
warrants, rights or options to acquire capital stock or convertible securities
or other equity securities) of such Subsidiary, other than pursuant to the
Security Documents and as contemplated by the Transaction.
7.15. DISPOSITION OF ASSETS. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, dispose of all or any part of its interest in
any asset, except that the Borrower and its Subsidiaries may sell assets so long
as (i) such sales are approved by the Required Banks and the sales price thereof
is, in the reasonable judgment of the Agent, at least equal to the fair market
value of such assets, or (ii) such sale, transfer or disposition is from one
Credit Party to another Credit Party, or (iii) such sales are for at least the
fair market value of such assets and the aggregate amount of such asset sales is
less than $500,000 in any 12month period and, in any such case, the Borrower
complies with the mandatory prepayment and Commitment reduction provisions of
this Agreement and, in the case of Collateral, so long as the conditions to the
release of Collateral described herein and in the applicable Security Documents
-90-
are met, or (iv) such sales are of inventory in the ordinary course of business,
or (v) such sales are (A) of obsolete equipment, (B) for at least the fair
market value of such equipment, (C) not in excess of $500,000 per year in the
aggregate and (D) the proceeds of such sales are used within 90 days of such
sales to (1) purchase equipment used in substantially similar lines of business
or (2) repay Indebtedness under this Agreement pursuant to Section 3.02.
The consideration received by the Borrower or its Subsidiaries from
each sale of assets permitted above shall be received in whole at the time of
sale and at least 70% of the consideration from each sale shall consist of Cash
or Cash Equivalents. Any noncash proceeds received from the sale of assets shall
be pledged to the Collateral Agent pursuant to and in accordance with the
applicable Security Documents and shall constitute Collateral.
(b) Upon compliance with the conditions in subsection (a) of this
Section 7.15, the Release Conditions and the Partial Release Conditions (each as
hereinafter defined), the Borrower shall be entitled to receive from the
Collateral Agent an instrument in form and substance reasonably satisfactory to
the Borrower (each, a "Release") releasing the Lien of the Mortgage with respect
to all or any portion of a Mortgaged Real Property (each, a "Released Real
Property"). The Borrower shall exercise its rights under this Section by
delivering to the Collateral Agent a notice (each, a "Release Notice"), which
shall refer to this Section, describe with particularity the proposed Released
Real Property and be accompanied by (i) four counterparts of the Release fully
executed and acknowledged by all necessary parties other than Collateral Agent,
(ii) executed counterparts of UCC or other applicable termination statements
necessary to terminate the Lien of the applicable Mortgage and (iii) an
Officers' Certificate certifying that no Default or Event of Default shall have
occurred and the parties executing any and all documents in connection with the
Release (other than the Collateral Agent) were duly authorized to do so
(collectively, the "Release Conditions"). In the event the proposed Released
Real Property consists of less than all of the Mortgaged Real Property subject
to a single Mortgage, the Partial Release Conditions must be satisfied in order
for the Borrower to receive the Release.
(c) The Collateral Agent's obligation to deliver a Release in respect
of less than all of the Mortgaged Real Property subject to a single Mortgage
-91-
shall be contingent upon the satisfaction of the conditions in subsection (a) of
this Section 7.15 and the Release Conditions as well as the following conditions
(collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other disposition of and
release of the Lien of the applicable Mortgage with respect to the
proposed Released Real Property, the remaining Mortgaged Real Property
shall have utility services and access to public roads, rail spurs and
other transportation structures sufficient and necessary for the
continued use of such Mortgaged Real Property in the manner utilized
prior to the Release;
(ii) following the sale, transfer or other disposition of the
proposed Released Real Property, the remaining Mortgaged Real Property
shall comply in all material respects with applicable laws, rules,
regulations and ordinances relating to environmental protection,
zoning, land use, configuration and building and workplace safety;
(iii) following the sale, transfer or other disposition of the
proposed Released Real Property, the value of the remaining Mortgaged
Real Property shall not be less than the value of such remaining
Mortgaged Real Property prior to the Release;
(iv) the Title Company shall have issued an endorsement to the
Banks' title insurance policy relating to the Mortgaged Real Property
confirming that after the proposed release, the Lien of the applicable
Mortgage continues unimpaired as a first priority Lien upon the
remaining Mortgaged Real Property subject only to Prior Liens; and
(v) the Borrower shall cause to have been delivered to Collateral
Agent an Officer's Certificate certifying that the conditions set
forth in subsections (i) through (iv) have been satisfied.
(d) The Collateral Agent shall execute, acknowledge (if applicable)
and deliver to the Borrower counterparts of the documents described in
subsection (b)(i) and (ii) within 30 days after receipt by the Collateral Agent
of a Release Notice provided that the Release Conditions and the Partial Release
Conditions (if applicable) have been satisfied. The Borrower shall (i) execute,
deliver, obtain and record such instruments as the Collateral Agent may require,
including, without limitation, amendments to the Security Documents or this
Agreement and (ii) deliver to the Collateral Agent such evidence of the
satisfaction of the Release Conditions and the Partial Release Conditions as the
-92-
Collateral Agent may require. The Borrower shall reimburse the Collateral Agent,
Agent and the Banks upon demand for all costs or expenses incurred in connection
with any actions taken pursuant to this Section 7.15.
7.16. CONTINGENT OBLIGATIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, create or become or
be liable with respect to any Contingent Obligation except:
(i) guarantees resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(ii) Interest Rate Agreements to the extent required by Section
6.11 of this Agreement;
(iii) performance guarantees by the Borrower of contractual
obligations of the Subsidiaries of the Borrower, in each case entered
into the ordinary course of business;
(iv) guarantees of Indebtedness permitted by Section 7.04; and
(v) other Contingent Obligations not to exceed $350,000 in the
aggregate for the Borrower and its Subsidiaries outstanding at any one
time.
7.17. ERISA. The Borrower will not, and will not permit any of its
Subsidiaries to:
(i) engage in any transaction in connection with which the
Borrower or its Subsidiaries could reasonably be subject to either a
tax imposed by Section 4975(a) of the Code or the corresponding civil
penalty assessed pursuant to Section 502(i) of ERISA, which penalties
and taxes for all such transactions could reasonably be expected to be
in an aggregate amount in excess of $200,000;
-93-
(ii) permit to exist any accumulated funding deficiency, for
which a waiver has not been obtained from the Internal Revenue
Service, with respect to any Pension Plan which is then maintained by
the Borrower or its Subsidiaries or as to which the Borrower or its
Subsidiaries has any continuing funding obligations;
(iii) permit to exist any failure to make contributions or any
unfunded benefits liability which creates, or with the passage of time
would create, a statutory lien or requirement to provide security
under ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity;
(iv) permit the sum of the amount of unfunded benefit liabilities
(determined in accordance with Statement of Financial Accounting
Standards No. 87) under all Title IV Plans which are then maintained
by the Borrower or its Subsidiaries or as to which any Credit Party or
its Subsidiaries have any funding obligations (excluding each Title IV
Plan with an amount of unfunded benefit liabilities of zero or less)
to exceed $200,000 for a period in excess of twelve months; or
(v) fail to make any material payment to any Multiemployer Plan
that it may be required to make under such Multiemployer Plan, any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto.
As used in this Section 7.17, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "amount of unfunded benefit liabilities" has the meaning
specified in Section 4001(a)(18) of ERISA.
7.18. MERGER AND CONSOLIDATIONS. No Credit Party will merge or
consolidate with or into any other entity, except that any Wholly Owned
Subsidiary of the Borrower may merge or consolidate with or into (a) any other
WhollyOwned Subsidiary of the Borrower, (b) any other Credit Party or (c) the
Borrower, PROVIDED that no Default or Event of Default exists or would result
therefrom.
7.19. SALE AND LEASEBACKS. Unless constituting a permitted disposition
of assets under Section 7.15 hereof, the Borrower will not, and will not permit
its Subsidiaries to, directly or indirectly, become or thereafter remain liable
-94-
as lessee or as guarantor or other surety with respect to the lessee's
obligations under any lease, whether an Operating Lease or a Capital Lease, of
any property (whether real or personal or mixed) whether now owned or hereafter
acquired (i) which the Borrower or its Subsidiaries has sold or transferred or
is to sell or transfer to any other Person (other than in connection with the
Transaction) or (ii) which the Borrower or its Subsidiaries intends to use for
substantially the same purpose as any other property which has been or is to be
sold or transferred by the Borrower or its Subsidiaries to any Person in
connection with such lease, if in the case of clause (i) or (ii) above, such
sale and such lease are part of the same transaction or a series of related
transactions or such sale and such lease occur within one year of each other or
are with the same other Person.
7.20. SALE OR DISCOUNT OF RECEIVABLES. The Borrower will not, and will
not permit its Subsidiaries to, sell, with or without recourse, or discount
(other than in connection with trade discounts in the ordinary course of
business) or otherwise sell for less than the face value thereof, notes or
accounts receivable, other than receivables, that, in accordance with GAAP, are
deemed uncollectible.
7.21. XXXX PAYMENTS. The Borrower will not, and will not permit its
Subsidiaries to, make any cash payments pursuant to the Stock Escrow and BuyBack
Agreement dated November 26, 1996 if at the time of such cash payment or after
giving effect thereto, a Default shall have occurred and be continuing.
