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EXHIBIT 10.7
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
MARKETING SPECIALISTS CORPORATION
("BORROWER"),
THE LENDERS SET FORTH ON SCHEDULE 1 HERETO
("LENDERS")
AND
FIRST UNION NATIONAL BANK,
AS AGENT FOR THE LENDERS
("AGENT")
CREDIT AGREEMENT DATED DECEMBER 18, 1998,
AS AMENDED AND RESTATED MARCH 30, 2000
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TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS...........................................................................................1
1.1. Definitions........................................................................................1
1.2. Rules of Construction.............................................................................17
SECTION 2 - TERM LOAN............................................................................................17
2.1. Term Loan.........................................................................................17
2.2. Promissory Notes..................................................................................17
2.3. Lenders' Participation............................................................................18
2.4. Use of Proceeds...................................................................................18
2.5. Repayment.........................................................................................18
2.6. Interest..........................................................................................18
2.7. Prepayment........................................................................................21
2.8. Funding Costs and Loss of Earnings................................................................23
2.9. Payments..........................................................................................23
2.10. Regulatory Changes in Capital Requirements........................................................23
2.11. Subordination.....................................................................................24
SECTION 3 - REPRESENTATIONS AND WARRANTIES.......................................................................26
3.1. Organization and Good Standing....................................................................26
3.2. Power and Authority; Validity of Agreement........................................................26
3.3. No Violation of Laws or Agreements................................................................26
3.4. Material Contracts................................................................................26
3.5. Compliance........................................................................................26
3.6. Litigation........................................................................................27
3.7. Title to Assets...................................................................................27
3.8. Accuracy of Information; Full Disclosure..........................................................27
3.9. Taxes and Assessments.............................................................................28
3.10. Indebtedness......................................................................................29
3.11. Management Agreements.............................................................................29
3.12. Investments; Ownership............................................................................29
3.13. ERISA.............................................................................................29
3.14. Fees and Commissions..............................................................................30
3.15. No Extension of Credit for Securities.............................................................30
3.16. Perfection of Security Interest...................................................................30
3.17. Hazardous Wastes, Substances and Petroleum Products...............................................31
3.18. Solvency..........................................................................................31
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3.19. Employee Controversies...........................................................................32
3.20. Year 2000 Compliance.............................................................................32
3.21. Indenture........................................................................................32
SECTION 4 - CONDITIONS...........................................................................................32
4.1. Effectiveness of Second Amended and Restated Credit Agreement.....................................32
4.2. Sales Force Acquisition...........................................................................36
SECTION 5 - AFFIRMATIVE COVENANTS................................................................................37
5.1. Existence and Good Standing.......................................................................37
5.2. Interim Financial Statements......................................................................37
5.3. Annual Financial Statements.......................................................................37
5.4. Compliance Certificate............................................................................38
5.5. Additional Reports................................................................................38
5.6. Public Information................................................................................38
5.7. Books and Records.................................................................................39
5.8. Insurance.........................................................................................39
5.9. Litigation; Event of Default......................................................................39
5.10. Taxes.............................................................................................39
5.11. Costs and Expenses................................................................................39
5.12. Compliance; Notification..........................................................................40
5.13. ERISA.............................................................................................40
5.14. Maximum Debt to EBITDA Ratio......................................................................41
5.15. Capital Expenditure Limits........................................................................41
5.16. Minimum EBITDA....................................................................................42
5.17. Minimum Interest Coverage Ratio...................................................................42
5.18. Minimum Fixed Charges Coverage Ratio..............................................................43
5.19. Management Changes................................................................................43
5.20. Transactions Among Affiliates.....................................................................43
5.21. Additional Collateral Security Documents..........................................................43
5.22. Collateral Audit..................................................................................44
5.23. Notice upon Change in Control.....................................................................44
5.24. Management Meetings...............................................................................44
5.25. Maintenance of Property...........................................................................44
5.26. Other Agreements..................................................................................44
5.27. Other Information.................................................................................45
SECTION 6 - NEGATIVE COVENANTS...................................................................................45
6.1. Indebtedness......................................................................................45
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6.2. Guarantees.......................................................................................46
6.3. Loans............................................................................................46
6.4. Liens and Encumbrances...........................................................................46
6.5. Additional Negative Pledge.......................................................................47
6.6. Restricted Payments..............................................................................47
6.7. Transfer of Assets; Liquidation..................................................................48
6.8. Acquisitions and Investments.....................................................................48
6.9. Payments to Affiliates...........................................................................49
6.10. Certain Changes..................................................................................49
6.11. Restrictive Agreements...........................................................................50
6.12. Use of Proceeds..................................................................................50
SECTION 7 - DEFAULT..............................................................................................51
7.1. Events of Default................................................................................51
7.2. Remedies.........................................................................................54
7.3. Right of Set-off.................................................................................55
7.4. Turnover of Property Held by Lender's Affiliates.................................................55
7.5. Remedies Cumulative; No Waiver...................................................................55
SECTION 8 - AGENCY PROVISIONS....................................................................................56
8.1. Application of Payments..........................................................................56
8.2. Set-Off..........................................................................................56
8.3. Modifications and Waivers........................................................................56
8.4. Obligations Several..............................................................................57
8.5. Lenders' Representations.........................................................................57
8.6. Investigation....................................................................................57
8.7. Powers of Agent..................................................................................57
8.8. General Duties of Agent, Immunity and Indemnity..................................................57
8.9. No Responsibility for Representations or Validity, etc...........................................58
8.10. Action on Instruction of Lenders; Right to Indemnity.............................................58
8.11. Employment of Agents.............................................................................58
8.12. Reliance on Documents............................................................................58
8.13. Agent's Rights as a Lender.......................................................................58
8.14. Expenses.........................................................................................58
8.15. Resignation of Agent.............................................................................59
8.16. Successor Agent..................................................................................59
8.17. Collateral Security and Intercreditor Agreements.................................................59
8.18. Enforcement by Agent.............................................................................60
8.19. Acknowledgment of Intercreditor Agreement........................................................60
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SECTION 9 - MISCELLANEOUS........................................................................................60
9.1. Indemnification and Release Provisions...........................................................60
9.2. Participations and Assignments...................................................................61
9.3. Binding and Governing Law........................................................................61
9.4. Survival.........................................................................................61
9.5. No Waiver; Delay.................................................................................62
9.6. Modification.....................................................................................62
9.7. Headings.........................................................................................62
9.8. Notices..........................................................................................62
9.9. Payment on Non-Business Days.....................................................................63
9.10. Time of Day......................................................................................63
9.11. Severability.....................................................................................63
9.12. Counterparts.....................................................................................63
9.13. Confidentiality..................................................................................63
9.14. Consent to Jurisdiction and Service of Process...................................................64
9.15. WAIVER OF JURY TRIAL.............................................................................64
9.16. ACKNOWLEDGMENTS..................................................................................65
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LIST OF EXHIBITS
Schedule 1: Lenders Pro Rata Shares and Maximum Principal Amounts
Exhibit A Form of Promissory Note
Exhibit B: Disclosure Pursuant to Representations and Warranties
Exhibit C: Funding Costs and Loss of Earnings Calculation
Exhibit D: Form of Compliance Certificate
Exhibit E: Form of Assignment
Exhibit F: Incumbency Certificate
Exhibit G: Form of Notice of Conversion/Continuation
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
made this _____ day of March, 2000, by and among MARKETING SPECIALISTS
CORPORATION, a Delaware corporation ("Borrower"); FIRST UNION NATIONAL BANK, a
national banking association ("First Union") and the other financial
institutions identified on Schedule 1 attached hereto (each individually a
"Lender" and individually and collectively, "Lenders"); and FIRST UNION as agent
for the Lenders ("Agent").
WHEREAS, the Borrower, and First Union as Lender and Agent are parties to
that certain Amended and Restated Credit Agreement dated August 18, 1999, as
amended (the "Existing Credit Agreement");
WHEREAS, the parties desire to amend the Existing Credit Agreement and the
Lenders signatory hereto desire to become party to the Credit Agreement as set
forth herein; and
WHEREAS, this Agreement amends and restates in its entirety the Existing
Credit Agreement; provided, however, that this Agreement shall not constitute a
novation and nothing herein shall be deemed to have terminated or discharged any
indebtedness or obligation under the Existing Credit Agreement and the Loan
Documents (as defined herein and therein) or the collateral security therefor,
all of which shall remain outstanding under and be governed by this Agreement
and such Loan Documents;
NOW, THEREFORE, In consideration of the agreements hereinafter set forth,
and intending to be legally bound, the parties hereto hereby agree as follows.
SECTION 1
DEFINITIONS
1.1. Definitions. When used in this Agreement, the following terms shall
have the respective meanings set forth below.
"Adjusted Base Rate" means the Base Rate plus 3.75%.
"Adjusted Libor Rate" means the Libor Rate plus 5.00%.
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"Affiliate" means as to any party: (i) any Person who or entity which
directly or indirectly owns, controls or holds five percent (5%) or more of the
outstanding beneficial interests in such party; (ii) any entity of which five
percent (5%) or more of the outstanding beneficial interest is directly or
indirectly owned, controlled, or held by such party; (iii) any entity which
directly or indirectly is under common control with such party; (iv) any
director or general partner of such party or any Affiliate; or (v) any immediate
family member of any Person who is an Affiliate. For purposes of this
definition, "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract, or otherwise.
"Agent" means First Union in its capacity as agent for the Lenders
hereunder and any successor in such capacity appointed pursuant to Paragraphs
8.15 and 8.16 hereof.
"Agreement" means this Second Amended and Restated Credit Agreement and all
exhibits hereto, as each may be amended, modified, extended, consolidated or
restated from time to time.
"Authorized Officer" means any of the officers of the Borrower designated
as such pursuant to the most recent Incumbency Certificate delivered to Lenders.
Any designated Authorized Officer shall remain as such until Lenders and Agent
shall have actually received a superseding Incumbency Certificate.
"Base Rate" means the higher of (a) the Federal Funds Rate plus one half of
one percent (1/2%) per annum or (b) the Prime Rate.
"Base Rate Portion" means a Portion as to which the applicable rate of
interest is based on the Base Rate.
"Borrower" means Marketing Specialists Corporation, a Delaware
corporation. "Business Day" means any day not a Saturday, Sunday or a day on
which banks
are required or permitted to be closed under the laws of the Commonwealth of
Pennsylvania.
"Capital Expenditures" means, for any period, all expenditures which are
classified as capital expenditures in accordance with GAAP including all such
expenditures associated with Capital Lease Obligations.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this
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Agreement, the amount of such Capital Lease Obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Capital Leases" means capital leases and subleases, as defined in
Statement 13 of the Financial Accounting Standards Board dated November 1976, as
amended and updated from time to time.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to time, and all rules and
regulations promulgated pursuant thereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and regulations with respect thereto in effect from time to time.
"Collateral" means the collateral security for the Loan, including under
the Collateral Security Documents, this Agreement or any other Loan Document.
"Collateral Security Documents" means the Security Agreement, the Guaranty,
the Pledge Agreements, and any other document or instrument executed and/or
delivered from time to time hereunder or in connection herewith granting or
evidencing Collateral for the Senior Obligations.
"Company" means individually, and "Companies" means individually and
collectively, Borrower and each Guarantor.
"Compliance Certificate" means a certificate in the form of Exhibit D
attached hereto delivered by Borrower to Lenders pursuant to Paragraph 5.4
hereof.
"Default" means an event, condition or circumstance the occurrence of which
would, with the giving of notice or the passage of time or both, constitute an
Event of Default.
"EBITDA" means, for any period and any Person, the total of the following,
each calculated without duplication for such Person on a consolidated basis for
such period: (a) Net Income; plus (b) any provision for (or less any benefit
from) income or franchise taxes included in determining Net Income; plus (c)
Interest Expense deducted in determining Net Income; plus (d) amortization and
depreciation expense deducted in determining Net Income; plus (e) other noncash
charges deducted in determining consolidated net income and not already deducted
in accordance with clauses (b) and (c) of the definition of Net Income.
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"Environmental Laws" means any federal, state, county, regional or local
laws governing the control, handling, storage, removal, spill, release or
discharge of Hazardous Substances, including without limitation CERCLA, the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1976, the
Hazardous Materials Transportation Act, the Emergency Planning and Community
Right to Know Act of 1986, the National Environmental Policy Act of 1975, the
Oil Pollution Act of 1990, any similar or implementing state law, and in each
case including all amendments thereto, and all rules and regulations promulgated
thereunder and permits issued pursuant thereto.
"EPA" means the United States Environmental Protection Agency, or any
successor thereto.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person and any option, warrant or
other right relating thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, all
amendments thereto and all rules and regulations in effect at any time
thereunder.
"ERISA Affiliate" means, when used with respect to any Plan, ERISA, the
PBGC or a provision of the Code pertaining to employee benefit plans, any Person
or entity that is a member of any group or organization within the meaning of
Code Sections 414(b), (c), (m) or (o) of which Borrower or any Guarantor is a
member.
"Event of Default" means an event described in Paragraph 7.1 hereof.
"Excess Cash Flow" means, for any Fiscal Year, EBITDA for such Fiscal Year,
less (i) all payments of principal, interest, fees and expenses with respect to
Total Debt made during such year, (ii) taxes paid in cash during such Fiscal
Year, (iii) Capital Expenditures made during such Fiscal Year, and (iv) the
change in Working Capital since the end of the prior Fiscal Year (such change in
Working Capital to constitute an increase in Excess Cash Flow to the extent that
it is negative, and a decrease to Excess Cash Flow to the extent that it is
positive).
"Executive Officer" means, with respect to the Borrower, its President,
Chief Financial Officer, Chief Operating Officer, and any other officer who is
an "executive officer" as defined in Rule 3b-7 under the Securities Exchange Act
of 1934, as amended.
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"Existing Credit Agreement" means the Amended and Restated Credit Agreement
dated August 18, 1999, as amended by Amendment No. 1 dated September 24, 1999.
"Existing Subordinated Obligations" means
(i) the payment obligations to JF & JF Limited Partnership under the
Stock Purchase Agreement dated July 7, 1999 by and among Borrower, Buckeye Sales
& Marketing, Inc., JF & JF Limited Partnership and certain Primary Parties (as
defined therein);
(ii) the obligations to the selling stockholders of Sell, Inc. under
those certain Subordinated Promissory Notes issued pursuant to the Stock
Purchase Agreement dated January 20, 1999 among Borrower, Sell, Inc. and the
stockholders of Sell, Inc.;
(iii) the payment obligations to the stockholders of United Brokerage
Company under that certain Stock Purchase Agreement dated April 23, 1999 among
Borrower, United Brokerage Company and the stockholders of United Brokerage
Company;
(iv) the payment obligations to the Stockholders of ▇▇▇▇ ▇▇▇▇▇
Associates, Inc. under those certain Subordinated Promissory Notes dated October
13, 1999;
(v) obligations to the stockholders of ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc. under
those certain Promissory Notes issued pursuant to the Stock Purchase Agreement
dated April 21, 1999 among MSSC, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc. and the stockholders of
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc.;
(vi) obligations to stockholders of Atlas Marketing Company, Inc. under
those certain Subordinated Promissory Notes issued pursuant to (A) the Stock
Purchase Agreement dated November 6, 1997 among Richmont, MSSC Carolina, Inc.,
the Atlas Marketing Company, Inc. Employee Stock Ownership Plan, and certain
management stockholders of Atlas Marketing Company, Inc., (B) the Stock Purchase
Agreement dated November 6, 1997 among Atlas Marketing Company, Inc., ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, MSCC Carolina, Inc. and Richmont;
(vii) obligations to the stockholders of Tower Marketing, Inc. under
the Common Notes and Preferred Notes issued pursuant to the Agreement and Plan
of Merger dated April 21, 1997 among Tower Marketing, Inc., MSSC Texas, Inc. and
MSSC; and
(viii) obligation to ▇▇▇▇▇▇▇-▇▇▇▇▇▇, Inc. under the Subordinated
Promissory Note dated January 27, 2000 by Marketing Specialists Sales Company.
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"Federal Funds Rate" means, for any day, the effective rate of interest for
such day, as announced from time to time by the Board of Governors of the
Federal Reserve System as shown in publication H.15 as the "Federal Funds Rate."
"First Union" means First Union National Bank, a national banking
association.
"Fiscal Quarters" means the three (3) month periods falling in each Fiscal
Year ending March 31, June 30, September 30, and December 31.
"Fiscal Year" means a twelve (12) month period ending December 31.
"Fixed Charges" means, for any period, the total of the following for
Borrower calculated on a consolidated basis without duplication: (a) scheduled
amortization of Indebtedness plus (b) cash interest expense plus (c) cash taxes.
"GAAP" means generally accepted accounting principles set forth in the
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements of the Financial Accounting
Standards Board and in such other statements by such other entity as Agent may
reasonably approve, which are applicable in the circumstances as of the date in
question, subject to Paragraph 1.2(a) hereof; and such principles observed in a
current period shall be comparable in all material respects to those applied in
a preceding period.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person or indemnifying such other Person from a
liability or other obligation and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect the obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means individually, and "Guarantors" means individually and
collectively, the Subsidiaries of Borrower, being MSSC, ▇▇▇▇ ▇▇▇▇▇ Associates,
Inc., a Michigan corporation and Bromar, Inc., a California corporation.
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"Guaranty" means the Second Amended and Restated Guaranty Agreement
executed by Guarantors in favor of Lenders as delivered pursuant to Paragraph
4.1 hereof, as may be amended, modified or restated from time to time.
"Hazardous Substance" means petroleum products and items defined in the
Environmental Laws as "hazardous substances", "hazardous wastes", "pollutants"
or "contaminants" and any other toxic, reactive, corrosive, carcinogenic,
flammable or hazardous substance or other pollutant.
"Incumbency Certificate" means a certificate in the form of Exhibit F
attached hereto delivered by Borrower to Lenders from time to time.
"Indebtedness" means as to any Person at any time (without duplication):
(a) all obligations of such Person for borrowed money; (b) all obligations of
such Person evidenced by bonds, notes, debentures, or other similar instruments;
(c) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than ninety (90)
days or that are being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves have been established; (d)
all Capital Lease Obligations of such Person; (e) all indebtedness or other
obligations of others Guaranteed by such Person; (f) all obligations secured by
a Lien existing on property owned by such Person, whether or not the obligations
secured thereby have been assumed by such Person or are non-recourse to the
credit of such Person; (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments; (h) all liabilities of such
Person in respect of unfunded vested benefits under any Plan; (i) all
liabilities of such Person under any interest rate swap, interest rate caps,
interest rate collars or other similar agreements, or any foreign exchange,
currency hedging, commodity hedging or other similar agreement; (j) any
agreement pursuant to which a Person is or may become obligated to make any
payment (i) in connection with the purchase by any third party of any Equity
Interest or subordinated Indebtedness or (ii) the amount of which is determined
by reference to the price or value at any time of any Equity Interest or
subordinated indebtedness; (k) all obligations of such Person, contingent or
otherwise, for the payment of money under any noncompete, consulting or any
other similar arrangements providing for the deferred payment of the purchase
price for an acquisition; and (l) all other amounts which are, in accordance
with GAAP, required to be reflected as liabilities on a consolidated balance
sheet of such Person other than accruals and deferred taxes.
"Indemnification Escrow Agreement" means the Indemnification Escrow
Agreement dated December 18, 1998 entered into pursuant to the ▇▇▇▇▇▇▇ Stock
Purchase Agreement.
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"Indenture" means the Indenture dated as of December 19, 1997 governing the
Richmont Subordinated Notes as amended by the Supplemental Indenture dated as of
August 18, 1999, and as may be further amended from time to time.
"Intercreditor Agreement" means the Intercreditor Agreement entered into
among the Borrower, the Agent, and the Revolver Agent, dated as of the date
hereof, and as may be amended from time to time.
"Interest Period" means, with respect to a Libor Portion, a period of one
(1), two (2), three (3) or six (6) months' duration, as Borrower may elect,
during which the Adjusted Libor Rate is applicable; provided, however, that (a)
if any Interest Period would otherwise end on a day which shall not be a London
Business Day, such Interest Period shall be extended to the next succeeding
London Business Day, unless such London Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding London
Business Day, subject to clause (c) below; (b) interest shall accrue from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires; (c) with respect to an Interest Period which
begins on the last London Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period), the Interest Period shall end on the last London
Business Day of a calendar month; and (d) Borrower may not elect an Interest
Period that would extend past the Maturity Date.
"Lender" means individually, and "Lenders" means individually and
collectively, the institutions identified on Schedule 1 attached hereto and
their respective successors and assigns so long as any such institution retains
any portion of the Loan hereunder.
"Libor Portion" means a Portion as to which the applicable rate of interest
is based on the Adjusted Libor Rate.
"Libor Rate" means, for any Interest Period, as applied to a Libor Portion,
the rate per annum (rounded upwards, if necessary to the next 1/16 of 1%)
determined pursuant to the following formula:
Base Libor Rate
Libor Rate = ----------------------
1 - Reserve Percentage
For purposes hereof, "Base Libor Rate" shall mean, as applied to a Libor
Portion, the rate which appears on the Telerate Page 3750 at approximately 9:00
a.m. Philadelphia time two London Business Days prior to the commencement of
such Interest Period for the offering to leading
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banks in the London Interbank Market of deposits in United States dollars
("Eurodollars") or, if such rate does not appear on the Telerate page 3750, the
rate which appears (or, if two or more such rates appear, the average rounded up
to the nearest 1/16 of 1% of the rates which appear) on the Reuters Screen LIBO
Page as of 9:00 a.m. Philadelphia time two London Business Days prior to the
commencement of the Interest Period, in either case for an amount substantially
equal to such Portion as to which Borrower may elect the Adjusted Libor Rate to
be applicable with a maturity of comparable duration to the Interest Period
selected by Borrower for such Libor Portion, as may be adjusted from time to
time in accordance with Paragraph 2.6(e) hereof.
"Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law, or otherwise.
"Loan" means the outstanding principal balance of indebtedness advanced
pursuant to Paragraph 2.1 hereof, together with interest accrued thereon and
fees and expenses payable hereunder in connection therewith.
"Loan Documents" means this Agreement, the Notes, the Collateral Security
Documents, and the other documents and agreements executed and delivered in
connection with this Agreement. The Loan Documents shall not include any
agreements or documents relating to swaps, ▇▇▇▇▇▇ or similar arrangements with
any Lender.
"Local Authorities" means individually and collectively the state and local
governmental authorities and administrative agencies which govern the business,
commercial activities or facilities owned or operated by any Company.
"London Business Day" means any Business Day on which banks in London,
England are open for business.
"MSSC" means Marketing Specialists Sales Company, a Texas corporation.
"Material Adverse Effect" means a material adverse effect on the business,
financial condition or prospects of the Borrower and its consolidated
Subsidiaries taken as a whole, or on the Companies' ability (taken as a whole)
to perform their obligations under (i) this Agreement and the other Loan
Documents or (ii) the Revolver.
"Material Subsidiary" means any direct or indirect Subsidiary of Borrower
which either: (i) comprises 5% or more of the assets of Borrower and its
consolidated Subsidiaries as of the last day of the most recently ended fiscal
quarter, or (ii) is responsible for 5% or more of the EBITDA of the Borrower and
its consolidated Subsidiaries for the most recent Rolling Period.
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"Maturity Date" means March 30, 2002.
"Maximum Principal Amount" means the maximum principal amount of the Loan,
up to which the applicable Lender has agreed to lend funds as set forth in
Schedule 1 attached hereto.
"▇▇▇▇▇▇▇ Stock Purchase Agreement" means the Stock Purchase Agreement dated
May 20, 1998 among the Borrower (formerly Monroe, Inc.), ▇▇▇▇▇▇▇ Enterprises,
Inc. and the stockholders of ▇▇▇▇▇▇▇ Enterprises, Inc. as amended by Amendment
No. 1 to Stock Purchase Agreement dated November 18, 1998 and by Amendment No. 2
to Stock Purchase Agreement dated December 15, 1998.
"Net Cash Proceeds" means, with respect to any Sale of Material Assets, the
cash proceeds (including insurance proceeds) received by the Borrower or its
Subsidiaries in such a transaction less (i) the reasonable costs of the
transaction, (ii) applicable taxes arising out of the transaction, and (iii)
payment of any Indebtedness secured by such assets pursuant to liens permitted
under Paragraph 6.4(i), (v) or (vi).
"Net Income" means, for any period and any Person, such Person's
consolidated net income (or loss), but excluding: (a) the income of any other
Person (other than its subsidiaries) in which such Person or any of its
subsidiaries has an ownership interest, unless received by such Person or its
subsidiary in a cash distribution; (b) any after-tax gains or losses
attributable to asset disposition; (c) to the extent not included in clauses (a)
and (b) above, any after-tax extraordinary, non-cash or nonrecurring gains or
losses; and (d) non-cash or nonrecurring charges due to changes in accounting
principles required by GAAP.
"Note" means individually, and "Notes" means individually and collectively,
the Second Amended and Restated Notes in the form of Exhibit A attached hereto
delivered by Borrower to each Lender, as may be amended, modified or restated
from time to time.
"Notice of Conversion/Continuation" means a notice regarding selection of
interest rates in the form of Exhibit G attached hereto.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
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"Permitted Investments" means (i) investments in commercial paper maturing
in 180 days or less from the date of issuance which is rated A1 or better by
Standard & Poor's Corporation or P1 or better by ▇▇▇▇▇'▇ Investors Services,
Inc.; (ii) investments in direct obligations of the United States of America or
obligations of any agency thereof which are guaranteed by the United States of
America, provided that such obligations mature within twelve (12) months of the
date of acquisition thereof; (iii) investments in certificates of deposit
maturing within one (1) year from the date of acquisition thereof issued by a
bank or trust company organized under the laws of the United States or any state
thereof, having capital, surplus and undivided profits aggregating at least
$500,000,000 and the long-term deposits of which are rated A1 or better by
▇▇▇▇▇'▇ Investors Services, Inc. or equivalent by Standard & Poor's Corporation;
and (iv) money market funds registered under the Investment Company Act of 1940,
as amended, whose shares are registered under the Securities Act of 1933, as
amended, and having a rating by Standard & Poor's Corporation of AAAm-G, AAAm or
AAm.
"Permitted Liens" shall mean liens permitted pursuant to Paragraph 6.4
hereof.
"Permitted Revolver Financing" means the Revolver on the date hereof and
any amendment or refinancing, provided, that (i) the principal amount shall not
exceed Sixty Million Dollars ($60,000,000), (ii) no Lien shall exist thereunder
other than the Lien on the Shared Collateral and (iii) any such amendment or
refinancing shall have no detrimental effect on the position of the Lenders
hereunder.
"Person" shall mean any individual, corporation, partnership, company,
association, limited liability corporation or other legal entity.
"Plan" means any employee pension benefit or employee welfare benefit plan
as defined in Sections 3(1) or (2) of ERISA maintained or sponsored by,
contributed to, or covering employees of, either Borrower or any ERISA
Affiliate.
"Pledge Agreements" shall mean the Second Amended and Restated Pledge
Agreement executed by the Companies in favor of Agent pursuant to Paragraph
4.1(d) hereof and any additional Pledge Agreement executed and delivered from
time to time pursuant to Paragraph 5.21 hereof, as may be amended, modified or
restated from time to time.
"Portion" means a portion of the Loan as to which a specific interest rate
and, in the case of a Libor Portion, an Interest Period, has been elected by
Borrower.