SECTION 8. EVENTS OF DEFAULT. Upon the occurrence and during the
continuance of any of the following specified events (each an "Event of
Default"):
8.01. PAYMENTS. The Borrower shall (i) default in the payment when due
of any principal of the Loans, (ii) default, and such default shall continue for
two or more Business Days, in the payment when due of any interest on the Loans
or under any other Credit Document or (iii) fail to pay any other amounts owing
hereunder for five Business Days after receiving notice from the Agent of such
default; or
8.02. REPRESENTATIONS, ETC. Any representation, warranty or statement
made or deemed made by any Credit Party or its respective Subsidiaries herein or
in any other Credit Document or in any statement or certificate delivered or
-95-
required to be delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
8.03. COVENANTS. Any Credit Party or its respective Subsidiaries shall
(a) default in the due performance or observance by it of any term, covenant or
agreement contained in Section 6.11, 6.12, 6.14, 6.15, 6.16 or Section 7 hereof
or Section 1.1 of any Mortgage or (b) default in the due performance or
observance by it of any other term, covenant or agreement contained in this
Agreement or any Security Document (other than those referred to in Section 8.01
or 8.02) and such default shall continue unremedied for a period of at least
thirty days after the date of such default; or
8.04. Default Under Other Agreements. (a) Any Credit Party or its
respective Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than Obligations) having a principal amount in excess of
$500,000 in the aggregate for all Credit Parties and their Subsidiaries, beyond
the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created or (ii) default in the observance or performance
of any agreement or condition relating to any such Indebtedness 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 a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity, PROVIDED
that to the extent that the Xxxx Payment is not made because it would cause a
Default or Event of Default hereunder, such nonpayment will not constitute a
Default or Event of Default under this Section 8.04; or (b) any such
Indebtedness of any Credit Party or any of its respective Subsidiaries shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof;
or
8.05. BANKRUPTCY, ETC. Any Credit Party or its respective Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against any Credit Party or any of its respective Subsidiaries and the petition
is not controverted within 10 days, or is not dismissed within 60 days, after
-96-
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
any Credit Party or any of its respective Subsidiaries; or any Credit Party or
any of its respective Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to any Credit Party or any of its respective
Subsidiaries; or there is commenced against any Credit Party or any of its
respective Subsidiaries any such proceeding which remains undismissed for a
period of 60 days; or any Credit Party or any of its respective Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any Credit Party or any of
its respective Subsidiaries suffers any appointment of any custodian or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or any Credit Party or any of its respective
Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by any Credit Party or any of its respective
Subsidiaries for the purpose of effecting any of the foregoing; or
8.06. ERISA.
(i) Any "reportable event" as described in Section 4043 of ERISA or
the regulations thereunder (excluding those events for which the requirement for
notice has been waived by the PBGC), or any other event or condition, which the
Required Banks determine constitutes reasonable grounds under Section 4042 of
ERISA for the termination of any Pension Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer or
liquidate any Title IV Plan shall have occurred; or
(ii) A trustee shall be appointed by a United States District Court to
administer any Title IV Plan; or
(iii) The PBGC shall institute proceedings to terminate any Title IV
Plan or to appoint a trustee to administer any Title IV Plan; or
(iv) Any Credit Party, its respective Subsidiaries or its respective
ERISA Affiliates shall become liable to the PBGC or any other party under
Section 4062, 4063, 4064 or 4069 of ERISA with respect to any Title IV Plan; or
-97-
(v) Any Credit Party, its respective Subsidiaries or its respective
ERISA Affiliates shall become liable to any Multiemployer Plan under Section
4201 ET SEQ. of ERISA; and
if the sum of each of such Credit Party's, its respective Subsidiaries' and its
respective ERISA Affiliates' various liabilities (such liabilities to include,
without limitation, any liability to the PBGC or to any other party under
Section 4062, 4063, 4064 or 4069 of ERISA) with respect to any Title IV Plan, or
to any Multiemployer Plan under Section 4201 ET SEQ. of ERISA which the Required
Banks determine could reasonably be expected to be incurred as a result of such
events listed in subclauses (i) through (v) above exceeds $200,000; or
8.07. SECURITY DOCUMENTS. Any Security Document shall cease to be in
full force and effect, or shall cease to give the Collateral Agent the Liens,
rights, powers and privileges purported to be created thereby, in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons and
subject to no Liens other than Prior Liens and Liens expressly permitted by the
applicable Security Document; or
8.08. GUARANTEES. Any Guarantee or any provisions thereof shall cease
to be in full force or effect in all material respects, or the Guarantor
thereunder or Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such Guarantee or the Guarantor
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any Guarantee; or
8.09. JUDGMENTS. One or more judgments or decrees shall be entered
against any Credit Party or any of its respective Subsidiaries involving a
liability of $250,000 or more in the case of any one such judgment or decree and
$500,000 or more in the aggregate for all such judgments and decrees for all
Credit Parties and their respective Subsidiaries (in either case in excess of
the amount covered by insurance as to which the insurance company has
acknowledged coverage) and (i) any such judgments or decrees shall not have been
vacated, discharged, bonded or enforcement thereof stayed pending appeal within
30 days from the entry thereof or (ii) any enforcement proceeding therefor shall
have been commenced; or
-98-
8.10. OWNERSHIP. (i) The consummation of any transaction the result of
which is that any person or "group" (as such term is used in Section 13(d)(3) of
the Exchange Act) owns (x) directly or indirectly 50% or more of the issued and
outstanding Common Stock of the Borrower or (y) 50% or more of the equity
securities of the Borrower entitled (without regard to the occurrence of any
contingency) to vote for the election of the members of the board of directors
of the Borrower or (ii) individuals who constituted the board of directors of
the Borrower on the Closing Date (together with any new directors whose proposal
for election by the members of the Borrower was approved by a vote of a majority
of the directors of the Borrower then still in office who either were directors
on the Closing Date or whose election or nomination for election was previously
so approved) shall cease for any reason to constitute a majority of the members
of the board of directors of the Borrower still in office (each, a "Change in
Control").
Then, and in any such event, and at any time thereafter, if any Event
of Default shall then be continuing, the Agent shall, upon the written request
of the Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (PROVIDED that, if an Event of Default specified
in Section 8.05 shall occur, with respect to any Credit Party or its respective
Subsidiaries, the result which would occur upon the giving of written notice by
the Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitments
terminated, whereupon the Commitment of each Bank shall forthwith terminate
immediately and any accrued and unpaid Commitment Commission shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and accrued interest in respect of all Loans and all Obligations
owing hereunder and thereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Credit Party; and/or (iii) enforce,
as Collateral Agent (or direct the Collateral Agent to enforce), any or all of
the remedies created pursuant to the Security Documents. If an Event of Default
is cured or waived in accordance with the terms of the Agreement, it ceases
(and, if waived, pursuant to the terms, and to the extent, of such waiver).
-99-
SECTION 9. DEFINITIONS. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:
"A TERM LOAN" has the meaning provided in Section 1.01(a).
"A TERM LOAN COMMITMENT" means, with respect to each Bank, the amount
set forth below such Bank's name on the signature pages hereto directly across
from the entry entitled "A Term Loan Commitment," as the same may be reduced
from time to time pursuant to Sections 2.02, 3.02 and/or 8.
"A TERM LOAN FACILITY" means the Loan Facility evidenced by the Total
A Term Loan Commitment.
"A TERM NOTE" has the meaning provided in Section 1.05(a).
"A TERM PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total A Term Loan Commitment.
"ABBA" means U.K. ABBA Products, Inc., a corporation.
"ACCOUNT" means all of the "accounts" (as that term is defined in
Section 9106 of the Uniform Commercial Code as in effect in the State of New
York) of the Borrower and its Subsidiaries whether or not such Account has been
earned by performance, whether now existing or existing in the future,
including, without limitation, all (i) accounts receivable, including, without
limitation, all accounts created by or arising from all of the Borrower's and
its Subsidiaries' sales of goods or rendition of services or licensing or
subleasing of any of the Borrower's and its Subsidiaries' Intellectual Property;
(ii) unpaid seller's rights (including rescission, replevin, reclamation and
stopping in transit) relating to the foregoing or arising therefrom; (iii)
rights to any goods represented by any of the foregoing, including returned or
repossessed goods; (iv) reserves and credit balances held by the Borrower and
its Subsidiaries with respect to any such accounts receivable or any account
debtor; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.
-100-
"ACQUISITION PORTION" means, at any time, the portion of the Loan
Facility evidenced by the Total Acquisition Term Loan Commitment.
"ACQUISITION TERM LOAN" has the meaning provided in Section 1.01(c).
"ACQUISITION TERM LOAN CLOSING DATE" has the meaning provided in
Section 1.01(c).
"ACQUISITION TERM LOAN COMMITMENT" means, with respect to each Bank,
the amount set forth below such Bank's name on the signature pages hereto beside
the column entitled "Acquisition Term Loan Commitment", as same may be reduced
from time to time pursuant to Sections 1.01(d), 2.01, 3.02 and/or 8.
"ACQUISITION TERM LOAN COMMITMENT TERMINATION DATE" means June 15,
1999.
"ACQUISITION TERM NOTE" has the meaning provided in Section
1.05(a)(iii).
"ADDITIONAL COLLATERAL" has the meaning provided in Section 6.14.
"AFFILIATE" means with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors,
managers and executive officers of such Person), controlled by, or under direct
or indirect common control with, such Person. A Person shall be deemed to
control a corporation or a limited liability company for the purposes of this
definition if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such corporation or limited liability company or
(ii) to direct or cause the direction of the management and policies of such
corporation or limited liability company, whether through the ownership of
voting securities, by contract or otherwise.
"AGENT" has the meaning provided in the first paragraph of this
Agreement and shall include any successor thereto appointed in accordance
herewith.
"AGENT'S OFFICE" means the office of the Agent located at 1211 Avenue
of the Americas, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other office in
New York as the Agent may hereafter designate in writing as such to the other
parties hereto.
-101-
"AGREEMENT" means this Credit Agreement, as the same may after its
execution be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"APPROVED BANK" has the meaning set forth in the definition of "Cash
Equivalents" below.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated
as of October 31, 1997, by and among the Borrower and the Sellers.
"ASSET SALE" means the sale, transfer or other disposition, to the
extent consummated after the Closing Date, by the Borrower or any of its
Subsidiaries of any asset of the Borrower or its Subsidiaries to any Person
(other than transactions included in the definition of Net Financing Proceeds
and sales, transfers or other dispositions of inventory in the ordinary course
of business and/or of obsolete equipment effected in compliance with Section
7.15(a)(iv)).
"AUTHORIZED OFFICER" means any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower, to the extent
acceptable to the Agent.
"B TERM LOAN" has the meaning provided in Section 1.01(a).
"B TERM LOAN COMMITMENT" means, with respect to each Bank, the amount
set forth below such Bank's name on the signature pages hereto directly across
from the entry entitled "B Term Loan Commitment," as the same may be reduced
from time to time pursuant to Sections 2.02, 3.02 and/or 8.
"B TERM LOAN FACILITY" means the Loan Facility evidenced by the Total
B Term Loan Commitment.