"Post-Default Payment" means any payments, or proceeds of the Collateral,
from the Borrower or any other source with respect to the Senior Obligations,
including from the exercise of any set-off which payments or proceeds are:
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(i) received by a Lender within 90 days prior to the commencement of a
bankruptcy proceeding of any nature as described in Paragraph 7.1(j) with
respect to the Borrower, or the acceleration of the Loan, and which payment
reduces the amount of the obligations owed to such Lender below the amount owed
to such Lender as of the 90th day prior to such occurrence, or
(ii) received by a Lender after commencement of a bankruptcy proceeding
of any nature as described in Paragraph 7.1(j) with respect to the Borrower, or
the acceleration of the Loan.
However, Post-Default Payments shall not include (i) payments made to the Agent
pursuant to Paragraph 2.10 of this Agreement or (ii) any payment made pursuant
to Paragraph 8.17(b).
"Prime Rate" means the rate of interest announced by Agent from time to
time as its prime rate. Such rate is an index or base rate and is not
necessarily the lowest or best rate charged by Agent to its customers or other
banks.
"Pro Rata Share" means as to any Lender, the ratio which the outstanding
principal balance of its portion of the Loan bears to the aggregate outstanding
principal balance of the Loan at any time, or if no Indebtedness is outstanding
under the Loan or the context otherwise requires, its percentage share set forth
in Schedule 1 attached hereto.
"RCP" means Richmont Capital Partners I, L.P., a Delaware limited
partnership.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the date hereof between the Borrower and the holders of the Warrants, and
as may be amended from time to time.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12 Code of Federal Regulations, as
amended, and any successor thereto.
"Release" means any spill, leak, emission, discharge or the pumping,
pouring, emptying, disposing, injecting, escaping, leaching or dumping of a
Hazardous Substance into the environment.
"Required Lenders" means those Lenders (which may include Agent in its
capacity as a Lender) holding sixty-six and two-thirds percent (66-2/3%) or more
of the aggregate principal amount outstanding under the Loan.
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"Reserve" means, for any day, that reserve (expressed as a decimal) which
is in effect (whether or not actually incurred) with respect to a Lender (or any
bank Affiliate of such Lender) on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor or any other banking
authority to which a Lender (or any bank Affiliate of such Lender) is subject
including any board or governmental or administrative agency of the United
States or any other jurisdiction to which a Lender (or any bank Affiliate of
such Lender) is subject) for determining the maximum reserve requirement
(including without limitation any basic, supplemental, marginal or emergency
reserves) for Eurocurrency liabilities as defined in Regulation D.
"Reserve Percentage" means, for a Lender (or any bank Affiliate of such
Lender) on any day, that percentage (expressed as a decimal) prescribed by the
Board of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender (or any bank Affiliate of such Lender) is
subject, including any board or governmental or administrative agency of the
United States or any other jurisdiction to which a Lender is subject), for
determining the reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for (i) deposits of United States
Dollars or (ii) Eurocurrency liabilities as defined in Regulation D, in each
case used to fund a Libor Portion or any Loan made with the proceeds of such
deposit. The Adjusted Libor Rate shall be adjusted on and as of the effective
day of any change in the Reserve Percentage.
"Restricted Payments" means redemptions, repurchases, and distributions of
any kind (including redemptions in exchange for real or tangible personal
property) in respect of the capital stock of Borrower (other than dividends or
distributions consisting solely of shares of capital stock of Borrower), and
payments of principal and interest or other amounts on Subordinated Debt.
"Revolver" means that certain Credit Agreement among the Companies, the
Revolver Lenders and the Revolver Agent, dated the date hereof, and as may be
amended from time to time.
"Revolver Agent" means The Chase Manhattan Bank, as agent for the Revolver
Lenders under the Revolver, or any successor agent thereunder.
"Revolver Lenders" means the financial institution identified as "Banks" in
the Revolver.
"Richmont" means Richmont Marketing Specialists, Inc., a Delaware
corporation.
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"Richmont Merger" means the merger of Richmont with and into Borrower, on
and subject to the terms and conditions set forth in the Richmont Merger
Agreement.
"Richmont Merger Agreement" means the Agreement and Plan of Merger dated
April 28, 1999, as amended by Amendment No. 1 dated July 8, 1999, by and among
Borrower, Richmont and the stockholders of Richmont.
"Richmont Subordinated Notes" means the 10 1/8 % Senior Subordinated Notes
due 2007 issued pursuant to the Indenture.
"Rolling Period" means a period of four consecutive fiscal quarters.
"Sale of Material Assets" means the sale or other disposition (including
damage, destruction or condemnation of assets) by Borrower or any of its
Subsidiaries, in a single transaction or in the aggregate as to all transactions
within any twelve (12) consecutive months, of assets (including stock or other
investments or interests in a Person) which, valued at the greater of book value
or fair market value, have a value of One Hundred Thousand Dollars ($100,000) or
more; excluding (i) the sale of inventory in the ordinary course of business,
and (ii) the sale of Permitted Investments for cash or the conversion into cash
of Permitted Investments.
"Sales Force" means The Sales Force Companies, Inc., an Illinois
corporation.
"Sales Force Acquisition" means the acquisition by the Borrower of all of
the outstanding capital stock of Sales Force pursuant to that certain Stock
Purchase Agreement by and among MSSC, Sales Force and the stockholders of Sales
Force dated as of February__, 2000 and in form and substance acceptable to the
Lenders.
"Security Agreement" means the Second Amended and Restated Security
Agreement executed by Borrower and Guarantors delivered pursuant to Paragraph
4.1(c) hereof (including as joined in by any additional Guarantors pursuant to
Paragraph 5.21 hereof from time to time), as may be amended, modified, or
restated from time to time.
"Seller Obligations" means (i) obligations of any of the Companies or their
Subsidiaries to sellers of previously acquired businesses, including all
deferred or contingent purchase price obligations and all non-competition,
employment and consulting arrangements, and (ii) obligations to previous
shareholders of any of the Companies relating to repurchase of their shares,
including, without limitation, the Existing Subordinated Obligations.
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"Senior Debt" means Total Debt less Subordinated Debt.
"Senior Obligations" means the obligations of the Borrower and its
Subsidiaries to Lenders or Agent with respect to (i) the Loan, (ii) any currency
or interest rate swap or similar obligation with any Lender, and (iii) any other
obligation under any Loan Document.
"Senior Secured Debt" means any Indebtedness that is secured by any asset
(real, personal, or mixed) of Borrower or any Subsidiary, including without
limitation the principal balance of the Loan and all Capital Leases.
"Shared Collateral" has the meaning given such term in the Intercreditor
Agreement.
"Stockholders Agreement" means the Stockholders Agreement dated the date
hereof among the Borrower, First Union Investors, Inc., a North Carolina
corporation, MS Acquisition Limited, a Delaware limited partnership, and
Richmont Capital Partners I, L.P., a Delaware limited partnership, as may be
further amended from time to time.
"Subordinated Debt" means the Existing Subordinated Obligations, the
Richmont Subordinated Notes and any other Indebtedness of Borrower or a
Subsidiary subordinated to the Senior Obligations pursuant to a subordination
agreement in form and substance satisfactory to the Required Lenders, as
approved in writing prior to the incurrence of such Indebtedness.
"Subsidiary" means, with respect to any Person, any other Person of which
such Person, directly or indirectly, owns or controls more than fifty percent
(50%) of any class or classes of securities, membership interests, partnership
interests or other equity interests, and any partnership in which such Person is
a general partner. Unless otherwise specified, references to "Subsidiaries"
herein shall mean direct and indirect Subsidiaries of Borrower.
"Successful Syndication" means (i) completion of an orderly syndication of
the credit facilities of the Borrower meeting the requirements set forth in the
Waiver Agreement, or (ii) this Agreement being terminated and all amounts due
and owing hereunder having been fully paid in cash.
"Synthetic Purchase Agreement" means any agreement pursuant to which a
Person is or may become obligated to make any payment (i) in connection with the
purchase by any third party of any Equity Interest or Subordinated Debt or (ii)
the amount of which is determined by reference to the price or value at any time
of any Equity Interest or subordinated Indebtedness; provided that no phantom
stock or similar plan providing for payments only to
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current or former directors, officers or employees of any Company shall be
deemed to be a Synthetic Purchase Agreement.
"Tax Escrow Agreement" means the Tax Escrow Agreement dated December 18,
1998, entered into pursuant to the ▇▇▇▇▇▇▇ Stock Purchase Agreement.
"Three Party Agreement" means an agreement entered into among the Revolver
Agent, the Agent, the Companies and a depository institution at which an
approved lock box and approved lock box account are maintained, which Three
Party Agreement Relating to Lockbox Services (With Activation) shall be
substantially in the form of that certain Three Party Agreement dated the date
hereof among the Revolver Agent, MSSC and Bank of America, N.A..
"Total Debt" means, as of the date of determination, the aggregate
outstanding principal amount of all Indebtedness for: (A) borrowed money,
including without limitation the Loan and any outstanding Subordinated Debt; (B)
the purchase price for installment purchases of real or personal property; (C)
the principal portion of Capital Leases; (D) guaranties of Indebtedness of
others; (E) reimbursement obligations under letters of credit; in each case
without duplication; and (F) Seller Obligations.
"Voting Agreement" means the Voting Agreement dated August 18, 1999 among
MS Acquisition Limited, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ & Company LLC, and JLM Management LLC.
"Waiver Agreement" means the Waiver, Consent and Amendment Agreement dated
August 13, 1999 among Borrower and First Union as Lender and as Agent.
"Warrant Agreement" means the Warrant Agreement dated the date hereof
between Borrower and the holders of the Warrants, and as may be further amended
from time to time.
"Warrant Agreements" means (i) the Warrant Agreement, (ii) the Registration
Rights Agreement and (iii) the Stockholders Agreement, collectively providing
for customary rights acceptable to the Lenders (including, but not limited to,
anti-dilution, pre-emptive, co-sale and piggyback rights and put provisions) and
containing certain clawback provisions limiting the ability of the holders of
the Warrants to exercise the entirety of the Warrants.
"Warrants" means detachable Warrants issued to the Lenders or their
Affiliates representing the right to purchase at a nominal exercise price four
percent (4%) of the Common Stock of Borrower on a fully diluted basis, and
governed by the Warrant Agreements.
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"Working Capital" means current assets (net of cash) less current
liabilities (net of short term debt and current maturities of long term debt).
"Year 2000 Compliant" and "Year 2000 Compliance" means, as to any material
computer system or application or micro-processor dependent good or equipment,
that it will operate as designed and intended prior to, during and after the
calendar year 2000 without error relating to date data or date information,
specifically including any error relating to, or the product of, date data or
date information that represents or references different centuries or more than
one century.
1.2. Rules of Construction.
(a) GAAP. Except as otherwise provided herein, financial and accounting
terms used in the foregoing definitions or elsewhere in this Agreement, shall be
defined in accordance with GAAP. If Borrower or Required Lenders determine that
a change in GAAP from that in effect on the date hereof has altered the
treatment of certain financial data to its detriment under this Agreement, such
party may, by written notice to the other within ten (10) days after the
effective date of such change in GAAP, request renegotiation of the financial
covenants affected by such change. If Borrower and Required Lenders have not
agreed on revised covenants within thirty (30) days after the delivery of such
notice, then, for purposes of this Agreement, GAAP will mean generally accepted
accounting principles on the date just prior to the date on which the change
occurred that gave rise to the notice.
(b) Use of term "consolidated". Any term defined in Paragraph 1.1
hereof, when modified by the word "consolidated," shall have the meaning given
to such term herein as to Borrower and all entities whose accounts, financial
results or position, for financial accounting purposes, are consolidated with
those of Borrower in accordance with GAAP.
SECTION 2
TERM LOAN
2.1. Term Loan. Pursuant to the Existing Credit Agreement and prior to the
effective date hereof, First Union advanced the Loan to Borrower, in the
aggregate amount of Thirty-Five Million Dollars ($35,000,000). The Loan is
hereby continued under this Agreement.
2.2. Promissory Notes. The Indebtedness of the Borrower to each Lender will
be evidenced by a Note executed by Borrower in favor of such Lender. The
original principal amount of each Lender's Note will be in the amount identified
in Schedule 1 attached hereto as its Maximum Principal Amount; provided,
however, that notwithstanding the face amount of
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each such Note, Borrower's liability thereunder shall be limited at all times to
the actual Indebtedness, principal, interest, fees and expenses then outstanding
to such Lender.
The Notes collectively amend and restate the Amended and Restated Revolving
Credit Note and the Amended and Restated Term Note executed and delivered by
Borrower pursuant to the Existing Credit Agreement (the "Prior Notes");
provided, however, that such Notes shall not constitute a novation, and shall
not be deemed to have extinguished or discharged the indebtedness under the
Prior Notes or the collateral security therefore, all of which shall continue
under and be governed by the Notes and the other Loan Documents.
2.3. Lenders' Participation. Lenders shall be lenders in the Loan in the
Maximum Principal Amounts and Pro Rata Shares set forth in Schedule 1 attached
hereto.
2.4. Use of Proceeds. The Loan shall be used solely to partially refinance
outstanding amounts under the Existing Credit Agreement, and in no event shall
funds be advanced to or used by Subsidiaries that are not Guarantors.
2.5. Repayment. Subject to certain mandatory prepayments as set forth in
Paragraph 2.7 hereof, the aggregate outstanding principal balance under the Loan
on the Maturity Date together with all interest, fees and costs due hereunder,
shall be due and payable in full on such Maturity Date. Notwithstanding the
foregoing, the entire outstanding balance of the Loan shall be due and payable
immediately upon acceleration of the Loan in accordance with Paragraph 7.2
hereof.
2.6. Interest. Portions of the Loan shall bear interest on the outstanding
principal amount thereof in accordance with the following provisions:
(a) Interest on Loan.
(i) At the Borrower's election in accordance with the provisions of
Paragraph 2.6(b) below, in the absence of the existence and continuance of an
Event of Default hereunder and prior to maturity or judgment, and subject to
clause (ii) below, any Portion of the Loan shall bear interest at either (A) the
Adjusted Base Rate, or (B) the Adjusted Libor Rate.