"B TERM NOTE" has the meaning provided in Section 1.05(a).
"B TERM PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total B Term Loan Commitment.
"BANK" has the meaning provided in the first paragraph of this
Agreement and in Section 11.04.
-102-
"BANKRUPTCY CODE" has the meaning provided in Section 8.05.
"BASE RATE" means the higher of (x) 1/2% PER ANNUM in excess of the
Federal Funds Rate and (y) the rate which the Agent announces from time to time
as its prime commercial lending rate, as in effect from time to time. The rate
the Agent announces as its prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
The Agent may make commercial loans or other loans at rates of interest at,
above or below the rate it announces as its prime commercial lending rate.
"BASE RATE LOAN" means each Loan bearing interest at the rate provided
in Section 1.07(a).
"BORROWER" has the meaning provided in the first paragraph of this
Agreement.
"BORROWER GENERAL SECURITY AGREEMENT" means the General Security
Agreement executed and delivered by the Borrower substantially in the form of
EXHIBIT H1 hereto, except for such changes as shall have been approved by the
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms and the terms hereof.
"BORROWER SECURITIES PLEDGE AGREEMENT" means the Securities Pledge
Agreement executed and delivered by the Borrower substantially in the form of
EXHIBIT F1 hereto, except for such changes therein as shall have been approved
by the Agent, as the same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"BORROWING" shall mean the incurrence pursuant to a Notice of
Borrowing and to the Loan Facility of one Type of Loan by the Borrower from all
of the Banks on a PRO RATA basis on a given date (or resulting from conversions
on a given date) having, in the case of LIBOR Loans, the same Interest Periods.
"BORROWING BASE" means an amount equal to the sum of (i) 85% of the
Eligible Accounts Receivable and (ii) 55% of the Eligible Inventory.
-103-
"BORROWING BASE CERTIFICATE" has the meaning assigned to that term in
Section 6.01.
"BUSINESS DAY" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, LIBOR Loans, any day which is a Business
Day described in clause (i) and which is also a day for trading by and between
banks in U.S. dollar deposits in the interbank Eurodollar market.
"CAPITAL LEASE" of any Person means any lease of any property (whether
real, personal or mixed) by that Person as lessee which, in conformity with
GAAP, is, or is required to be, accounted for as a capital lease on the balance
sheet of that Person, together with any renewals of such leases (or entry into
new leases) on substantially similar terms.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means all obligations
under Capital Leases of such Person or any of its Subsidiaries in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means (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 three years from the date of acquisition, (ii) marketable direct
obligations issued by any State of the United States of America or any local
government or other political subdivision thereof rated (at the time of
acquisition of such security) at least AA by Standard & Poor's Corporation
("S&P") or the equivalent thereof by Xxxxx'x Investors Service, Inc. ("Moody's")
having maturities of not more than one year from the date of acquisition, (iii)
U.S. dollar denominated time deposits, certificates of deposit and bankers'
acceptances of (x) any Bank, (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250,000,000 or (z) any bank
whose shortterm commercial paper rating (at the time of acquisition of such
-104-
security) by S&P is at least A1 or the equivalent thereof or by Xxxxx'x is at
least P1 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with maturities of not more than six months from the date of acquisition,
(iv) commercial paper and variable or fixed rate notes issued by any Bank or
Approved Bank or by the parent company of any Bank or Approved Bank and
commercial paper and variable rate notes issued by, or guaranteed by, any
industrial or financial company with a shortterm commercial paper rating (at the
time of acquisition of such security) of at least A1 or the equivalent thereof
by S&P or at least P1 or the equivalent thereof by Moody's, or guaranteed by any
industrial company with a longterm unsecured debt rating (at the time of
acquisition of such security) of at least AA or the equivalent thereof by S&P or
the equivalent thereof by Moody's and in each case maturing within one year
after the date of acquisition, and (v) repurchase agreements with any Bank or
any primary dealer maturing within one year from the date of acquisition that
are fully collateralized by investment instruments that would otherwise be Cash
Equivalents; PROVIDED that the terms of such repurchase agreements comply with
the guidelines set forth in the Federal Financial Institutions Examination
Council Supervisory Policy Repurchase Agreements of Depository Institutions With
Securities Dealers and Others, as adopted by the Comptroller of the Currency on
October 31, 1985.
"CERCLA" has the meaning provided in Section 5.22(d).
"CHANGE IN CONTROL" has the meaning provided in Section 8.10.
"CLOSING DATE" means December 10, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means all of the Pledged Collateral, Pledged Securities
and Mortgaged Real Property.
"COLLATERAL AGENT" means Indosuez in its capacity as collateral agent
for the Banks and shall include any successor thereto appointed in accordance
herewith.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the account of Borrower for the purpose of providing the
primary payment mechanism in connection with the purchase of any materials,
-105-
goods or services by Borrower or any of its Subsidiaries in the ordinary course
of business of Borrower or Subsidiaries.
"COMMITMENT" means, with respect to each Bank, such Bank's A Term Loan
Commitment, B Term Loan Commitment, Acquisition Term Loan Commitment and
Revolving Loan Commitment.
"COMMITMENT COMMISSION" has the meaning provided in Section 2.03.
"COMMON STOCK" means the Common Stock, $.0001 par value, of the
Borrower.
"COMPLIANCE CERTIFICATE" means a certificate issued pursuant to
Section 6.01(d) signed by a chief financial officer, controller, chief
accounting officer or other Authorized Officer of the Borrower.
"CONSOLIDATED AMORTIZATION EXPENSE" for any Person means, for any
period, the consolidated amortization expense of such Person for such period,
determined on a consolidated basis for such Person and its Subsidiaries in
conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" of any Person means, for any
period, the amount expended for property, plant or equipment in conformity with
GAAP, but excluding expenditures made in connection with the replacement,
substitution or restoration of assets (i) to the extent financed from insurance
proceeds paid on account of the loss of or damage to the assets being replaced
or restored, (ii) with awards of compensation arising from the taking by eminent
domain or condemnation of the assets being replaced or (iii) with regard to
equipment that is purchased simultaneously with the tradein of existing
equipment, fixed assets or improvements, the credit granted by the seller of
such equipment for the tradein of such equipment, fixed assets or improvements;
PROVIDED that Consolidated Capital Expenditures shall in any event not include
the purchase price paid in connection with a Designated Acquisition or the
acquisition of all or substantially all of a business or product line and shall
not include Indebtedness incurred pursuant to Section 7.04(i).
"CONSOLIDATED CURRENT ASSETS" means, with respect to any Person as at
any date of determination, the total assets of such Person and its consolidated
-106-
Subsidiaries which may properly be classified as current assets on a
consolidated balance sheet of such Person and its Subsidiaries in accordance
with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, with respect to any Person
as at any date of determination, the total liabilities of such Person and its
consolidated Subsidiaries which may properly be classified as current
liabilities (other than the current portion of any Loans and of any Existing
Indebtedness) on a consolidated balance sheet of such Person and its
consolidated Subsidiaries in accordance with GAAP.
"CONSOLIDATED DEPRECIATION EXPENSE" for any Person means, for any
period, the consolidated depreciation expense of such Person for such period,
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP.
"CONSOLIDATED EBITDA" for any Person means, for any period, the
difference between (A) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Tax Expense, (iii) Consolidated
Interest Expense, (iv) Consolidated Amortization Expense and (v) Consolidated
Depreciation Expense; PROVIDED that the sums included in clauses (ii) through
(v) shall be added back only to the extent deducted in calculating Consolidated
Net Income LESS (B) the sum of the amounts for such period of interest income
and (C) net gains in connection with sales of assets (excluding sales in the
ordinary course of business), whether or not extraordinary, all as determined on
a consolidated basis for such Person and its consolidated Subsidiaries in
accordance with GAAP.
"CONSOLIDATED EBITDAC" for any Person means, for any period,
Consolidated EBITDA MINUS Consolidated Capital Expenditures.
"CONSOLIDATED INTEREST EXPENSE" for any Person means, for any period,
total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of such Person and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, but excluding, however, any amortization of deferred
-107-
financing costs and any other non-cash component of interest expense, all as
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in accordance with GAAP.
"CONSOLIDATED NET INCOME" for any Person means, for any period, the
net income (or loss) of such Person and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined on a consolidated
basis for such Person and its consolidated Subsidiaries in conformity with GAAP;
PROVIDED that there shall be excluded (i) the income (or loss) of any other
Person (other than consolidated Subsidiaries of such Person) in which any third
Person (other than such Person or any of its consolidated Subsidiaries) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Subsidiaries by such
other Person during such period, (ii) the income (or loss) of any other Person
accrued prior to the date it becomes a consolidated Subsidiary of such Person or
is merged into or consolidated with such Person or any of its consolidated
Subsidiaries or such other Person's assets are acquired by such Person or any of
its consolidated Subsidiaries, (iii) the income of any consolidated Subsidiary
of such Person to the extent that the declaration or payment of dividends or
similar distributions by that consolidated Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that consolidated Subsidiary and (iv) the income (or loss) for
such Person arising from any nonrecurring charges, including the extraordinary
charge related to the writeoff of deferred financing charges, arising as a
result of the Borrower entering into this Agreement.
"CONSOLIDATED TAX EXPENSE" for any Person means, for any period,
without duplication, the consolidated tax expense of such Person for such
period, determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP.
"CONTINGENT OBLIGATIONS" means, as to any Person, without duplication,
any obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
-108-
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business and amounts that are included in Section 7.16. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the maximum
amount that such Person may be obligated to expend pursuant to the terms of such
Contingent Obligation or, if such Contingent Obligation is not so limited, the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"CONVERSION EVENT" shall have the meaning ascribed to such term in
Section 1.01(d).
"CREDIT DOCUMENTS" means (i) this Agreement, (ii) each Note, (iii)
each Guarantee and (iv) each Security Document.
"CREDIT PARTY" means at all times the Borrower and each Subsidiary
thereof that pledges any stock, grants any Lien or issues any guarantee pursuant
to any Credit Document.
"CURRENCY PROTECTION AGREEMENT" shall mean any foreign exchange
contract, currency swap agreement, or other financial agreements or arrangements
designed to protect the Borrower against fluctuations in currency values.