(ii) Notwithstanding the foregoing, upon the occurrence and during
the continuance of an Event of Default hereunder, including after maturity and
upon judgment, Borrower hereby agrees to pay to Lenders interest (A) on any
outstanding Libor Portion, at the rate which is two percent (2%) per annum in
excess of the Adjusted Libor Rate for each such Libor Portion through the end of
the applicable Interest Period, and thereafter, at
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the rate of two percent (2%) per annum in excess of the Adjusted Base Rate and
(B) on any Base Rate Portion, at the rate of two percent (2%) per annum in
excess of the Adjusted Base Rate.
(b) Procedure for Determining Interest Periods and Rates of Interest.
(i) If Borrower elects the Adjusted Base Rate to be applicable to a
Portion, Borrower must notify Agent of such election in writing prior to eleven
o'clock (11:00) a.m. Philadelphia time one (1) Business Day prior to the
proposed application of such rate. If Borrower elects the Adjusted Libor Rate to
be applicable to a Portion, Borrower must notify Agent of such election and the
Interest Period selected prior to eleven o'clock (11:00) a.m. Philadelphia time
at least three (3) London Business Days prior to the commencement of the
proposed Interest Period. If Borrower does not provide timely notice of its
election of the Adjusted Libor Rate, Borrower shall be deemed to have elected
that the Adjusted Base Rate shall apply to any Portion as to which the Interest
Period is expiring until Borrower shall have given proper notice of a change in
or determination of the rate of interest in accordance with this Paragraph
2.6(a). Notices with respect to the selection of interest rates pursuant to this
Paragraph 2.6(b) shall be made by delivery to Agent of a Notice of
Conversion/Continuation.
(ii) Borrower shall not elect more than six (6) different Libor
Portions to be applicable to the Loan at one time. Any Base Rate Portion shall
be in an amount equal to Five Hundred Thousand Dollars ($500,000) or an even
multiple of One Hundred Thousand Dollars ($100,000) in excess thereof, and any
Libor Portion shall be in an amount equal to Two Million Five Hundred Thousand
Dollars ($2,500,000) or an even multiple of One Hundred Thousand Dollars
($100,000) in excess thereof.
(c) Payment and Calculation of Interest. With respect to Portions which
bear interest at the Adjusted Libor Rate, interest shall be due and payable on
the last day of each Interest Period for each such Portion, and, in the case of
a Portion with an Interest Period of six (6) months, on the ninetieth (90) day
after the commencement of such Interest Period and on the last day of the
Interest Period. With respect to Portions which bear interest at the Adjusted
Base Rate, interest shall be due and payable on the last Business Day of each
March, June, September and December. Interest shall be calculated in accordance
with the provisions of Paragraph 2.6(b) hereof. All interest shall be calculated
(i) on the basis of the actual number of days elapsed over a year of 360 days if
at the Adjusted Libor Rate, or (ii) over a year of 365 or 366 days, as
applicable, if at the Adjusted Base Rate.
(d) Reserves. If at any time when a Portion is subject to the Adjusted
Libor Rate, a Lender (or a bank Affiliate of such Lender) is subject to and
incurs a Reserve, other than a Reserve Percentage included in the calculation of
the applicable Libor Rate, Borrower hereby agrees to pay within five (5)
Business Days of written demand thereof from
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time to time, as billed by Agent on behalf of itself or any other Lender, such
amount as is necessary to reimburse such Lender (or such Lender's bank
Affiliate) for its costs in maintaining such Reserve, as described in reasonable
detail in such demand. Such amount shall be computed by taking into account the
cost incurred by such Lender (or such Lender's bank Affiliate) in maintaining
such Reserve in an amount equal to such Lender's ratable share of the Portion on
which such Reserve is incurred, which computation shall be set forth in any such
demand by Agent on behalf of itself or any other Lender. The good faith
determination by Agent or any Lender of such costs incurred and the allocation
of such costs among Borrower and other customers which have similar arrangements
with such Lender (or such Lender's bank Affiliate) shall be prima facie evidence
of the correctness of the fact and the amount of such additional costs. Upon
notification to Borrower of any payment required pursuant to this Paragraph
2.6(d), Borrower (A) shall make such payment in accordance with the provisions
hereof, and (B) may repay the Portion of the Loan with respect to which such
payment is required, subject to the requirements of Paragraph 2.7 and 2.8
hereof.
(e) Special Provisions Applicable to Adjusted Libor Rate. The following
special provisions shall apply to the Adjusted Libor Rate:
(i) Change of Adjusted Libor Rate. The Adjusted Libor Rate may be
automatically adjusted by Agent on a prospective basis to take into account the
additional or increased cost of maintaining any necessary reserves for
Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable Interest Period, including but not limited
to changes in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), excluding the
Reserve Percentage and any Reserve which has resulted in a payment pursuant to
subparagraph (d) above, that increase the cost to Lenders of funding the Loan or
a Portion thereof bearing the Adjusted Libor Rate. Agent shall give Borrower
notice of such a good faith determination and adjustment, described in
reasonable detail, which determination shall be prima facie evidence of the
correctness of the fact and the amount of such adjustment. Borrower may, by
notice to Agent, (A) request Agent to furnish to Borrower a statement setting
forth the basis for adjusting such Adjusted Libor Rate and the method for
determining the amount of such adjustment; and/or (B) repay the Portion of the
Loan with respect to which such adjustment is made, subject to the requirements
of Paragraph 2.7 and 2.8 hereof.
(ii) Unavailability of Eurodollar Funds. In the event that Borrower
shall have requested the Adjusted Libor Rate in accordance with Paragraph 2.6(b)
and any Lender (or such Lender's bank Affiliate) shall have reasonably
determined that Eurodollar deposits equal to the amount of the principal of the
Portion and for the Interest Period specified
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are unavailable, or that the Adjusted Libor Rate will not adequately and fairly
reflect the cost of making or maintaining the principal amount of the Portion
specified by Borrower during the Interest Period specified, or that by reason of
circumstances affecting Eurodollar markets, adequate and reasonable means do not
exist for ascertaining the Adjusted Libor Rate applicable to the specified
Interest Period, such Lender shall give notice to Agent and Agent shall promptly
give notice of such determination to Borrower that the Adjusted Libor Rate is
not available. A good faith determination by such Lender (or such Lender's bank
Affiliate) hereunder shall be prima facie evidence of the correctness of the
fact and amount of such additional costs or unavailability. Upon such a
determination, (i) the obligation to advance or maintain Portions at the
Adjusted Libor Rate shall be suspended until Agent shall have notified Borrower
and Lenders that such conditions shall have ceased to exist, and (ii) the rate
based on the Base Rate shall be applicable to all such Portions (provided, that
Borrower shall not be required to compensate the affected Lender for funding
costs or loss of earnings as a result of such change in interest rate).
(iii) Illegality. In the event that it becomes unlawful for a
Lender (or such Lender's bank Affiliate) to maintain Eurodollar liabilities
sufficient to fund any Portion of the Loan subject to the Adjusted Libor Rate,
then such Lender shall immediately notify Borrower thereof (with a copy to
Agent) and such Lender's obligations hereunder to advance or maintain advances
at the Adjusted Libor Rate shall be suspended until such time as such Lender (or
such Lender's bank Affiliate) may again cause the Adjusted Libor Rate to be
applicable to any Portion of the outstanding principal balance of the Loan and
any such Lender's share of any Portion shall then be subject to the Adjusted
Base Rate (provided, that Borrower shall not be required to compensate the
affected Lender for funding costs or loss of earnings as a result of such change
in interest rate).
2.7. Prepayment.
(a) Voluntary Prepayments. Upon one (1) Business Day's prior written
notice by Borrower to Agent, Borrower may repay all or any portion of the
outstanding principal balance under the Loan without premium or penalty,
provided that any such payment shall include all accrued interest on the amount
prepaid plus any amounts which may be due pursuant to Paragraph 2.8 hereof. Any
such payment with respect to the Loan shall be applied to the scheduled
installments thereof in the inverse order of maturity.
(b) Mandatory Payments.
(i) In addition to any other required payments hereunder, Borrower
shall make principal payments on the Loan in the circumstances and in the
amounts set forth below:
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(A) Asset Dispositions. In connection with each Sale of
Material Assets (it being understood and agreed that any such Sale of Material
Assets shall require the approval of Required Lenders, except to the extent
expressly authorized pursuant to Paragraph 6.7 hereof), all of the Net Cash
Proceeds to the seller of such transaction shall be paid directly to Agent for
the account of Lenders; provided, however, that (x) proceeds with respect to
condemnation, damage or destruction of property shall not be required to be
applied to the Loan pursuant hereto if such proceeds are used to repair or
replace such property within one hundred eighty (180) days after receipt by
Borrower or its Subsidiaries, and (y) the proceeds of the sale of the (1) ▇▇▇▇▇▇
Building in Charlotte, North Carolina pursuant to Paragraph 6.7(a) hereof shall
be applied first to the payment of the mortgage thereon, and then to payment to
certain prior shareholders of ▇▇▇▇▇▇-American Company, Inc. to the extent they
have not been paid prior thereto and (2) land and buildings thereon located in
Canton, Massachusetts commonly known as 490 and ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be
applied first to the payment of the mortgage thereon.
(B) New Debt. In the event any Company incurs Indebtedness
consented to by Required Lenders which is not otherwise permitted pursuant to
Paragraph 6.1 hereof, all of the net cash proceeds of such Indebtedness shall be
paid directly to Agent for the account of the Lenders.
(C) Equity Issuance. In connection with any issuance of
equity by the Borrower after the date of this Agreement (other than (x) pursuant
to the exercise of stock options issued to officers, employees and directors of
the Borrower or its Subsidiaries, and (y) the issuance of stock as consideration
for acquisitions), all of the net cash proceeds to the Borrower of such issuance
shall be paid directly to Agent for the account of the Lenders.
(D) Refunds. In the event that Borrower or any Subsidiary
receives any return of any surplus assets of any pension plan, or receives any
tax refund, the full amount of such returned assets or such refund shall be paid
immediately to Agent for the account of the Lenders.
(ii) Excess Cash Flow. Until the Loan has been repaid in full, at
the time of delivery of a Compliance Certificate with respect to each Fiscal
Year, commencing with the Fiscal Year ending December 31, 2000, Borrower shall
make a prepayment of the Loan in an amount equal to seventy-five percent (75%)
of Excess Cash Flow for such Fiscal Year.
(iii) Additional Requirements. Any payments pursuant to this
Paragraph 2.7(b) shall be accompanied by all accrued and unpaid interest and
fees in connection with the amount prepaid (including any amount payable under
Paragraph 2.8 hereof); provided,
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however, that in the absence of an Event of Default or Default hereunder: (x)
the Borrower shall be entitled to determine the order in which Portions of the
Loan shall be repaid pursuant to such payments; and (y) if any amount would
otherwise be payable by Borrower pursuant to Paragraph 2.8 hereof as a result of
a prepayment pursuant thereto, the required amount shall, at the request of
Borrower, be held by Agent in a cash collateral account and applied to the
payment of the applicable Libor Portion(s) at the expiration of the Interest
Period with respect thereto. If a cash collateral account is established
pursuant to the foregoing clause (y), Borrower shall pay any cost associated
with the establishment or maintenance of such account and shall be entitled to
any interest on such funds while held in such account, and the applicable Libor
Portion(s) shall remain outstanding hereunder and shall continue to accrue
interest in accordance herewith until such funds are actually applied to repay
such Libor Portion(s).
(c) Effect on Other Agreements. Any prepayment hereunder shall not
affect the obligation of Borrower or any Subsidiary under any swap, hedge or
similar arrangement with any Lender.
2.8. Funding Costs and Loss of Earnings. In connection with any prepayment
or repayment of a Portion bearing interest at the Adjusted Libor Rate made on
other than the last day of the applicable Interest Period, whether such
prepayment or repayment is voluntary, mandatory, by demand, acceleration or
otherwise, Borrower shall pay to Lenders all reasonable funding costs and loss
of earnings which may arise in connection with such prepayment or repayment, as
calculated by Agent in accordance with Exhibit C hereto.
2.9. Payments. All payments of principal, interest, fees and other amounts
due hereunder, including any prepayments thereof, shall be made by Borrower to
Agent for the account of Lenders in immediately available funds before two
o'clock (2:00) p.m., Philadelphia time, on any Business Day at the office of
Agent at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other office as
may be designated by Agent from time to time. Borrower hereby authorizes Agent
to charge Borrower's account with Agent for all payments of principal, interest
and fees when due hereunder.
2.10. Regulatory Changes in Capital Requirements. If any Lender shall have
determined that the adoption or the effectiveness after the date hereof of any
law, rule, regulation or guideline regarding capital adequacy, or any change in
any of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central lender or comparable agency
charged with the interpretation or administration thereof, or compliance by such
Lender (or any lending office of such Lender) or such Lender's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's
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holding company, as a consequence of this Agreement or the Loan to a level below
that which such Lender or its holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
and the policies of such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time to
time Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or its holding company for any such reduction suffered
together with interest on each such amount from the date demanded until payment
in full thereof at the rate provided in Paragraph 2.6(a)(ii) hereof with respect
to amounts not paid when due. Such Lender will notify Borrower of any event
occurring after the date of this Agreement that will entitle such Lender to
compensation pursuant to this Paragraph 2.10, including a description in
reasonable detail of the nature of such event and the amount of such
compensation, as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and such compensation shall not be
charged for any period more than three (3) months prior to the date of such
notice.
A certificate of such Lender setting forth such amount or amounts as shall
be necessary to compensate such Lender or its holding company as specified above
shall be delivered to Borrower and shall be conclusive absent manifest error, if
calculated and charged in a manner consistent with similar charges made by such
Lender to its other customers having similar arrangements with such Lender.
Borrower shall pay such Lender the amount shown as due on any such certificate
delivered by such Lender within ten (10) days after its receipt of the same.
Failure on the part of any Lender to demand compensation for increased
costs or reduction in amounts received or receivable or reductions in return on
capital with respect to any period shall not constitute a waiver of such
Lender's right to demand compensation with respect to any other period except as
otherwise limited by the terms of this Paragraph 2.10.
2.11. Subordination. The Borrower hereby agrees that the Subordinated
Indebtedness (as defined below) shall be subordinate and junior in right of
payment to the prior payment in full of all Obligated Party Obligations as
herein provided. The Subordinated Indebtedness shall not be payable, and no
payment of principal, interest or other amounts on account thereof, and no
property or guarantee of any nature to secure or pay the Subordinated
Indebtedness shall be made or given, directly or indirectly by or on behalf of
any Subordination Party (hereafter defined) or received, accepted, retained or
applied by any Company unless and until the Obligated Party Obligations shall
have been paid in full in cash; except that prior to the occurrence and
continuance of a Default, a Company shall have the right to receive, accept,
retain and apply payments on the Subordinated Indebtedness made in the ordinary
course of business. After the occurrence and during the continuance of a
Default, no payments of principal or interest may be made or given, directly or
indirectly, by or on behalf of any Subordination
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Party or received, accepted, retained or applied by any Company unless and until
the Obligated Party Obligations shall have been paid in full in cash. If any
sums shall be paid to a Company by any Subordination Party or any other Person
on account of the Subordinated Indebtedness when such payment is not permitted
hereunder, such sums shall be held in trust by such Company for the benefit of
Agent and the Lenders and shall forthwith be paid to Agent without affecting the
liability of the Borrower under this Agreement and may be applied by Agent
against the Obligated Party Obligations in accordance with this Agreement as if
such payments were Collateral. Upon the request of Agent, the Borrower shall
execute, deliver, and endorse to Agent such documentation as Agent may request
to perfect, preserve, and enforce its rights hereunder. For purposes of this
Agreement and with respect to a Company, the term "Subordinated Indebtedness"
means all indebtedness, liabilities, and obligations of any other Company or any
Obligated Party (herein a "Subordination Party") to such Company, whether such
indebtedness, liabilities, and obligations now exist or are hereafter incurred
or arise, or are direct, indirect, contingent, primary, secondary, several,
joint and several, or otherwise, and irrespective of whether such indebtedness,
liabilities, or obligations are evidenced by a note, contract, open account, or
otherwise, and irrespective of the Person or Persons in whose favor such
indebtedness, obligations, or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by such Company. The term "Obligated Party Obligations" means, with
respect to any Subordination Party, all obligations, indebtedness and liability
of such Subordination Party to the Agent and the Lenders under the Loan
Documents (including, without limitation, any and all post-petition interest and
expenses whether or not allowed under any bankruptcy, insolvency or other
similar law). The Borrower agrees that any and all Liens (including any judgment
liens) upon any Subordination Party's assets securing payment of any
Subordinated Indebtedness shall be and remain inferior and subordinate to any
and all Liens upon any Subordination Party's assets securing payment of the
Obligated Party Obligations or any part thereof, regardless of whether such
Liens in favor of a Company, Agent or any Bank presently exist or are hereafter
created or attached. Without the prior written consent of Agent, no Company
shall (i) file suit against any Subordination Party or exercise or enforce any
other creditor's right it may have against any Subordination Party, or (ii)
foreclose, repossess, sequester, or otherwise take steps or institute any action
or proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any obligations of any
Subordination Party to such Company or any Liens held by such Company on assets
of any Subordination Party. In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving any Subordination Party as debtor, Agent shall have the right to prove
and vote any claim under the Subordinated Indebtedness and to receive directly
from the receiver, trustee or other court custodian all dividends,
distributions, and payments made in respect of the Subordinated Indebtedness
until the Obligated Party Obligations have been paid in full in cash.
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Agent may apply any such dividends, distributions, and other payments against
the Obligated Party Obligations in accordance with this Agreement as if such
payments were Collateral.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lenders as follows:
3.1. Organization and Good Standing. Each Company is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
formation as set forth on Exhibit B, and each has the power and authority to
carry on its business as now conducted and is qualified to do business in the
states indicated on Exhibit B which constitute, except as to failures to qualify
which would not, either singly or in the aggregate, have a Material Adverse
Effect, all states in which the nature of its business or the ownership of its
properties requires such qualification.
3.2. Power and Authority; Validity of Agreement. Each Company has the power
and authority under applicable law and under its organizational documents to
enter into and perform the Loan Documents to the extent that it is a party
thereto; and all actions necessary or appropriate for the execution and
performance by each Company of the Loan Documents to which it is a party have
been taken, and, upon their execution, the same will constitute the valid and
binding obligations of each Company to the extent it is a party thereto,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy or equitable principles applicable
to the enforcement of creditors' rights generally.
3.3. No Violation of Laws or Agreements. The execution, delivery and
performance of the Loan Documents by the Companies will not violate any
provisions of any law or regulation, federal, state or local, or its
organizational documents, or result in any breach or violation of, or constitute
a default under, any material agreement or instruments by which any Company or
its property may be bound, except for such breaches, defaults and violations of
agreements or instruments as would not, either singly or in the aggregate, have
a Material Adverse Effect.
3.4. Material Contracts. Except as set forth on Exhibit B attached hereto,
there exists no material default under any contracts material to the businesses
of the Companies or their Subsidiaries.
3.5. Compliance.
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(a) Each of the Companies and their Subsidiaries is in compliance with
all applicable laws and regulations, federal, state and local (including without
limitation those administered by the Local Authorities), except for such
failures to comply as would not either singly or in the aggregate, have a
Material Adverse Effect;
(b) The Companies and their Subsidiaries possess all the franchises,
permits, licenses, certificates of compliance and approval and grants of
authority, necessary or required in the conduct of their respective businesses
as of the date hereof; and except as identified on Exhibit B attached hereto, as
of the date hereof all such franchises, permits, licenses, certificates and
grants are valid, binding, enforceable and subsisting without any defaults
thereunder or enforceable adverse limitations thereon and are not subject to any
proceedings or claims opposing the issuance, development or use thereof or
contesting the validity thereof, except to the extent that the failure to
possess or maintain any of the foregoing would not, and except for such
defaults, limitations, proceedings or claims as would not, either singly or in
the aggregate, have a Material Adverse Effect; and
(c) No authorization, consent, approval, waiver, license or formal
exemptions from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority (federal, state or local) or
non-governmental entity, under the terms of contracts or otherwise, is required
by the Companies by reason of or in connection with the Companies' execution and
performance of the Loan Documents, except those which have been obtained or have
been delivered to Agent for filing in connection with perfecting liens.
3.6. Litigation. Except as set forth on Exhibit B, there are no actions,
suits, proceedings or claims which are pending or, to the best of the Companies'
knowledge, threatened against any Company or any Subsidiary which, if adversely
resolved, would, either singly or in the aggregate, be reasonably be expected to
have a Material Adverse Effect.
3.7. Title to Assets. All real estate owned by any of the Companies is
listed as Exhibit B attached hereto, including the street address and real
property description with respect thereto. Each of the Companies and their
Subsidiaries has good and marketable title to or valid leasehold interests in
all of its properties and assets material to the conduct of its business, free
and clear of any liens and encumbrances except the security interests granted
under the Collateral Security Documents, liens and encumbrances permitted
pursuant to Paragraph 6.4 hereof and the liens and security interests identified
on Exhibit B attached hereto. All such assets are fully covered by the insurance
required under Paragraph 5.8 hereof.
3.8. Accuracy of Information; Full Disclosure.
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(a All information furnished to Lenders concerning the financial
condition and results of operations of the Companies, including the pro forma
financial statements for the Companies on a consolidated basis for the Fiscal
Year ended December 31, 1998 and the interim pro forma financial statements for
the Companies on a consolidated basis for the nine months ended September 30,
1999 (but not including projections) has been prepared in accordance with GAAP
and fairly presents in all material respects the financial condition and results
of operations of the Companies as of the dates and for the periods covered and
discloses all liabilities of the Companies required to be disclosed in
accordance with GAAP, except that interim statements do not have footnotes and
are subject to year-end adjustments, and there has been no material adverse
change in the financial condition or business of the Companies from the date of
such statements to the date hereof.
(b This Agreement and all financial statements (excluding financial
projections) and other documents furnished by the Companies to Lenders pursuant
to this Agreement and the other Loan Documents, taken together, do not and will
not contain any untrue statement of material fact or omit to state a material
fact necessary in order to make the statements contained herein and therein not
misleading. The Companies have disclosed to the Lenders in writing any and all
facts which would, either singly or in the aggregate, have a Material Adverse
Effect. The company prepared financial statements for the Companies on a
consolidated basis for the Fiscal Year ended December 31, 1999 have been
prepared by the Borrower in good faith and the Borrower reasonably believes that
such statements fairly present in all material respects the financial condition
and results of operations of the Companies as of the dates and for the periods
covered and disclose all liabilities of the Companies required to be disclosed
in accordance with GAAP.
3.9. Taxes and Assessments. Except as described on Exhibit B attached
hereto:
(a Each Company and each Subsidiary has filed all required tax returns
or has filed for extensions of time for the filing thereof, and has paid all
applicable federal, state and local taxes, other than taxes not yet due or which
may be paid hereafter without penalty; provided that no such taxes shall be
required to be paid if they are being contested in good faith by appropriate
proceedings and are covered by appropriate reserves maintained in accordance
with GAAP; and there is no material tax deficiency or additional assessment in
connection therewith not provided for in the financial statements required
hereunder; and
(b Each Company and each Subsidiary has properly withheld all amounts
required by law to be withheld for income taxes and unemployment taxes including
without limitation, all amounts required with respect to social security and
unemployment compensation, relating to its employees, and has remitted such
withheld amounts in a timely manner to the appropriate taxing authority, agency
or body.
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3.10. Indebtedness. The Companies and their Subsidiaries have no presently
outstanding Indebtedness or obligations, including contingent obligations and
obligations of any of the Companies under leases of property from others, except
the Indebtedness and obligations described in Exhibit B attached hereto, and
indebtedness permitted pursuant to Paragraph 6.1 hereof. Without limiting the
foregoing, set forth on Exhibit B is a complete and accurate listing of all
Seller Obligations outstanding as of the date hereof, indicating the Person to
whom the obligation is owed, the aggregate principal amount thereof as of
December 31, 1999, such obligations are due; and all such Seller Obligations, to
the extent they remain unpaid as of the date hereof, have been capitalized and
appear as a liability on the balance sheet of the Company and its Consolidated
Subsidiaries in accordance with GAAP.
3.11. Management Agreements. No Company is a party to any management or
consulting agreements for the provision of senior executive services to such
Company except as described on Exhibit B attached hereto.
3.12. Investments; Ownership. Each (a) direct and indirect Subsidiary of
Borrower and (b) holder of at least five percent (5%) of any class of stock in
the Borrower is identified on Exhibit B attached hereto, which indicates (x) as
to each such Subsidiary, the number of shares and classes of stock, and the
ownership thereof, and (y) as to each holder, the number of shares and classes
of stock of such holder. No Company has any other Subsidiaries or any
investments in or loans to any other individuals or business entities except for
loans and investments permitted pursuant to Paragraphs 6.3 or 6.8 hereof.
3.13. ERISA. Each of the Companies, their Subsidiaries and each ERISA
Affiliate is in compliance in all material respects with all applicable
provisions of ERISA and the regulations promulgated thereunder; and,
(a No Company nor any Subsidiary or ERISA Affiliate maintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in section 4001 of ERISA) under which any Company, any Subsidiary or any
ERISA Affiliate could have any withdrawal liability which would, either singly
or in the aggregate, have a Material Adverse Effect;
(b No Company nor any Subsidiary or ERISA Affiliate, sponsors or
maintains any Plan under which there is an accumulated funding deficiency within
the meaning of ss.412 of the Code, whether or not waived which would, either
singly or in the aggregate, have a Material Adverse Effect;
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(c The aggregate liability for accrued benefits and other ancillary
benefits under each defined benefit pension Plan that is sponsored or maintained
by any Company, any Subsidiary or any ERISA Affiliate (determined on the basis
of the actuarial assumptions prescribed for valuing benefits under terminating
single-employer defined benefit plans under Title IV of ERISA) does not exceed
the aggregate fair market value of the assets under each such defined benefit
pension Plan by an amount which would, either singly or in the aggregate, have a
Material Adverse Effect;
(d The aggregate liability of each Company, and each Subsidiary or
ERISA Affiliate arising out of or relating to a failure of any Plan to comply
with the provisions of ERISA or the Code, is not an amount which would, either
singly or in the aggregate, have a Material Adverse Effect; and
(e There does not exist any unfunded liability (determined on the basis
of actuarial assumptions utilized by the actuary for the Plan in preparing the
most recent Annual Report) of any Company or any Subsidiary or ERISA Affiliate
under any Plan providing post-retirement life or health benefits which would,
either singly or in the aggregate, have a Material Adverse Effect.
3.14. Fees and Commissions. Except as set forth on Exhibit B, the Companies
owe no brokers' or finders' fees or commissions of any kind, and know of no
claim for any brokers' or finders' fees or commissions, in connection with the
Companies' obtaining the Loan from Lenders, except those provided herein.
3.15. No Extension of Credit for Securities. The Companies are not now, nor
at any time have they been engaged principally, or as one of their respective
important activities, in the business of extending or arranging for the
extension of credit, for the purpose of purchasing or carrying any margin stock
or margin securities; nor will the proceeds of the Loan be used by any Company
directly or indirectly, for such purposes.
3.16. Perfection of Security Interest. Upon the filing of UCC financing
statements with respect to the collateral covered by the Security Agreement in
the jurisdictions identified on Exhibit B attached hereto, and taking of
possession by the Agent of the certificates evidencing the shares pledged
pursuant to the Pledge Agreement, Agent, for the benefit of Lenders, has a
perfected, first-priority security interest and lien on the Collateral (other
than the Shared Collateral, in which the security interest of the Lenders shall
be second only to that of the Revolver Lenders) covered by the Security
Agreement and the Pledge Agreement, subject to the Permitted Liens.