"DEFAULT" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
-109-
"DESIGNATED ACQUISITION" means such acquisition as shall be effected
by the Borrower or its Subsidiaries in whatever manner selected by the Borrower
or its Subsidiaries (including acquisition of capital stock or the purchase of
assets) with the proceeds of an Acquisition Term Loan; PROVIDED that (x) in the
case of a purchase of Capital Stock, the entity acquired engages in, and (y) in
the case of a purchase of assets, such assets are used in a business directly
related to the manufacture and/or distribution of beauty products, and lines of
business reasonably related thereto.
"DESTRUCTION" has the meaning assigned to that term in each Mortgage.
"DIVIDENDS" has the meaning provided in Section 7.08.
"DOCUMENTS" means each Credit Document and each Transaction Document.
"DOLLARS" or "$" means United States Dollars.
"EFFECTIVE DATE" has the meaning provided in Section 11.10. "EFFECTIVE
TIME" has the meaning provided in Section 11.10.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, as at any applicable date of
determination, the aggregate face amount of the Accounts of the Credit Parties
included in clause (i) of the definition of Account hereunder (excluding any
Accounts set forth in clauses (ii) through (vi) of such definition), without
duplication, in each case less (without duplication) the aggregate amount of all
reserves, limits and deductions with respect to such Accounts set forth below
and less the aggregate amount of all returns, discounts, claims, rebates,
offsets, credits, charges (including warehouseman's charges) and allowances of
any nature with respect to such Accounts (whether issued, owing, granted or
outstanding). Unless otherwise approved in writing by the Agent in its sole
discretion, no individual Account shall be deemed to be an Eligible Account
Receivable if:
-110-
(a) a Credit Party does not have legal and valid title to the
Account; or
(b) the Account is not the valid, binding and legally enforceable
obligation of the account debtor subject, as to enforceability, only
to (i) applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws at the time in effect affecting the enforceability of
creditors' rights generally and (ii) judicial discretion in connection
with the remedy of specific performance and other equitable remedies;
or
(c) the Account arises out of a sale made by a Credit Party to an
Affiliate of such Credit Party; or
(d) that portion of any Account that is unpaid more than 90 days
after the original invoice date, with respect to Accounts the invoice
for which provides that payment is due in 60 days or less from the
date of such invoice; or
(e) the Account is unpaid more than 30 days after the original
payment due date, with respect to Accounts the invoice for which
provides that payment is due more than 60 days from the date of such
invoice; PROVIDED, HOWEVER, that the aggregate percentage of all
invoices providing for payment more than 60 days from the date of the
invoice that may constitute Eligible Accounts Receivable shall not
exceed 20% at any one time; or
(f) such Account, when aggregated with all other Accounts of the
same account debtor (or any Affiliate thereof), exceeds twenty percent
in face value of all Accounts of the Credit Parties then outstanding,
to the extent of such excess; or
(g) (i) the account debtor for such Account is also a creditor of
a Credit Party, to the extent of the amount owed by such Credit Party
to the account debtor, (ii) the Account is subject to any claim on the
part of the account debtor disputing liability under such Account in
whole or in part, to the extent of the amount of such dispute or (iii)
the Account otherwise is or is reasonably likely to become subject to
any right of setoff or any counterclaim, claim or defense by the
account debtor, to the extent of the amount of such setoff or
counterclaim, claim or defense; or
-111-
(h) the account debtor for such Account has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of creditors
or if a decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the account debtor in an
involuntary case under the federal bankruptcy laws, as now constituted
or hereafter amended, or if any other petition or other application
for relief under the federal bankruptcy laws has been filed by or
against the account debtor, or if the account debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered
a receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs; or
(i) the Agent does not have a valid and perfected first priority
security interest in such Account (subject only to a tax lien being
contested in good faith and by appropriate proceedings and permitted
by Section 7.03(a)); or
(j) the sale to the account debtor for such Account is on a
consignment, sale on approval, guaranteed sale or saleandreturn basis
or pursuant to any written agreement requiring repurchase or return;
or
(k) such Account is from an account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
Accounts from either such account debtor or any Affiliate thereof are
due or unpaid for more than 90 days after the original invoice date;
or
(l) fifty percent (50%) or more, in face amount, of other
Accounts from the same account debtor for such Account are not deemed
Eligible Accounts Receivable hereunder; or
(m) the account debtor for such Account is a foreign government
or any agency, department or institution thereof; or
(n) such Account is an Account a security interest in which would
be subject to the Federal Assignment of Claims Act of 1940, as amended
(31 U.S.C. ss.3727 ET SEQ.), unless the Credit Party has assigned the
Account to the Agent in compliance with the provisions of such Act; or
-112-
(o) the account debtor for such Account is outside the United
States or incorporated in or conducting substantially all of its
business in any jurisdiction located outside the United States, unless
(i) the sale is on letter of credit or sight draft, guaranty or
acceptance terms, in each case acceptable to the Agent or (ii) such
Account is otherwise approved by and reasonably acceptable to the
Agent; or
(p) the Agent determines in good faith in accordance with its
internal credit policies that (i) collection of the account is
insecure or (ii) such Account may not be paid by reason of the account
debtor's financial inability to pay; provided, however, that any
Account referred to in this clause (p) shall not become ineligible
until the Agent shall have given the Credit Party three Business Days'
advance notice of such determination; or
(q) the goods giving rise to such Account have not been shipped
or the services giving rise to such Account have not been performed by
a Credit Party or the Account otherwise does not represent a final
sale; or
(r) such Account does not comply in all material respects with
all applicable legal requirements, including, where applicable, the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System, in each case as amended.
In addition to the foregoing, Eligible Accounts Receivable includes
such Accounts as a Credit Party requests and that the Agent approves in advance,
in writing and in its sole discretion (or if the aggregate face amount to be
approved exceeds $1,000,000 at any one time, the approval of the Required Banks
has been obtained in writing).
"ELIGIBLE INVENTORY" means (A) the gross amount of Inventory of the
Credit Parties, valued at the lower of cost (on a FIFO basis) or market, which
(i) is owned solely by a Credit Party and with respect to which such Credit
Party has good, valid and marketable title; (ii) is stored on property that is
either (a) owned or leased by a Credit Party, PROVIDED that with respect to any
leased property, from and after the sixtieth (60th) day following the Closing
Date the landlord has executed and delivered a Landlord Lien Assurance, or (b)
owned or leased by a warehouseman that has contracted (including purchase
-113-
orders) with a Credit Party to store Inventory on such warehouseman's property
(PROVIDED that with respect to Inventory stored on property owned or leased by a
warehouseman, from and after the sixtieth (60th) day following the Closing Date
the warehouseman has executed and delivered to the Agent an agreement reasonably
satisfactory to the Agent whereby the warehouseman acknowledges the priority of
the Lien of the Collateral Agent); (iii) is subject to a valid, enforceable and
first priority Lien in favor of the Agent subject only to a tax lien being
contested in good faith and by appropriate proceedings and permitted by Section
7.03(a); (iv) is located in the United States or the United Kingdom PROVIDED,
that any such Inventory located in the United Kingdom (x) is located in a
warehouse leased by the Borrower or its Subsidiaries, (y) is subject to a valid,
enforceable and first priority security interest reasonably acceptable to
counsel for the Agent and (z) does not exceed $1,500,000 in value at any one
time; and (v) is not, in the reasonable judgment of the Agent, obsolete or slow
moving in relation to customary industry practice, and which otherwise conforms
to the requirements for eligibility contained herein; (B) LESS the amount of any
goods returned or rejected by the Credit Parties' customers and goods in transit
to third parties (other than to the Credit Parties' agents or warehousemen that
comply with clause (A)(ii)(b) above); and (C) LESS the amount of any reserves
for special order goods or otherwise. In addition to the foregoing, Eligible
Inventory shall include such items of the Credit Parties' Inventory as Borrower
shall request and that the Agent approves in advance, in writing and in its sole
discretion (or if the aggregate amount to be approved exceeds $1,000,000 at any
one time, the approval of the Required Banks has been obtained).
"ENVIRONMENTAL LAWS" means the common law and all federal, state,
local and foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials, into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials, and (iii)
underground and aboveground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
-114-
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" means any entity, whether or not incorporated, which
is under common control or would be considered a single employer with any Credit
Party within the meaning of Section 414(b), (c) or (m) of the Code and
regulations promulgated under those sections or within the meaning of section
4001(b) of ERISA and regulations promulgated under that section.
"EVENT OF DEFAULT" has the meaning provided in Section 8.
"EXCESS CASH FLOW" means, without duplication, for any Person for any
period for which such amount is being determined, (i) Consolidated Net Income,
MINUS (ii) any amount of gain included in both (x) Consolidated Net Income and
(y) either Net Cash Proceeds or Net Financing Proceeds required to be applied to
the prepayment of the Loans pursuant to Section 3.02(A)(e), PLUS (minus) (iii)
the amount of depreciation, depletion, amortization of intangibles, deferred
taxes and other noncash expenses (revenues) which, pursuant to GAAP, were
deducted (added) in determining such Consolidated Net Income of such Person
MINUS (plus) (iv) additions (reductions) to working capital for such period
(I.E., the increase or decrease in Consolidated Current Assets (excluding cash)
of such Person minus Consolidated Current Liabilities (excluding (A) changes in
current liabilities for borrowed money and (B) Cash or Cash Equivalents which
are either Net Cash Proceeds or Net Financing Proceeds required to be applied to
the prepayment of the Loans pursuant to Section 3.02(A)(e) of such Person from
the beginning to the end of such period), MINUS (v) the amount of Consolidated
Capital Expenditures, MINUS (vi) Term Loan principal payments (excluding
mandatory payments made pursuant to Section 3.02) made during such period. For
purposes of the foregoing and without duplication, Consolidated Net Income will
exclude (x) all losses on the sale of capital assets or out of the ordinary
course of business and (y) all writedowns of capital assets. There shall also be
deducted for the purposes of this definition payments made during such period
pursuant to Sections 7.06(h) and 7.06(i).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
-115-
"EXISTING DEBT" means the Indebtedness of the Credit Parties set forth
on SCHEDULE 5.21(A).