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3.17. Hazardous Wastes, Substances and Petroleum Products. Except as
otherwise set forth on Exhibit B attached hereto:
(a Each Company and each Subsidiary (i) has received all permits and
has filed all notifications required by applicable Environmental Laws to carry
on its respective business(es); and (ii) is in compliance with all Environmental
Laws, except in each case for such matters as would not, either singly or in the
aggregate, have a Material Adverse Effect.
(b No Company or Subsidiary has given any written or oral notice, or
failed to give any required notice, to the EPA or any state or local agency with
regard to any Release or threat of Release of Hazardous Substances on properties
owned, leased or operated by such Company or used in connection with the conduct
of its business and operations which would, either singly or in the aggregate,
have a Material Adverse Effect.
(c No Company or Subsidiary has received written notice that it is
potentially responsible for clean-up, remediation, costs of clean-up or
remediation, fines or penalties with respect to any Release or threat of Release
of Hazardous Substances pursuant to any Environmental Law which would, either
singly or in the aggregate, have a Material Adverse Effect.
3.18. Solvency.
(a To the best of each Company's knowledge, each Company, after giving
effect to the Waiver Agreement and taking into consideration the mutual rights
and obligations among the Companies set forth in subparagraph (b) below, is
solvent such that (i) the fair value of its assets, including contingent assets
(including without limitation the fair salable value of the goodwill and other
intangible property of such Company) is greater than the total amount of its
liabilities, including without limitation, contingent liabilities, (ii) the
present fair salable value of its assets (including without limitation the fair
salable value of the goodwill and other intangible property of such Company) is
not less than the amount that will be required to pay the probable liability on
its debts as they become absolute and matured, and (iii) it is able to realize
upon its assets and pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business. No
Company intends to, nor believes that it will, incur debts or liabilities beyond
its ability to pay as such debts and liabilities mature, and no Company is
engaged in a business or transaction, or about to engage in a business or
transaction, for which its property would constitute unreasonably small capital
after giving due consideration to the prevailing practice and industry in which
it is engaged. For purposes of this Paragraph 3.18, in computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that reasonably can be expected to
become an actual matured liability of the applicable Company.
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(b Each Company hereby agrees that to the extent a Company shall have
paid more than its proportionate share of any payment made hereunder or under
the Guaranty, such Company shall be entitled to seek and receive contribution
from and against any other Company who has not paid its proportionate share of
such payment; provided however such Company shall not seek any such contribution
from any other Company until the Loan has been paid in full and all commitments
of the Lenders hereunder have been terminated. The provisions of this paragraph
shall in no respect limit the obligations and liabilities of any Company to the
Agent and the Lenders and each Company shall remain liable to the Agent and the
Lenders for the full amount of its obligations hereunder and under the Guaranty.
3.19. Employee Controversies. Except as described in Exhibit B, there are
no material controversies pending or, to the knowledge of the Companies,
threatened or anticipated between any Company and any of its respective
employees, and there are no labor disputes, grievances, arbitration proceedings
or any strikes, work stoppages or slowdowns pending, or to the Companies'
knowledge, threatened between any Company and its respective employees and
representatives, which, in any such case, would, either singly or in the
aggregate, have a Material Adverse Effect.
3.20. Year 2000 Compliance. The Companies completed a review and assessment
of their material computer systems and applications, micro-processor based goods
and equipment owned or used by them in their business, and all products
currently sold by them, and have made inquiry of their material suppliers,
vendors and customers, with respect to functionality before, during and after
the year 2000 (the "Year 2000 Problem"). Based on the foregoing review,
assessment and inquiry and the Borrower's experience through the date of this
Agreement with such systems, applications, goods and equipment, the Year 2000
Problem has not had and will not result in a Material Adverse Effect.
3.21. Indenture. The Senior Obligations have been (and hereby are)
designated as "Designated Senior Indebtedness" (as defined in the Indenture) for
all purposes under the Indenture.
SECTION 4
CONDITIONS
4.1. Effectiveness of Second Amended and Restated Credit Agreement. The
effectiveness of this Agreement is subject to Agent's receipt of the following
documents and satisfaction of the following conditions, each in form and
substance satisfactory to Agent:
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(a Promissory Notes. The Notes duly executed by Borrower.
(b Guaranty. A Second Amended and Restated Guaranty Agreement duly
executed by each wholly-owned Subsidiary of Borrower, jointly and severally, in
favor of Lenders.
(c Security Agreement. A Second Amended and Restated Security Agreement
duly executed by each of the Companies in favor of Agent, for the benefit of
Lenders, granting Agent, for the benefit of Lenders, a lien on all assets of the
Companies as Collateral for the Senior Obligations, together with UCC financing
statements in such jurisdictions and such other documents and instruments as
Agent shall reasonably require, all in form and substance satisfactory to Agent.
(d Pledge Agreement. A Second Amended and Restated Pledge Agreement
duly executed by each of the Companies in favor of Agent, for the benefit of
Lenders, pledging all of the issued and outstanding shares of capital stock of
each direct and indirect Subsidiary of Borrower to Agent, for the benefit of
Lenders, as Collateral for the Senior Obligations, together with the stock
certificates evidencing the pledged shares and stock powers duly endorsed in
blank.
(e Authorization Documents. A certificate of the secretary of each
Company attaching and certifying as to (i) the certificate or articles of
incorporation and bylaws of such Company and (ii) resolutions or other evidence
of authorization by the board of directors of such Company, authorizing its
execution and full performance of Loan Documents and all other documents and
actions required hereunder, and including incumbencies of each Company setting
forth the name, title and specimen signature of each officer of such Company who
is authorized to execute the Loan Documents on behalf of such entity.
(f Good Standing. Certificates of good standing or the equivalent for
each Company in its state of formation and each of the states in which it is
qualified to do business.
(g Corporate Opinion. Legal opinions addressing corporate, validity,
perfection and enforceability matters with respect to each Company, and opining
that no violation of the terms of the Indenture has occurred, reasonably
satisfactory to Agent.
(h Searches. Uniform Commercial Code, tax and judgment searches against
the Companies, with results satisfactory to Agent, in those offices and
jurisdictions as Agent shall reasonably request.
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(i Real Estate. Title reports, appraisals and environmental assessments
for all real property owned by the Companies, with results satisfactory to
Agent.
(j Landlord Waivers. Each landlord consent and waiver delivered for the
benefit of the Revolver Lenders, which shall equally be for the benefit of the
Lenders.
(k Financial Projections. Financial projections including, but not
limited to balance sheets, income statements and cash flow statements for
Borrower and its consolidated Subsidiaries for the period January 1, 2000
through December 31, 2001, certified by the chief financial officer of Borrower
as constituting a good faith projection based upon assumptions believed to be
reasonable.
(l Warrants. The Warrants and Warrant Agreements duly executed by the
respective parties thereto, all in form and substance satisfactory to Lenders.
(m Event of Default. No Event of Default or Default shall have occurred
and be continuing and all of the representations and warranties set forth herein
and in the other Loan Documents shall be true and correct.
(n Certain Agreements. An acknowledgment executed by RCP regarding the
limitations imposed hereunder on fees payable to such party by the Companies.
(o Notice to Subordinated Debt Holders. Written notice shall have been
delivered to each holder of the Existing Subordinated Obligations of the amount
of the Loan hereunder.
(p Indenture. Evidence satisfactory to the Agent that (i) the holders
of the Richmont Subordinated Notes shall have consented to the departure from
Section 4.03 of the Indenture to permit the incurrence of Indebtedness hereunder
and under the Revolver and (ii) the Indebtedness hereunder is "Senior
Indebtedness" and has been designated as "Designated Senior Indebtedness" under
the Indenture.
(q Letters of Credit. All letters of credit issued by the Agent at the
request of any Company shall have been released and terminated with the consent
of the beneficiary and replaced by letters of credit issued for the account of
RCP, and a written undertaking by RCP to provide for the additional projected
letter of credit requirements of the Companies. Any recourse to any of the
Companies or their assets in connection with such letters of credit shall be
expressly subordinated to the Lenders and may be taken only prior to the
occurrence of an Event of Default hereunder.
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(r Intercreditor Agreement. An Intercreditor Agreement executed by the
Borrower, the Agent and the Revolver Agent.
(s Revolver. A certificate by an Authorized Officer of Borrower,
certifying that all conditions to closing of the Revolver have been met (without
waiver by the Companies), together with copies of (i) authorizing resolutions
and (ii) executed closing documents delivered in connection with the Revolver,
in form and substance satisfactory to the Lenders with a maximum principal
amount of not less than Fifty Million Dollars ($50,000,000).
(t Availability under Revolver. A certificate of the Borrower setting
forth the calculation of the amount available to be advanced under the Revolver
after giving effect to the funding of the Sales Force Acquisition, the repayment
of the Existing Credit Agreement and other items permitted to be paid at
closing, which amount shall not be less than Eighteen Million Dollars
($18,000,000).
(u Equity. Verification satisfactory to the Agent that the Borrower
received at least Ten Million Dollars ($10,000,000) on the date hereof from MS
Acquisition Limited, a Delaware limited partnership, in exchange for share of
common stock in the Borrower.
(v Three Party Agreement. The Three Party Agreement duly executed by
each party thereto.
(w Repayment of Indebtedness. Evidence of repayment, with proceeds of
the Loan and the initial amount advanced under the Revolver, of all amounts
outstanding under the Existing Credit Agreement, except for the Term Loan
continued hereunder, together with (i) all accrued and unpaid interest, (ii) all
costs and charges for which invoices have been issued and (iii) any funding
costs and loss of earnings arising in connection with such repayment.
(x Seller Obligations. Receipt of a detailed analysis on the Seller
Obligations in form and substance satisfactory to the Agent.
(y Consents. Receipt of all required consents and approvals under
applicable law or contract, including, without limitation, consent of the
holders of the Richmont Subordinated Notes.
(z Other Documents. Such additional documents as Agent reasonably may
request.
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4.2. Sales Force Acquisition. The Lenders' consent to the Sales Force
Acquisition shall be subject to the Agent's receipt of the following documents
and satisfaction of the following conditions:
(a Joinder. A joinder to the Guaranty, the Security Agreement and the
Intercreditor Agreement by Sales Force and each of its Subsidiaries, a
supplement to the Pledge Agreements or an additional Pledge Agreement pledging
all of the shares of stock of Sales Force and each of its Subsidiaries, and such
other documents as Agent may reasonably require in connection therewith,
including without limitation UCC-1 financing statements, secretary's
certificates, resolutions and legal opinions, all in form and substance
satisfactory to Agent.
(b Lien Searches. Uniform Commercial Code, tax lien and judgment lien
searches against Sales Force and each of its Subsidiaries in those offices and
jurisdictions as Agent shall reasonably request.
(c Pay-Offs and Releases. Evidence of the pay-off and/or release of all
Indebtedness of Sales Force and each of its Subsidiaries, in form and substance
satisfactory to Agent.
(d Indenture Compliance. Evidence of compliance with the covenants set
forth in the Indenture, including evidence of the permissibility of the
incurrence of debt in connection with the proposed acquisition, with supporting
documentation in form and substance satisfactory to Agent.
(e Acquisition Documents. Certified copies of the letter of intent,
purchase agreement and Seller Obligations, which documents shall be satisfactory
to Agent and which Seller Obligations shall be subordinated to the Senior
Obligations on terms approved in writing by all Lenders.
(f Disclosures. Disclosures pursuant to the representations and
warranties set forth in Section 3 of this Agreement and pursuant to the Security
Agreement and any other Loan Documents, reflecting the Sales Force Acquisition,
all of which shall have been approved by Lenders in writing.
(g Other Information. Other information that the Agent may reasonably
request, including copies of due diligence reports prepared by or for the
Borrower.
(h Closing Certificate. A certificate by an Authorized Officer of
Borrower, certifying that all conditions to closing of the acquisition have been
met (without waiver by the Companies).
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SECTION 5
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Indebtedness of Borrower
to Lenders is outstanding, each of the Companies will and will cause each of its
Subsidiaries (and with respect to Paragraph 5.13, will cause each ERISA
Affiliate) to:
5.1. Existence and Good Standing. Except for any merger permitted pursuant
to Paragraph 6.8(iii), preserve and maintain (a) its existence as a corporation
and its good standing in all states in which it conducts business and (b) the
effectiveness and validity of all its franchises, licenses, permits,
certificates of compliance or grants of authority required in the conduct of its
business, except for such instances of ineffectiveness or invalidity as would
not, either singly or in the aggregate, have a Material Adverse Effect.
5.2. Interim Financial Statements.
(a Furnish to each Lender within thirty-five (35) days after the end of
each month that is not a fiscal quarter end, unaudited consolidated and
consolidating financial statements for such month and for the year to date, in
form and substance as reasonably required by Agent, including (i) a balance
sheet, (ii) a statement of income and (iii) a statement of cash flows, prepared
in accordance with GAAP consistently applied (except that such interim
statements need not contain footnotes and may be subject to year-end
adjustments).
(b Furnish to each Lender within forty-five (45) days after the end of
each Fiscal Quarter that is not a Fiscal Year end, unaudited quarterly
consolidated and consolidating financial statements, in form and substance as
reasonably required by Agent, including (i) a consolidated balance sheet, (ii) a
consolidated statement of income, and (iii) a statement of cash flows, prepared
in accordance with GAAP consistently applied (except that such interim
statements need not contain footnotes and may be subject to year-end
adjustments).
5.3. Annual Financial Statements. Furnish to each Lender within ninety (90)
days after the close of each Fiscal Year audited consolidated and consolidating
annual financial statements, including the information required under Paragraph
5.2 hereof, which financial statements shall be prepared in accordance with GAAP
and shall be certified without qualification (except with respect to changes in
GAAP as to which Borrower's independent certified public accountants have
concurred) by an independent certified public accounting firm reasonably
satisfactory to Agent; and cause Agent to be furnished, at the time of the
completion
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of the annual audit, with copies of any management letters prepared
by such accountants and with a certificate signed by such accountants to the
effect that to the best of their knowledge there exists no Event of Default or
Default hereunder.