"FEDERAL FUNDS RATE" means on any one day the weighted average of the
rate on overnight Federal funds transactions with members of the Federal Reserve
System only arranged by Federal funds brokers as published as of such day by the
Federal Reserve Bank of New York, or if not so published, the rate then used by
first class banks in extending overnight loans to other first class banks.
"FINAL A TERM LOAN MATURITY DATE" means the last Business Day of
December, 2002.
"FINAL B TERM LOAN MATURITY DATE" means the last Business Day of
December, 2004.
"FINANCING PROCEEDS" means the cash (other than Net Cash Proceeds or
cash obtained in connection with the issuance of equity) received by the
Borrower and/or any of its Subsidiaries, directly or indirectly, from any
financing transaction of whatever kind or nature, including without limitation
from any incurrence of Indebtedness, any mortgage or pledge of an asset or
interest therein (including a transaction which is the substantial equivalent of
a mortgage or pledge), from the sale of tax benefits, from a lease to a third
party and a pledge of the lease payments due thereunder to secure Indebtedness,
from a joint venture arrangement, from an exchange of assets and a sale of the
assets received in such exchange, or any other similar arrangement or technique
whereby the Borrower or any of its Subsidiaries obtains Cash in respect of an
asset.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, it being understood and agreed
that determinations in accordance with GAAP for purposes of Section 7, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 11.07(a).
"GENERAL SECURITY AGREEMENTS" means and includes the Borrower General
Security Agreement, the Subsidiary General Security Agreements and any other
general security agreements delivered pursuant to Section 6.14 or 6.15.
-116-
"GOVERNMENT ACTS" shall have the meaning provided in Section 1.10(i).
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local, foreign
or other governmental or administrative body, instrumentality, department or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar disputeresolving panel or body.
"GUARANTEES" means and includes, once executed and delivered, the
Subsidiary Guarantees and any subsidiary guarantee delivered pursuant to Section
6.16.
"GUARANTORS" for purposes of this Agreement means each of the
Borrower's Subsidiaries and any subsidiary that delivers a subsidiary guarantee
pursuant to Section 6.16.
"HAZARDOUS MATERIALS" means any pollutant, contaminant, chemical or
industrial, toxic or hazardous substance, constituent or waste, including
without limitation, petroleum including crude oil or any fraction thereof, or
any petroleum product, subject to regulation under any Environmental Law.
"INDEBTEDNESS" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all unreimbursed drafts drawn thereunder, (iv) all Indebtedness of
a second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, I.E., takeorpay and similar obligations, (vii) all
obligations of such Person under Interest Rate Agreements or Currency Protection
Agreements and (viii) all net Contingent Obligations of such Person; PROVIDED
that Indebtedness shall not include trade payables, accrued expenses, accrued
dividends, stock redemption payments, royalty payments, accrued retirees or
employees benefits, deferred taxes and accrued income taxes, in each case
arising in the ordinary course of business. For purposes of clause (iv) above
-117-
(where the relevant Indebtedness has not been assumed by such first Person), the
amount of Indebtedness is equal to the lesser of the amount of Indebtedness
secured or the fair market value of the property subject to the Lien.
"INDOSUEZ" has the meaning provided in the first paragraph of this
Agreement.
"INITIAL BANK" means a Bank that was an original signatory to this
Agreement.
"INITIAL LOANS" means the initial Loans made under this Agreement on
the Closing Date.
"INTELLECTUAL PROPERTY" has the meaning provided in Section 5.16.
"INTELLECTUAL PROPERTY SECURITY AGREEMENTS" means and includes the
Subsidiary Intellectual Property Security Agreement and any other intellectual
property security agreements delivered pursuant to Section 6.14 or 6.15.
"INTEREST MARGIN" shall mean, in respect of (i) Base Rate Loans that
are (a) A Term Loans, 1.00%, (b) B Term Loans, 1.50% and (c) Revolving Loans,
1.00% and (ii) LIBOR Loans that are (a) A Term Loans, 2.50%, (b) B Term Loans,
3.00% and (c) Revolving Loans, 2.50%.
"INTEREST PERIOD" shall mean, with respect to any LIBOR Loan, the
interest period applicable thereto, as determined pursuant to Section 1.13.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which the Borrower is a party, designed to protect the Borrower
or any of its Subsidiaries against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" shall mean each date for
calculating LIBOR for purposes of determining the interest rate in respect of
the Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a LIBOR
Loan.
-118-
"INVENTORY" means all of the inventory of Borrower and its
Subsidiaries (on a consolidated basis) including without limitation: (i) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the business of the Borrower and its Subsidiaries;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned or repossessed by Borrower or any of its Subsidiaries.
"INVERNESS" means Inverness Corporation, a New Jersey corporation.
"INVERNESS ACQUISITION" means the acquisition of certain of the assets
of Inverness and Inverness U.K. pursuant to the Asset Purchase Agreement.
"INVERNESS U.K." means Inverness (U.K.) Limited, a private company
limited by shares and registered in England and Wales.
"ISSUING BANK" means the Bank that agrees to issue a Letter of Credit,
determined as provided in Section 1.10(c).
"LEASE" means any lease, sublease, franchise agreement, license,
occupancy or concession agreement.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means (i) standby Letter or
Letters of Credit and (ii) Commercial Letter or Letters of Credit, in each case,
issued or to be issued by Issuing Banks for the account of the Borrower pursuant
to Section 1.10.
"LETTER OF CREDIT PARTICIPATION" has the meaning assigned to that term
in Section 1.10(a).
"LETTERS OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount that is or at any time thereafter may
become available under all Letters of Credit then outstanding PLUS (ii) the
aggregate amount of all drawings under Letters of Credit honored by all Issuing
Banks and not theretofore reimbursed by the Borrower.
"LIBOR" shall mean, with respect to any LIBOR Loan for any Interest
Period, an interest rate PER ANNUM (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the rate at which U.S. dollar deposits approximately equal
in principal amount to the applicable Loan of the Agent, in its capacity as a
-119-
Bank, included in such LIBOR Loan and for a maturity comparable to such Interest
Period are offered to the principal London office of the Agent in the London
interbank market at approximately 11:00 A.M., London time, on the Interest Rate
Determination Date for such LIBOR Loan.
"LIBOR LOAN" shall mean each Loan bearing interest at the LIBOR Rate
plus the applicable Interest Margin in accordance with the provisions of Section
1.07(b) hereof.
"LIBOR RATE" shall mean, with respect to any LIBOR Loan for any
Interest Period, an interest rate PER ANNUM (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the product of (a) the LIBOR in effect for such
Interest Period and (b) Statutory Reserves, if any. "LIEN" means any mortgage,
pledge, security interest, encumbrance, lien, claim, hypothecation, assignment
for security or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"LOAN" means each and every A Term Loan, B Term Loan, Acquisition Term
Loan or Revolving Loan.
"LOAN FACILITY" means the credit facility evidenced by the Total Term
Loan Commitment, the Total Acquisition Term Loan Commitment and the Total
Revolving Loan Commitment.
"MATERIALLY ADVERSE EFFECT" means (i) any materially adverse effect
(both before and after giving effect to the Transaction and the financing
thereof and the other transactions contemplated hereby and by the other
Documents) with respect to the operations, business, properties, assets, nature
of assets, liabilities (contingent or otherwise), financial condition or
prospects of the Borrower and its Subsidiaries, taken as a whole, (ii) any fact
or circumstance (whether or not the result thereof would be covered by
insurance) as to which singly or in the aggregate there is a reasonable
likelihood of (w) a materially adverse change described in clause (i) with
respect to the Borrower and its Subsidiaries, taken as a whole, (x) the
inability of any Credit Party to perform in any material respect its Obligations
hereunder or under any of the other Documents or the inability of the Banks to
enforce in any material respect their rights purported to be granted hereunder
or under any of the other Documents or the Obligations (including realizing on
-120-
the Collateral), or (y) a materially adverse effect on the ability to effect
(including hindering or unduly delaying) the Transaction and the other
transactions contemplated hereby and by the Documents on the terms contemplated
hereby and thereby or (iii) any fact or circumstance relating to any Credit
Party as to which singly or in the aggregate there is a reasonable likelihood of
any significant liability on the part of the Banks or the Agent.
"MINIMUM BORROWING AMOUNT" means $100,000 for Term Loans and Revolving
Loans, and $250,000 for Acquisition Term Loans.
"MORTGAGE" means a term loan and revolving credit mortgage or deed of
trust, assignment of rents, security agreement and fixture filing creating and
evidencing a Lien on each Mortgaged Real Property, which shall be substantially
in the form of EXHIBIT D hereto, in each such case containing such schedules and
including such additional provisions and other deviations from such Exhibit as
shall be necessary to conform such document to applicable or local law or as
shall be customary under local law and made and which shall be dated the date of
delivery thereof and made by the owner of the Mortgaged Real Property described
therein for the benefit of the Collateral Agent, as mortgagee, assignee and
secured party, as the same may at any time be amended or supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"MORTGAGED REAL PROPERTY" means each Real Property designated on
SCHEDULE 4.01(T)(I).
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA with respect to which any Credit Party or its
respective ERISA Affiliates is or has been required to contribute or otherwise
may have liability.
"NET AWARD" has the meaning assigned to that term in each Mortgage.
"NET CASH PROCEEDS" means:
(a) with respect to any Asset Sale, the aggregate cash payments
received by the Borrower and/or any of its Subsidiaries, as the case
may be, from such Asset Sale, net of the reasonably incurred direct
expenses of sale; PROVIDED that, with respect to taxes, expenses shall
-121-
only include taxes to the extent that taxes are payable in cash in the
current year or in the next succeeding year with respect to the
current year as a result of such Asset Sale; and
(b) with respect to any Taking or Destruction, the Net Award or
Net Proceeds, as applicable, resulting therefrom, to be applied as Net
Cash Proceeds under this Agreement pursuant to the provisions of each
Mortgage;
PROVIDED, FURTHER, that Net Cash Proceeds shall not include any amounts or items
included in the definition of Financing Proceeds or Net Financing Proceeds
(including in any proviso appearing therein or exclusion therefrom).
"NET FINANCING PROCEEDS" means Financing Proceeds, net of the
reasonably incurred direct expenses of the transaction and net of taxes
(including income taxes) currently paid or payable in cash as a result thereof
in the current year or in the next succeeding year with respect to the current
year as a result of the transaction generating Net Financing Proceeds.
"NET PROCEEDS" has the meaning assigned to that term in each Mortgage.
"NOTES" means any Revolving Note, Acquisition Term Note or Term Note.
"NOTICE OF BORROWING" has the meaning provided in Section 1.03.
"OBLIGATIONS" means all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Agent, the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document or secured by any of the Security
Documents.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or any Assistant Treasurer; PROVIDED that
every Officers' Certificate with respect to compliance with a condition
precedent to the making of any Loan hereunder shall include, on behalf of the
Borrower, (i) a statement that the officers making or giving such Officers'
-122-
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"OFFICERS' SOLVENCY CERTIFICATE" means the Officers' Solvency
Certificate in the form set forth as EXHIBIT M hereto.
"OPERATING LEASE" of any Person, shall mean any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) by such Person as Lessee which is
not a Capital Lease.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PENSION PLAN" means any pension plan as defined in Section 3(2) of
ERISA (other than a Multiemployer Plan) which is or has been maintained by or to
which contributions are or have been made by any Credit Party or its respective
ERISA Affiliates or as to which any Credit Party or its respective ERISA
Affiliates may have liability.
"PERMITTED ENCUMBRANCES" has the meaning provided in Section 7.03.
"PERSON" means any individual, partnership, limited liability company,
joint venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"PLEDGE AGREEMENTS" means and includes the Borrower Securities Pledge
Agreement and any securities pledge agreements delivered pursuant to Section
6.14 or 6.15.
"PLEDGED COLLATERAL" means all the Pledged Collateral as defined in
the General Security Agreements and the Intellectual Property Security
Agreements.
-123-
"PLEDGED SECURITIES" means all the Pledged Collateral as defined in
each of the Pledge Agreements.
"PORTION" means the Term Portion, the Acquisition Term Portion or the
Revolving Portion.
"PREDECESSOR COMPANIES" means each of Xxxx Laboratories, Inc., Body
Drench (a Division of Designs by Xxxxxxx, Inc.), JDS Manufacturing Co., Inc. and
Kotchammer Investments, Inc.
"PRINCIPAL PAYMENT DATE" means any date of a Scheduled Term Loans
Principal Payment.
"PRIOR LIENS" means Liens which, to the extent permitted by the
provisions of any Security Document, are or may be superior to the Lien of such
Security Document.
"PROJECTED FINANCIAL STATEMENTS" has the meaning provided in Section
5.11(c).
"REAL PROPERTY" means all right, title and interest of any Credit
Party or its respective Subsidiaries (including, without limitation, any
leasehold estate) in and to a parcel of real property acquired by any Credit
Party together with, in each case, all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and rights incidental
to the ownership, lease or operation thereof.
"REGISTER" has the meaning provided in Section 11.04(b)(A) of this
Agreement.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
-124-
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REQUIRED BANKS" shall mean at any time one or more Banks holding at
least 51% of the Total Commitments held by Banks (or, if the Total Commitments
shall have been terminated, Banks holding at least 51% of the outstanding
Loans); PROVIDED that for the purposes of Section 4, the requirement that any
document, agreement, certificate or other writing is to be satisfactory to the
Required Banks shall be satisfied if (x) such document, agreement, certificate
or other writing was delivered in its final form to the Banks prior to the
Effective Date (or if amended or modified thereafter, the Agent have reasonably
determined such amendment or modification not to be material), (y) such
document, agreement, certificate or other writing is satisfactory to the Agent
and (z) Banks holding more than 331/3% of the Total Commitments held by Banks
have not objected in writing to such document, agreement, certificate or other
writing to the Agent prior to the Closing Date.
"RESTORATION" has the meaning assigned to that term in each Mortgage.
"REVOLVING LOAN COMMITMENT" means, with respect to each Bank, the
amount set forth below such Bank's name on the signature pages hereto directly
across from the entry entitled "Revolving Loan Commitment," as such amount may
be reduced from time to time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the Business Day
immediately preceding the Revolving Loan Maturity Date.
"REVOLVING LOANS" has the meaning provided in Section 1.01(b).
"REVOLVING LOAN MATURITY DATE" means the last Business Day of
December, 2002 or such earlier date on which all Revolving Loan Commitments have
been terminated.
-125-
"REVOLVING NOTE" has the meaning provided in Section 1.05(a).
"REVOLVING PORTION" means, at any time, the Portion of the Loan
Facility evidenced by the Total Revolving Loan Commitments.
"SCHEDULED A TERM LOANS PRINCIPAL PAYMENTS" means, with respect to the
principal payments on the A Term Loans on the last Business Day of each month
set forth below, the U.S. dollar amount set forth opposite thereto:
Scheduled A Term Loan
DATE Principal Payment
---- ---------------------
March 1998 750,000
June 1998 750,000
September 1998 750,000
December 1998 750,000
March 1999 1,000,000
June 1999 1,000,000
September 1999 1,000,000
December 1999 1,000,000
March 2000 1,250,000
June 2000 1,250,000
September 2000 1,250,000
December 2000 1,250,000
March 2001 1,500,000
June 2001 1,500,000
September 2001 1,500,000
December 2001 1,500,000
March 2002 1,750,000
June 2002 1,750,000
September 2002 1,750,000
December 2002 1,750,000
PROVIDED, HOWEVER, that the Scheduled A Term Loans Principal Payments set forth
above shall be adjusted pursuant to Section 1.01(e) upon each Conversion Event.
"SCHEDULED B TERM LOANS PRINCIPAL PAYMENTS" means with respect to the
principal payments on the B Term Loans on the last Business Day of each month
set forth below, the U.S. dollar amount set forth opposite thereto:
-126-
Total B Term Loans
DATE Principal Payments
---- ------------------
March 1998 75,000
June 1998 75,000
September 1998 75,000
December 1998 75,000
March 1999 75,000
June 1999 75,000
September 1999 75,000
December 1999 75,000
March 2000 75,000
June 2000 75,000
September 2000 75,000
December 2000 75,000
March 2001 75,000
June 2001 75,000
September 2001 75,000
December 2001 75,000
March 2002 75,000
June 2002 75,000
September 2002 75,000
December 2002 75,000
March 2003 2,937,000
June 2003 2,937,000
September 2003 2,937,000
December 2003 2,937,000
March 2004 2,937,000
June 2004 2,937,000
September 2004 2,937,000
December 2004 2,941,000
PROVIDED, HOWEVER, that the Scheduled B Term Loans Principal Payments set forth
above shall be adjusted pursuant to Section 1.01(e) upon each Conversion Event.
"SCHEDULED TERM LOANS PRINCIPAL PAYMENTS" means the Scheduled A Term
Loans Principal Payments and the Scheduled B Term Loans Principal Payments.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SECURITY DOCUMENTS" means each of the Pledge Agreements, the General
Security Agreements, the Intellectual Property Security Agreements, the
Mortgages and any other documents utilized to pledge as Collateral for the
Obligations any property or assets of whatever kind or nature.
-127-
"SELLERS" has the meaning set forth in the first recital to this
Agreement.
"SENIOR INDEBTEDNESS" means Indebtedness, including under the Credit
Documents, of the Borrower or any of its Subsidiaries which is not expressly
subordinated to the Loans or to the Guarantees, as the case may be.
"SENIOR LEVERAGE RATIO" means the ratio of (i) Senior Indebtedness of
the Borrower and its Subsidiaries at any date to (ii) Consolidated EBITDA of the
Borrower for the Test Period most recently ended.
"STATE AND LOCAL DISCLOSURE REQUIREMENTS" means any state or local
laws requiring notification of the buyer of real property, or notification,
registration, or filing to or with any state or local agency, prior to the sale
of any real property or transfer of control of an establishment, of knowledge of
the actual or threatened presence or release into the environment, or the use,
disposal, or handling of Hazardous Materials on, at, under, or near the real
property to be sold or the establishment for which control is to be transferred.
"STATUTORY RESERVES" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency, supplemental or other reserves) expressed as a
decimal established by the Board of Governors of the Federal Reserve system of
the United States with respect to any category of liabilities which includes
deposits by reference to which LIBOR in respect of such Borrowing is determined.
Such reserve percentages shall include those imposed pursuant to Regulation D.
For purposes of this definition, LIBOR Loans shall be deemed to constitute
"Eurocurrency Liabilities" within the meaning of Regulation D and to be subject
to such reserve requirements without benefit of or credit for proration,
exemptions or offsets which may be available from time to time to any Bank under
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"SUBSIDIARY" of any Person means and includes (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
-128-
(excluding stock of any class or classes of such corporation that might have
voting power solely by reason of the happening of any contingency) is at the
time owned by such Person directly or indirectly through Subsidiaries, and (ii)
any partnership, limited liability company, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has more
than a 50% equity interest at the time.
"SUBSIDIARY GENERAL SECURITY AGREEMENT" means the General Security
Agreements executed and delivered by each Subsidiary substantially in the form
of EXHIBIT H2 hereto, except for such changes as shall have been approved by the
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms and the terms hereof.
"SUBSIDIARY GUARANTEE" means each subsidiary guarantee executed by the
subsidiaries of the Borrower substantially in the form of EXHIBIT E hereto,
except for such changes as shall have been approved by the Agent, as the same
may after its execution be amended, supplemented or otherwise modified from time
to time in accordance with its terms and the terms hereof.
"SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the
Intellectual Property Security Agreement executed and delivered by certain
Credit Parties substantially in the form of EXHIBIT G hereto, except for such
changes as shall have been approved by the Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms and the terms hereof.
"SUBSIDIARY SECURITIES PLEDGE AGREEMENT" means the Securities Pledge
Agreement executed and delivered by certain Credit Parties substantially in the
form of EXHIBIT F3 hereto, except for such changes therein as shall have been
approved by the Agent, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"TAKING" has the meaning assigned to that term in each Mortgage.
"TAXES" has the meaning provided in Section 3.04.
-129-
"TERM LOANS" has the meaning provided in Section 1.01(a).
"TERM NOTE" means an A Term Note or B Term Note.
"TERM PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total Term Loan Commitment.