5.4. Compliance Certificate. At the time of delivery of financial
statements pursuant to Paragraph 5.2(b) and 5.3 hereof, deliver to Lenders a
Compliance Certificate executed by the chief financial officer of Borrower or
other Authorized Officer approved by Agent, showing the calculation of the
covenants set forth in Paragraphs 5.14, 5.15, 5.16, 5.17 and 5.18.
5.5. Additional Reports.
(a) Not later than the last Business Day of the first month of each
Fiscal Year, furnish to each Lender, in form reasonably satisfactory to Agent,
the Borrower's business plan for such Fiscal Year, which shall include, without
limitation, a balance sheet, an income statement, a statement of cash flows and
the revenues/losses projected to result for such Fiscal Year, all approved by
the Board of Directors of Borrower.
(b) At the time of delivery of monthly financial statements pursuant to
Paragraph 5.2(a), furnish to each Lender a summary of revenue wins and losses
listing annualized revenues by principal, the effective date of the win or loss,
and the revenues/losses projected to result for the following four Fiscal
Quarters, in form and substance as reasonably required by Agent.
(c) On the date delivered to the Revolver Agent, a copy of each item
delivered to the Revolver Agent in accordance with Section 8.1(d) of the
Revolver.
(d) Furnish to each Lender at the time of delivery financial statements
pursuant to Paragraph 5.2(a) for March, 2000, June 2000, and each month
thereafter cash flow projections for the twelve week period immediately
following such month, including, but not limited to, a calculation of borrowing
needs for such twelve week period and projected borrowing availability under the
Revolver for such twelve week period; provided, that such reporting shall no
longer be required after the date on which Lenders have been provided evidence
satisfactory to them that (i) the consolidated EBITDA of Borrower calculated for
the nine-month period ended December 31, 2000 equals or exceeds Forty Million
Dollars ($40,000,000); or (ii) the consolidated EBITDA of Borrower calculated
for any twelve month period equals or exceeds Fifty Million Dollars
($50,000,000).
5.6. Public Information. Deliver to Lenders promptly following transmission
thereof, copies of all financial statements, proxy statements, notices and
reports, and copies of
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any registration statement or annual or quarterly reports, if any, filed with
the Securities and Exchange Commission (or successor entity) or sent to
shareholders of Borrower.
5.7. Books and Records. Keep and maintain satisfactory and adequate books
and records of account in accordance with GAAP and make or cause the same to be
made available to Agent or its agents or nominees at any reasonable time upon
reasonable notice for inspection and to make extracts thereof and permit Agent
or its agents or nominees to discuss contents of same with senior officers of
Borrower and also with outside auditors and accountants of Borrower.
5.8. Insurance. Keep and maintain all of its property and assets in good
order and repair and covered by insurance with reputable and financially sound
insurance companies against such hazards and in such amounts as is customary in
the industry, under policies requiring the insurer to furnish reasonable notice
to Agent and opportunity to cure any non-payment of premiums prior to
termination of coverage and naming Agent, for the benefit of Lenders, as loss
payee and additional insured.
5.9. Litigation; Event of Default. Notify Lenders in writing immediately of
the institution of any litigation, the commencement of any administrative
proceedings, the happening of any event or the assertion or threat in writing of
any claim, to the extent that any of the foregoing, either singly or in the
aggregate, would, either singly or in the aggregate, have a Material Adverse
Effect, or the occurrence of any Event of Default or Default hereunder. Without
limitation of the foregoing, Borrower shall keep Lenders reasonably advised as
to the status of such litigation.
5.10. Taxes. Subject to the matters disclosed on Exhibit B pursuant to
Paragraph 3.9 hereof, pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are currently being contested in good faith by
appropriate proceedings, diligently prosecuted and covered by appropriate
reserves maintained in accordance with GAAP.
5.11. Costs and Expenses. Pay or reimburse Agent for all reasonable
out-of-pocket costs and reasonable expenses (including but not limited to
reasonable attorneys' fees and disbursements) Agent may reasonably pay or incur
in connection with the preparation and review of this Agreement and all waivers,
consents and amendments in connection therewith and all other documentation
related thereto, and the making of the Loan hereunder, and pay or reimburse
Lenders for all costs, liabilities and expenses (including but not limited to
reasonable attorneys' fees and disbursements) associated with the collection or
enforcement of the same, including without limitation any fees and disbursements
incurred in defense of or to retain
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amounts of principal, interest or fees paid or in connection with any audit or
examination of the Companies. All obligations provided for in this Paragraph
5.11 shall survive any termination of this Agreement and the repayment of the
Loan.
5.12. Compliance; Notification.
(a Comply in all material respects with all local, state and federal
laws and regulations applicable to its business, including without limitation
all laws and regulations of the Local Authorities, and with the provisions and
requirements of all franchises, permits, certificates of compliance, approval
and need issued by regulatory authorities and with other like grants of
authority held by any Company; and notify Lenders immediately in detail of any
actual or alleged failure to comply with or perform, breach, violation or
default under any such laws or regulations or under the terms of any of such
franchises, licenses or grants of authority, or of the occurrence or existence
of any facts or circumstances which with the passage of time, the giving of
notice or otherwise could create such a breach, violation or default or could,
either singly or in the aggregate, occasion the termination of any of such
franchises, licenses or grants of authority, to the extent that any of the
foregoing would, either singly or in the aggregate, have a Material Adverse
Effect.
(b With respect to applicable Environmental Laws, promptly notify Agent
when, in connection with the conduct of the Companies' business(es) or
operations, any Person (including, without limitation, EPA or any state or local
agency) provides oral or written notification to any Company, or any Company
otherwise becomes aware, of a condition with regard to a Release or threat of
Release of Hazardous Substances which would, either singly or in the aggregate,
have a Material Adverse Effect; and notify Agent in detail promptly upon the
receipt by a Company of a written assertion of liability under any Environmental
Laws, of any actual or alleged failure to comply with, failure to perform,
breach, violation or default under any such Environmental Laws (or any
combination thereof) which would, either singly or in the aggregate, have a
Material Adverse Effect.
5.13. ERISA. (a) Comply in all material respects with the provisions of
ERISA to the extent applicable to any Plan maintained for the employees of any
Company or any ERISA Affiliate; (b) do or cause to be done all such acts and
things that are required to maintain the qualified status of each Plan which is
intended to meet the requirements of 401(a) of the Code and tax exempt status of
each trust forming part of such Plan; (c) not incur any material accumulated
funding deficiency (within the meaning of ERISA and the regulations promulgated
thereunder), or any material liability to the PBGC (as established by ERISA);
(d) not permit any event to occur with respect to any Plan sponsored by any
Company or any ERISA Affiliate (i) as described in Section 4042 of ERISA or (ii)
which may result in the imposition of a lien on its properties or assets; and
(e) notify Agent in writing promptly after it has come to the attention
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of senior management of any Company of the written assertion or threat of any
event described in Section 4042 of ERISA (relating to the soundness of a Plan)
(including any "reportable event" described in Section 4042(a)(3) of ERISA) or
the PBGC's ability to assert a material liability against it or impose a lien on
any Company's, or any ERISA Affiliate's properties or assets; and (f) refrain
from engaging in any prohibited transactions or actions causing possible
liability under Section 502 of ERISA.
5.14. Maximum Debt to EBITDA Ratio. As of the last day of each Fiscal
Quarter, Borrower shall not permit the ratio of (a) the principal amount of all
Indebtedness of the Companies outstanding as of such date determined on a
consolidated basis to (b) Adjusted EBITDA calculated for the four (4) Fiscal
Quarter period ending on the last day of such Fiscal Quarter to be more than:
(i) 7.75 to 1.00 as of the Fiscal Quarter ending on June 30, 2000; (ii) 6.50 to
1.00 as of the Fiscal Quarter ending on September 30, 2000; and (iii) 6.00 to
1.00 as of the Fiscal Quarter ending on December 31, 2000, and for each Fiscal
Quarter thereafter. As used in this Paragraph 5.14 the following terms have the
following meanings:
"Adjusted EBITDA" means, for any period, (a) Borrower's consolidated EBITDA
plus (b) for calculations including the Fiscal Quarter ending September 30,
1999, $10,452,000, plus (c) for calculations including the Fiscal quarter
ending December 31, 1999, $11,420,000, plus (d) at any time after the Sales
Force Acquisition is consummated, an amount equal to the lesser of (i) the
actual consolidated EBITDA for companies acquired in the Sales Force
Acquisition or (ii) $1,000,000 for each Fiscal Quarter (or pro-rated portion
thereof for partial Fiscal Quarters) that is included in the measurement
period for Adjusted EBITDA but that is before the Sales Force Acquisition is
consummated.
5.15. Capital Expenditure Limits. The Borrower shall not, and shall not
permit any Subsidiary to, make or incur Capital Expenditures during each period
set forth in the table below in excess of an aggregate amount for the Borrower
and all Subsidiaries equal to the applicable Capital Expenditure Limit for such
period. The term "Capital Expenditure Limit" means, for each period set forth in
the table below, the sum of (a) the Dollar amount set forth in the table below
opposite the applicable period (such Dollar amount as set forth for each such
period herein the "Yearly Limit") plus (b) One Hundred percent (100%) of the
portion of the Yearly Limit from the immediately preceding period which was not
expended by the Borrower and the Subsidiaries in such preceding period (the
amount calculated for any period under this clause (b), herein the "Carryover
Amount"). In calculating compliance with this Section 10.6, (a) Capital
Expenditures made in a period shall first be debited against the Yearly Limit
for such period then debited against the Carryover Amount carried into such
period, if any, from the preceding period pursuant to this Section 10.6, and (b)
the aggregate amount of all payments due under a Capital Lease Obligation for
the entire term thereof (excluding, however, the interest
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portion of capitalized lease payments) shall be considered expended in full on
the date that the Capital Lease Obligation is entered into.
====================================== ==========
Period Amount
====================================== ==========
Calendar year ending December 31, 2000 $7,000,000
-------------------------------------- ----------
Each Fiscal Year thereafter $7,500,000
====================================== ==========
5.16. Minimum EBITDA. As of the last day of each Fiscal Quarter during the
periods set forth below, Borrower shall cause its EBITDA calculated for the four
(4) Fiscal Quarters then ended to be not less than the amount set forth below
opposite the applicable period:
========================================== ===========
Period Amount
========================================== ===========
January 1, 2000 through March 31, 2000 $ 5,400,000
------------------------------------------ -----------
April 1, 2000 through June 30, 2000 $14,400,000
------------------------------------------ -----------
July 1, 2000 through September 31, 2000 $29,700,000
------------------------------------------ -----------
October 1, 2000 through December 31, 2000 $45,000,000
------------------------------------------ -----------
January 1, 2001 through March 31, 2001 $46,000,000
------------------------------------------ -----------
April 1, 2001 through Maturity Date $47,000,000
========================================== ===========
5.17. Minimum Interest Coverage Ratio. As of the last day of each Fiscal
Quarter during the periods set forth below, Borrower shall not permit the ratio
of its EBITDA to its consolidated cash interest expense, both calculated for the
period since January 1, 2000, then ended or, if four (4) Fiscal Quarters or more
have elapsed since January 1, 2000, then for the four (4) Fiscal Quarters then
ended, to be less than the ratio set forth below for such period:
==================================================== ============
Period Ratio
==================================================== ============
April 1, 2000 through June 30, 2000 1.00 to 1.00
---------------------------------------------------- ------------
July 1, 2000 though September 31, 2000 1.50 to 1.00
---------------------------------------------------- ------------
October 1, 2000 through December 31, 2000 1.60 to 1.00
---------------------------------------------------- ------------
Each quarter end beginning January 1, 2001 and 1.75 to 1.00
through Maturity Date
==================================================== ============
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5.18. Minimum Fixed Charges Coverage Ratio. Borrower shall not permit the
ratio of its Modified EBITDA to its Fixed Charges calculated as of the last day
of each Fiscal Quarter beginning with the Fiscal Quarter ending March 31, 2001,
for the four (4) Fiscal Quarters then ended, to be less than 1.00 to 1.00.
As used in this Paragraph 5.18, "Modified EBITDA" means, for any period, the
total of the following for Borrower calculated on a consolidated basis without
duplication: (a) EBITDA minus (b) Capital Expenditures.
5.19. Management Changes. Notify Agent in writing within ten (10) Business
Days after any change of its Executive Officers.
5.20. Transactions Among Affiliates. Except pursuant to existing agreements
as described on Exhibit B attached hereto, cause all transactions between and
among it and its Affiliates, other than transactions among the Companies, to be
on an arms-length basis and on such terms and conditions as are customary in the
applicable industry between and among unrelated entities.
5.21. Additional Collateral Security Documents.
(a) Deliver to Agent each landlord consent and waiver and bailee
consent delivered to the Revolver Agent, to which the Agent shall be a named as
a party on equal terms and with equal priority as the Revolver Agent.
(b) At any time deliver to Agent within sixty (60) days following
notice from Agent, (i) such environmental reports as Agent shall reasonably
require with respect to any real property owned, leased or operated by any
Company, and (ii) a mortgage on any such properties as specified by Agent in
favor of Agent for the benefit of Lenders, together with an effective policy of
title insurance thereon in an amount satisfactory to Agent, opinions of local
and company counsel in form and substance satisfactory to Agent, and such other
documents as Agent shall reasonably require in connection therewith.
(c) Execute, deliver, file and record such additional documents,
instruments or agreements as Agent shall reasonably require from time to time in
order to perfect, maintain, protect or realize upon a security interest and lien
on all of the assets of the Companies, including without limitation mortgages,
pledges or assignments of specific assets, UCC financing statements, landlord
waivers and consents and other documentation.
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5.22. Collateral Audits. Collateral audits on Borrower and its Subsidiaries
shall be performed from time to time at the request of the Agent; provided,
however, that, in the absence of an Event of Default hereunder, Borrower shall
not be required to pay for the costs of more than two (2) collateral audits
requested under this subparagraph (b) in any twelve-month period.