"TERMINATION EVENT" means (i) a "reportable event" described in
Section 4043 of ERISA or in the regulations thereunder (excluding events for
which the requirement for notice of such reportable event has been waived by the
PBGC by regulation) with respect to a Title IV Plan, or (ii) the withdrawal of
any Credit Party or any of its respective ERISA Affiliates from a Title IV Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a Title IV Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
by the PBGC to terminate a Title IV Plan or to appoint a trustee to administer a
Title IV Plan, or (v) any other event or condition which might constitute
reasonable grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan, or (vi) the complete
or partial withdrawal (within the meaning of Sections 4203 and 4205,
respectively, of ERISA) of any Credit Party or any of its respective ERISA
Affiliates from a Multiemployer Plan, or (vii) the insolvency or reorganization
(within the meaning of Sections 4245 and 4241, respectively, of ERISA) or
termination of any Multiemployer Plan, or (viii) the failure to make any payment
or contribution to any Pension Plan or Multiemployer Plan or the making of any
amendment to any Pension Plan which could result in the imposition of a lien or
the posting of a bond or other security.
"TEST PERIOD" means the four consecutive complete fiscal quarters of
the Borrower then last ended computed on a PRO FORMA basis giving effect to any
acquisitions which have occurred during such period, as if such acquisitions had
occurred on the first day of such period, PROVIDED, HOWEVER, that the Agent
shall have the right to review and approve any adjustments to historical
financial statements used in such computation.
"TITLE COMPANY" means First American Title Insurance Company of New
York or such other title insurance or abstract company as shall be designated by
the Agent.
-130-
"TITLE IV PLAN" means any Pension Plan described in Section 4021(a) of
ERISA, and not excluded under Section 4021(b) of ERISA.
"TOTAL A TERM LOAN COMMITMENT" means the sum of the A Term Loan
Commitments of each of the Banks increased, at each Acquisition Term Loan
Closing Date, by that portion of the Acquisition Term Loan attributed to such
Commitment pursuant to Section 1.01(d).
"TOTAL ACQUISITION TERM LOAN COMMITMENT" means the sum of the
Acquisition Term Loan Commitment of each of the Banks reduced, at each
Acquisition Term Loan Closing Date, by the amount of Acquisition Term Loans
borrowed on such date.
"TOTAL B TERM LOAN COMMITMENT" means the sum of the B Term Loan
Commitments of each of the Banks increased, at each Acquisition Term Loan
Closing Date, by that portion of the Acquisition Term Loan attributed to such
Commitment pursuant to Section 1.01(d).
"TOTAL COMMITMENT" means the sum of the Total Term Loan Commitments,
the Total Acquisition Term Loan Commitments and the Total Revolving Loan
Commitments.
"TOTAL LEVERAGE RATIO" means the ratio of (i) Indebtedness of the
Borrower and its Subsidiaries at any date to (ii) Consolidated EBITDA of the
Borrower for the Test Period most recently ended.
"TOTAL REVOLVING LOAN COMMITMENT" means the sum of the Revolving Loan
Commitments of each of the Banks.
"TOTAL TERM LOAN COMMITMENT" means the sum of the A Term Loan
Commitment and B Term Loan Commitment of each of the Banks.
"TOTAL UTILIZATION" means, at any date of determination, the aggregate
principal amount of all outstanding Revolving Loans.
"TRANSACTION" has the meaning set forth in the recitals to this
Agreement.
"TRANSACTION DOCUMENTS" means the Asset Purchase Agreement and all
schedules and exhibits thereto.
-131-
"TYPE" shall mean a Base Rate Loan or LIBOR Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
"UNUTILIZED COMMITMENT" for any Bank at any time means, on and after
the Effective Date, the sum of the unutilized Revolving Loan Commitment of such
Bank, after taking into effect the Letters of Credit Usage, and, until the
earlier of the Acquisition Term Loan Commitment Termination Date and the date on
which the Acquisition Term Loan Commitment is voluntarily reduced to zero
pursuant to Section 2.02, the unutilized Acquisition Term Loan Commitment of
such Bank.
"WHOLLY-OWNED SUBSIDIARY" of any Person means any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' or nominees' qualifying shares, is owned
directly or indirectly by such Person.
"WRITTEN" or "IN WRITING" means any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
-132-
SECTION 10. THE AGENT.
10.01. APPOINTMENT. Each Bank hereby irrevocably designates and
appoints Indosuez as Agent (such term to include the Agent acting as Collateral
Agent or in any other representative capacity under any other Credit Document)
of such Bank to act as specified herein and in the other Credit Documents and
each such Bank hereby irrevocably authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Agreement and the other Credit Documents,
together with such other powers as are reasonably incidental thereto. The Agent
agrees to act as such upon the express conditions contained in this Section 10.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein or in the other Credit Documents, or any fiduciary relationship
with any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Agent. The provisions of this Section 10 are solely for the benefit
of the Agent and the Banks, and no Credit Party shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement, the Agent shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
or relationship of agency or trust with or for any Credit Party. The Borrower
hereby agrees to pay the Agent an annual agency fee as previously agreed with
the Agent.
10.02. DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Credit Document by or through agents or
attorneysinfact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneysinfact selected by it with
reasonable care except to the extent otherwise required by Section 10.03.
10.03. EXCULPATORY PROVISIONS. Neither the Agent nor any of its
officers, directors, employees, agents, attorneysinfact 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
-133-
manner to any of the Banks for any recitals, statements, representations or
warranties by the Borrower, any Subsidiary of the Borrower or any of their
respective officers contained in this Agreement, any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Document or for any failure of the Borrower or any Subsidiary of the
Borrower or any of their respective officers to perform its obligations
hereunder or thereunder. The Agent shall not be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any Subsidiary of the Borrower.
The Agent shall not be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Banks or by or on behalf of the Borrower
to the Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default.
10.04. RELIANCE BY THE AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and 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 Credit Parties), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Credit Document
unless it shall first receive such advice or concurrence of the Required Banks
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Agent shall in
-134-
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Credit Documents in accordance with a request of the
Required Banks (or to the extent specifically provided in Section 11.12, all the
Banks), and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks.
10.05. NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge of the occurrence of any Default or Event of Default, other than a
default in the payment of principal or interest on the Loans hereunder unless it
has received notice from a Bank or the Borrower or any other Credit Party
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the Banks.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; PROVIDED that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
10.06. NONRELIANCE ON AGENT AND OTHER BANKS. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneysinfact or affiliates have made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower or any Subsidiary of the Borrower,
shall be deemed to constitute any representation or warranty by the Agent to any
Bank. Each Bank represents to the Agent that it has, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement and the other agreements contemplated hereby. Each Bank also
represents that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
-135-
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any of its Subsidiaries which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneysinfact or affiliates. Neither the Agent nor any Bank shall be
deemed to be a fiduciary or have any fiduciary duty to any other Bank or Credit
Party.
10.07. INDEMNIFICATION. The Banks agree to indemnify the Agent in its
capacity as such or in any other representative capacity under any other Credit
Document ratably according to their aggregate Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Agreement or any other Credit Document, or any documents contemplated by
or referred to herein or the transactions contemplated hereby or any action
taken or omitted to be taken by the Agent under or in connection with any of the
foregoing, but only to the extent that any of the foregoing is not paid by the
Borrower or any of its Subsidiaries; PROVIDED that no Bank shall be liable to
the Agent for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. If any indemnity furnished to the Agent for any purpose shall, in
the opinion of the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section 10.07 shall survive the payment of all Obligations.
10.08. THE AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower, its Subsidiaries and other Affiliates of the
Borrower as though the Agent were not the Agent hereunder. With respect to the
-136-
Loans made by it and all Obligations owing to it, the Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" shall include the
Agent in its individual capacity.
10.09. SUCCESSOR AGENT. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, the term "Agent" shall include such
successor agent effective upon its appointment, and the resigning Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
10.10. RESIGNATION BY AGENT.
(a) The Agent may resign from the performance of all its functions and
duties hereunder at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to subsections (b) and
(c) below or as otherwise provided below.
(b) Upon any such notice of resignation of the Agent, the Required
Banks shall appoint a successor Agent acceptable to the Borrower and which shall
be an incorporated bank or trust company or other qualified financial
institution with operations in the United States and total assets of at least $1
billion.
(c) If a successor Agent shall not have been so appointed within said
15 Business Day period, the resigning Agent with the consent of the Borrower
shall then appoint a successor Agent (which shall be an incorporated bank or
trust company or other qualified financial institution with operations in the
United States and total assets of at least $1 billion) who shall serve as Agent
until such time, if any, as the Required Banks appoint a successor Agent as
provided above.
(d) If no successor Agent has been appointed pursuant to subsection
(b) or (c) by the 20th Business Day after the date such notice of resignation
was given by the resigning Agent, such Agent's resignation shall become
-137-
effective and the Required Banks shall thereafter perform all the duties of
Agent hereunder until such time, if any, as the Required Banks with the consent
of Borrower appoint a successor Agent as provided above.
(e) Notwithstanding anything to the contrary contained in this Section
10, Indosuez, as Agent, may transfer its rights and obligations to perform all
of its functions and duties hereunder to its parent company or to any Affiliate
of it or its parent company.
SECTION 11. MISCELLANEOUS.
11.01. PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all outofpocket
costs and expenses (x) of the Agent in connection with the negotiation,
preparation, execution and delivery of the Credit Documents and the documents
and instruments referred to therein and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees and
disbursements of Xxxxxx Xxxxxx & Xxxxxxx and local counsel to the Banks) with
prior notice to the Borrower of the engagement of any counsel and (y) of each of
the Banks in connection with the enforcement of the Credit Documents (including
in connection with any "workout" or other restructuring of the Borrower's
Obligations or in connection with any bankruptcy, reorganization or similar
proceeding with respect to any Credit Party or its Subsidiaries) and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for each of the Banks) with
prior notice to the Borrower of the engagement of any counsel and the reasonable
fees and expenses of any appraisers or any consultants or other advisors engaged
with prior notice to the Borrower of any such engagement with respect to
environmental or other matters; (ii) pay all outofpocket costs and expenses
(including attorneys' fees) of the Agent or Indosuez or in connection with the
assignment or attempted assignment to any other Person of all or any portion of
Indosuez's interest under this Agreement pursuant to Section 11.04 incurred
prior to 120 days following the Closing Date; (iii) pay and hold each of the
Banks harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such Bank)
to pay such taxes; and (iv) indemnify each Bank, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
arising under Environmental Laws) incurred by any of them as a result of, or
arising out of, or in any way related to the entering into and/or performance of
-138-
any Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the documented reasonable fees
and disbursements of counsel incurred by any of them (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
11.02. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank wherever located) to
or for the credit or the account of any Credit Party against and on account of
the Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Bank pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
11.03. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(which may include telecopier communication) and couriered for delivery of the
next Business Day, and shall be sent, if to any Credit Party, to:
Styling Technology Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.
Attention: Xxxxxxx X. Xxxx
-139-
with copies to:
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx &
Xxxxxxxx, P.A.
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 0000000
Attention: Xxxxxxx X. Xxxxxx
if to any Bank, at its address specified for such Bank on Annex II hereto; or,
at such other address as shall be designated by any party in a written notice to
the other parties hereto. All such notices and communications shall, when
telecopied or sent by overnight courier, be effective when sent by telecopier or
delivered to the overnight courier, as the case may be, except that notices and
communications to the Agent shall not be effective until received by the Agent.
11.04. BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto, all future holders of the Notes, and
their respective successors and assigns; PROVIDED that no Credit Party may
assign or transfer any of its interests hereunder without the prior written
consent of all of the Banks in their sole discretion; and PROVIDED, FURTHER,
that the rights of each Bank to transfer, assign or grant participations in its
rights and/or obligations hereunder shall be limited as set forth below in this
Section 11.04; PROVIDED that nothing in this Section 11.04 shall prevent or
prohibit any Bank from (i) pledging its Loans hereunder to a Federal Reserve
Bank in support of borrowings made by such Bank from such Federal Reserve Bank
and (ii) subject to Section 11.04(b)(B), granting participations in or
assignments of all or a portion of such Bank's Loans, Notes and/or Commitments
hereunder (y) to its parent company and/or to any Affiliate of such Bank that is
at least 50% owned by such Bank or its parent company or (z) to an entity
managed by a Person referred to in Section 11.04(a)(ii)(y).
(b) Each Bank shall have the right to transfer, assign or grant
participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Each Bank
may furnish any information concerning the Borrower in the possession of such
Bank from time to time to assignees and participants (including prospective
assignees and participants).
-140-
(A) ASSIGNMENTS. Each Bank, with the written consent of the
Agent, which shall not be unreasonably withheld, which shall be
evidenced on the notice in the form of EXHIBIT I1 hereto, may assign
pursuant to an Assignment and Assumption Agreement substantially in
the form of EXHIBIT I2 hereto all or a portion of its Loans, Notes
and/or Commitments hereunder pursuant to this clause (b)(A) to (x) one
or more Banks or (y) one or more commercial banks or other financial
or lending institutions; PROVIDED that any such assignment pursuant to
this clause (y) shall be in an amount equal to at least $3,000,000 or
such Bank's remaining Loans, Notes or Commitments. Any assignment
pursuant to this clause (b)(A) will become effective no later than
five Business Days after the Agent's receipt of (i) a written notice
in the form of EXHIBIT I1 hereto from the assigning Bank and the
assignee Bank and (ii) a processing and recordation fee of $2,000 from
the assigning Bank in connection with the Agent's recording of such
sale, assignment, transfer or negotiation; PROVIDED that such fee
shall only be payable if the assignment is between a Bank and a party
that is not a Bank prior to the assignment. The Borrower shall issue
new Notes to the assignee in conformity with Section 1.05 and the
assignor shall return the old Notes to the Borrower. Upon the
effectiveness of any assignment in accordance with this clause (b)(A),
the assignee will become a "Bank" for all purposes of this Agreement
and the other Credit Documents and, to the extent of such assignment,
the assigning Bank shall be relieved of its obligations hereunder with
respect to the Loans, Notes or Commitments being assigned. The Agent
shall maintain at its address specified in Annex II hereto a copy of
each Assignment Agreement delivered to and accepted by it and a
register in which it shall record the names and addresses of the Banks
and the Commitment of, and principal amount of the Loans owing to,
each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
demonstrable error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, the Agent or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(B) PARTICIPATIONS. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Loans, Notes and/or
-141-
Commitments hereunder pursuant to this clause (b)(B) to any Person;
PROVIDED that (i) such Bank shall remain a "Bank" for all purposes of
this Agreement and the transferee of such participation shall not
constitute a Bank hereunder and (ii) no participant under any such
participation 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 (x) extend the scheduled final maturity
date of any of the Loans, Notes or Commitments in which such
participant is participating or (y) reduce the principal amount,
interest rate or fees applicable to any of the Loans, Notes or
Commitments in which such participant is participating or postpone the
payment of any interest or fees or (z) release all or substantially
all of the Collateral (except as expressly permitted by the Credit
Documents). 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 the granting Bank
in respect of such participation to be those set forth in the
agreement with such Bank creating such participation) and all amounts
payable by the Borrower hereunder shall be determined as if such Bank
had not sold such participation; PROVIDED that such participant shall
be considered to be a "Bank" for purposes of Sections 11.02 and
11.06(b).
11.05. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of the Agent or any Bank in exercising any right, power or privilege hereunder
or under any other Credit Document and no course of dealing between any Credit
Party and the Agent or any Bank shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power, or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Agent or any Bank would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Agent or the Banks to any other or
further action in any circumstances without notice or demand.
-142-
11.06. PAYMENTS PRO RATA.
(a) The Agent agrees that promptly after its receipt of each payment
from or on behalf of any Credit Party in respect of any Obligations of such
Credit Party, it shall distribute such payment to the Banks PRO RATA based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to any related sum or sums that are
received by other Banks is proportionately greater as measured (immediately
prior to receipt of all related amounts) relative to the total of such
Obligations then owed and due to such Bank to the total of such Obligations then
owed and due to all of the Banks, then such Bank receiving such excess amount
shall promptly purchase for cash without recourse or warranty from the other
Banks an interest in the Obligations of the respective Credit Party to such
Banks in such amount as shall result in a proportional participation by all of
the Banks in such excess amount PRO RATA in accordance with their respective
shares of the Obligations with respect to which such amount was received;
PROVIDED that if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
11.07. CALCULATIONS; COMPUTATIONS.
(a) The financial statements to be furnished to the Banks pursuant
hereto shall be made and prepared in accordance with GAAP consistently applied
throughout the periods involved (except as set forth in the notes thereto or as
otherwise disclosed in writing by Borrower to the Banks); PROVIDED that, except
as otherwise specifically provided herein, all computations determining
compliance with Section 7 and all definitions used herein for any purpose shall
utilize accounting principles and policies in effect at the time of the
preparation of, and in conformity with those used to prepare, the historical
financial statements delivered to the Banks pursuant to Section 4.01(i).
(b) All computations of interest and fees hereunder shall be made on
the actual number of days elapsed over a year of 365 days; PROVIDED, HOWEVER,
that all computations of Commitment Commission and interest on LIBOR Loans shall
be made on the actual number of days elapsed over a year of 360 days.
-143-
11.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) This
Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, each Credit Party and its respective
Subsidiaries hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts. Each Credit Party and its respective Subsidiaries further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to CT Corporation System, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, its agent for service of process, such
service to become effective 30 days after such mailing. Each Credit Party and
its respective Subsidiaries hereby irrevocably appoints CT Corporation System to
serve as its agent for service of process in respect of any such action or
proceeding. Nothing herein shall affect the right of the Agent or any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Credit Party or its respective
Subsidiaries in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
11.09. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
-144-
11.10. EFFECTIVENESS. This Agreement shall become effective on the
date (the "Effective Date") and at the time (the "Effective Time") on which the
Borrower and each of the Banks shall have signed a copy hereof (whether the same
or different copies) and shall have delivered the same to the Agent at the
Agent's Office or, in the case of the Banks, shall have given to the Agent
telephonic (confirmed in writing), written, telex or telecopy notice (actually
received) at such office that the same has been signed and mailed to it. The
Agent will give the Borrower and each Bank prompt written notice of the
occurrence of the Effective Date.
11.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.12. AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated (other than pursuant to the terms hereof) unless such
change, waiver, discharge or termination is in writing signed by the Required
Banks; PROVIDED that no such change, waiver, discharge or termination shall,
without the consent of each Bank and the Agent, (i) extend the scheduled final
maturity date of any Loan, or any portion thereof, or reduce the rate or extend
the time of payment of interest thereon or fees or reduce the principal amount
thereof, or increase the Commitments of any Bank or the Total Commitments, in
each case 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 any Commitment of any Bank), (ii) release all or substantially all of
the Collateral or Guarantees (except as expressly permitted by the Credit
Documents), (iii) amend, modify or waive any provision of Section 1.08, 3.04,
10.07, 11.01, 11.02, 11.04, 11.06, 11.07(b) or 11.12, (iv) reduce any percentage
specified in, or otherwise modify, the definition of Required Banks, (v) modify
the definition of Scheduled A Term Loans Principal Payments or Scheduled B Term
Loans Principal Payments or (vi) consent to the assignment or transfer by any
Credit Party of any of its rights and obligations under this Agreement. No
provision of Section 10 may be amended without the consent of the Agent.
-145-
11.13. SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.08, 1.10, 1.12, 3.04, 10.07 or 11.01 shall survive the
execution and delivery of this Agreement and the making of the Loans, the
repayment of the Obligations and the termination of the Total Commitments.
11.14. DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, Subsidiary or Affiliate of such
Bank.
11.15. WAIVER OF JURY TRIAL. Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement, the Credit
Documents or the transactions contemplated hereby or thereby.
11.16. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
-146-
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed, all as of the date first written above.
STYLING TECHNOLOGY CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-147-
Credit Agreement among Styling Technology Corporation, Credit Agricole
Indosuez and the Banks listed herein.
CREDIT AGRICOLE INDOSUEZ,
as Agent and Collateral
Agent and as a Bank
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
A Term Loan Commitment:
$25,000,000
B Term Loan Commitment:
$25,000,000
Acquisition Term Loan Commitment:
$12,500,000
Revolving Loan Commitment:
$12,500,000