5.23. Notice upon Change in Control. The Borrower will notify Agent
promptly following the Borrower becoming aware that a "Change in Control" as
defined in the Indenture has occurred or if Borrower has entered into an
agreement which, if consummated, would result in a "Change in Control" as
defined in the Indenture, but in no event shall such notice be provided more
than ten (10) days following such event.
5.24. Management Meetings. The senior management of the Borrower shall meet
with Lenders (a) each month during the six months following the date hereof, and
(b) thereafter upon the request of any Lender.
5.25. Maintenance of Property. Except for dispositions permitted by
Paragraph 6.7 or disuse in the ordinary course of business, protect and preserve
all properties useful in and material to its business, including all material
copyrights, patents, trade names and trademarks and other intellectual property;
maintain in good working order and condition all material buildings, equipment
and other tangible real and personal property; and from time to time make or
cause to be made all renewals, replacements and additions to such material
property necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times.
5.26. Other Agreements.
(a) Notify Agent in writing not less than ten (10) Business Days prior
to the date any Company enters into any agreement respecting Indebtedness
containing financial covenants, or any amendment or modification thereof. In the
event that any agreement of such Company now or hereafter imposes financial
covenants on any Company which are more restrictive to such Company than those
contained is this Agreement, the corresponding covenants, terms and conditions
of this Agreement shall be deemed to be automatically and immediately amended to
include the applicable covenants, terms and/or conditions of such other
agreement.
(b) In the event any property or assets of any Company is subject to a
lien or security interest in violation of Paragraph 6.4 hereof, the Borrower
shall make, or cause to be made, provisions whereby the Loan shall be secured
equally and ratably with all other obligations secured thereby, and in any case
the Lenders shall have the benefit, to the full extent
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that, and with such priority as the creditors may be entitled under applicable
law, of any equitable lien on such property securing the Loan. Such violation of
Paragraph 6.4 hereof shall constitute an Event of Default hereunder, whether or
not the Loan is secured pursuant to this Paragraph 5.26.
(c) The Borrower hereby agrees to promptly execute and deliver any and
all such documents and instruments and to take all such further actions as Agent
may deem necessary or appropriate to effectuate the provisions of this Paragraph
5.26.
(d) The Borrower hereby agrees that it will (i) cause all accounts with
First Union other than payroll account #2079950027162 to be closed within sixty
(60) days after the date hereof, and (ii) case payroll account #2079950027162
with First Union to be closed by June 30, 2000.
5.27. Other Information. Provide any Lender with any other documents and
information, financial or otherwise, reasonably requested by such Lender from
time to time.
SECTION 6
NEGATIVE COVENANTS
So long as any Indebtedness of Borrower to Lenders remains outstanding
hereunder, Borrower covenants and agrees that each Company and its Subsidiaries
will not:
6.1. Indebtedness. Borrow any monies or create or permit to exist any
Indebtedness except: (i) the Senior Obligations; (ii) trade Indebtedness in the
normal and ordinary course of business for value received; (iii) Indebtedness
and obligations incurred to purchase or lease fixed or capital assets, provided,
that the aggregate outstanding principal amount of such indebtedness and
obligations shall not exceed in the aggregate Three Million Dollars ($3,000,000)
outstanding at any time; (iv) Existing Subordinated Obligations; (v) existing
Seller Obligations which are not Subordinated Debt, as described on Exhibit B;
(vi) the existing mortgage indebtedness to Corporate Real Estate Capital, LLC
(relating to properties in Canton, Massachusetts) and to Rexham Industries Corp.
(relating to property in Charlotte, North Carolina) described on Exhibit B in
the outstanding principal amount at December 31, 1999 of $9,200,000 and
$3,600,000, respectively, as reduced from time to time by payments thereon,
provided that such mortgage indebtedness shall be paid off in full upon sale of
the property so mortgaged; (vii) tax obligations for which funds have been
escrowed as provided in Paragraph 4.1(p) of the Existing Credit Agreement;
(viii) Indebtedness issued under Permitted Revolver Financing; (ix) Indebtedness
of one Company to another Company; (x)
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Guarantees permitted pursuant to Paragraph 6.2 hereof; and (xi) Subordinated
Debt incurred in connection with the Sales Force Acquisition.
6.2. Guarantees. Guarantee or assume or be or agree to become liable in any
way, either directly or indirectly, for any Indebtedness or liability of others
except: (i) to endorse checks or drafts in the ordinary course of business; (ii)
pursuant to the Guaranty; (iii) the guaranty by ▇▇▇▇▇▇▇ American Co., Inc. of
indebtedness of Merchandising Corporation of America, Inc, as described on
Exhibit B, provided that the principal amount thereof shall not exceed at any
time Five Hundred Thousand Dollars ($500,000); (iv) the guaranty by Borrower of
the mortgage indebtedness permitted pursuant to Paragraph 6.1(vi) hereof with
respect to the Canton, Massachusetts building; (v) Guarantees by the
Subsidiaries of the Revolver, Permitted Revolver Financings and the Richmont
Subordinated Notes; (vi) Guarantees incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations; (vii) Indebtedness constituting obligations to
reimburse worker's compensation insurance companies for claims paid by such
companies on any Company's behalf in accordance with the policies issued to such
Company; (viii) Indebtedness of any Company under any interest rate swap,
interest rate caps, interest rate collars or other similar agreements, or any
foreign exchange, currency hedging, commodity hedging or other similar agreement
entered into to enable such Company to fix or limit its interest expense or to
limit the market risk of holding currency or a commodity in either the cash or
futures markets; provided that, in the case of any Synthetic Purchase Agreement
related to any Subordinated Debt, the obligations of the Company thereunder must
be subordinated to the Senior Debt to at least the same extent as the
Subordinated Debt to which such Synthetic Purchase Agreement relates (the
Borrower shall promptly deliver to the Agent a copy of any Synthetic Purchase
Agreement to which any Company becomes a party); (vii) the existing guarantees
as of the date hereof as disclosed on Exhibit B.
6.3. Loans. Make or permit to exist any loans or advances to others, other
than (i) loans or advances by any Company to any other Company, (ii) loans to
any Subsidiary that is not a Guarantor, subject to the limitations set forth in
paragraph 6.8(i) hereof, (iii) the loan to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is described in
Section 3.12 of Exhibit B hereto, and (iv) loans to employees outstanding on the
date hereof as described on Exhibit B, and other loans or advances to employees
for travel and entertainment expenses, or in connection with relocation of
employees, in an aggregate principal amount outstanding (for all loans under
this clause (iv)) not to exceed One Million Dollars ($1,000,000).
6.4. Liens and Encumbrances. Create, permit or suffer the creation or
existence of any liens, security interests, or any other encumbrances on
(including any conditional sales arrangement with respect to) any of its
property, real or personal, except the security interests in favor of the Agent
on behalf of Lenders as security for the Loan, and except (i) liens arising
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in favor of sellers or lessors for indebtedness and obligations incurred to
purchase or lease fixed or capital assets permitted under Paragraph 6.1(iii)
hereof, provided, however, that such liens secure only the indebtedness and
obligations created thereunder and are limited to the assets purchased or leased
pursuant thereto and the proceeds thereof; (ii) Liens of mechanics, materialmen,
warehousemen, carriers, landlords or other similar statutory Liens securing
obligations that are not yet due or are being contested in good faith by
appropriate proceedings diligently pursued and for which adequate reserves have
been established in accordance with GAAP and are incurred in the ordinary course
of business; (iii) pledges or deposits to secure obligations under workmen's
compensation, unemployment insurance or social security laws or similar
legislation; (iv) deposits to secure surety, appeal or custom bonds required in
the ordinary course of business; (v) the existing mortgage liens pursuant to the
mortgage Indebtedness permitted pursuant to Paragraph 6.1(vi) hereof (vi) the
liens in the Shared Collateral securing the Indebtedness permitted pursuant to
Paragraph 6.1(viii) hereof; (vii) encumbrances consisting of minor easements,
zoning restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of the assets
encumbered thereby or materially impair the ability of Borrower and each
Subsidiary to use such assets in their respective businesses, and none of which
is violated in any material respect by existing or proposed structures or land
use; (viii) any attachment or judgment Lien not constituting an Event of
Default; (ix) Lien's granted to the Indenture trustee in Section 7.07 of the
Indenture.
6.5. Additional Negative Pledge. Except for agreements relating to: (a)
Liens permitted pursuant to Subparagraphs 6.4(i) or 6.4(v); (b) leases of
property; or (c) the sale or disposition of assets permitted hereunder, provided
such agreement relates only to the property subject to such Lien, leased or sold
or disposed of (and only pending the closing of such sale or disposition), and
except as set forth in the Permitted Revolver Financing, agree or covenant with
or promise any Person or entity other than the Lenders that it will not pledge
its assets or properties or otherwise grant any liens, security interests or
encumbrances on its property.
6.6. Restricted Payments.
(a) Make any Restricted Payments; provided, that (i) in the absence of
an Event of Default or Default hereunder, and provided no Event of Default or
Default would be caused by such payment, the Companies may make regularly
scheduled payments of principal and interest on the Subordinated Debt, subject
to the subordination provisions with respect thereto, and (ii) provided there is
no Event of Default under Paragraph 7.1(a) hereof, the Loan has not been
accelerated as provided herein, and no "Payment Blockage Period" is in effect
under the Indenture, Borrower may make payments required under the Richmont
Subordinated Notes, provided, that at any time that an Event of Default or
Default exists under this Agreement Borrower shall give Lenders not less than
ten (10) Business Days prior written notice of any proposed payment on the
Richmont Subordinated Notes.
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(b) Make any voluntary payment or prepayment of any Indebtedness,
including, without limitation, any obligations to sellers in connection with
previous acquisitions, provided that, in the absence of an Event of Default
hereunder, Borrower and its Subsidiaries may make all regularly scheduled
payments of principal and interest on account of any such Indebtedness and
obligations which is not Subordinated Debt.
(c) Make any payments of management fees or consulting fees; provided,
however, that in the absence of an Event of Default hereunder, (i) Borrower may
pay consulting fees to Monroe & Company LLC and RCP (A) as described in clause
(i) of the disclosure under Paragraph 6.9 on Exhibit B, and (B) as described in
clause (ii) of the disclosure under Paragraph 6.9 of Exhibit B, in an aggregate
amount not to exceed in any twelve month period $500,000, provided, that no such
fees shall be paid to Monroe & Company LLC or RCP prior to completion of a
Successful Syndication, and (ii) the Companies may make regularly scheduled
payments of Seller Obligations which are not Subordinated Debt; provided,
however, that if a judgment is rendered by a court of competent jurisdiction
providing that any fee or obligation is owed to Monroe & Company, LLC then
Borrower may make such payment provided that Borrower has defended in good faith
such suit and kept Agent reasonably advised as to the status of the suit and the
amount of such payment is not materially in excess of the range of settlement
proposals disclosed on Exhibit B attached hereto.
6.7. Transfer of Assets; Liquidation.
(a) Sell, lease, transfer or otherwise dispose of all or any portion of
its assets, real or personal, including any sale/leaseback or similar
transaction, other than such transactions in the normal and ordinary course of
business for value received; provided, however, that in the absence of an Event
of Default, Borrower and its Subsidiaries may sell real property, so long as the
purchase price is not less than the greater of (i) its appraised value or (ii)
the amount of all indebtedness secured by such real property; or
(b) discontinue, liquidate, or change in any material respect any
substantial part of its operations or business(es), except as a result of an
intercompany merger permitted pursuant to Paragraph 6.8(iii) hereof.
6.8. Acquisitions and Investments. Purchase or otherwise acquire (including
without limitation by way of share exchange) any part or amount of the capital
stock, partnership interests, or assets of, or make any investments in, any
other Person; or enter into any new business activities or ventures not directly
related to its present business; or merge or consolidate with or into any other
Person; or create any Subsidiary; provided, however that:
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(i) the Companies may own the Subsidiaries owned by them on the date
hereof as set forth on Exhibit B attached hereto and may make additional
investments in any such Subsidiaries;
(ii) the Companies may make Permitted Investments, subject to the
conditions and limitations set forth in the definition thereof;
(iii) any Company or wholly-owned Subsidiary may merge with or into any
Company, provided that the surviving entity shall be the Borrower or a Guarantor
hereunder, at least ten (10) Business Days prior written notice thereof shall
have been delivered to Agent, and all documentation reasonably required by Agent
shall have been executed, delivered and filed in order to establish and maintain
Agent's existing security interests in the assets of the Companies; and
(iv) the Companies may consummate the Sales Force Acquisition, subject
to the completion of all conditions set forth in Paragraph 4.2.
6.9. Payments to Affiliates. Pay any salaries, compensation, management
fees, consulting fees, service fees, licensing fees, or other similar payments
to Affiliates of any Company other than on an arms-length basis for value, and
on terms and conditions as are customary in the industry between and among
unrelated entities, except pursuant to existing agreements as described on
Exhibit B attached hereto.
6.10. Certain Changes.
(a) Make any change in the Fiscal Year of Borrower.
(b) Enter into any amendments to the financial covenants, rate or
interest, amount or time of payments with respect to other outstanding
Indebtedness which are more burdensome to the Companies, or which increase or
accelerate any payment thereunder.
(c) Agree to any amendment for the Tax Escrow Agreement or the
Indemnification Escrow Agreement or agree to any release of the escrowed funds
pursuant to Section 3.1 of the Indemnification Escrow Agreement or Section 4(a)
of the Tax Escrow Agreement without the consent of Agent.
(d) Amend, modify or waive (or permit any amendment, modification or
waiver of) any term or provision of (i) its certificate of incorporation or
other governing documents, (ii) the Voting Agreement.
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(e) Issue any voting securities or options or other rights to acquire
voting securities unless (i) at least ten (10) Business Days' prior written
notice thereof has been given to Lenders, except for issuances of common stock
or rights to acquire common stock under the Amended and Restated 1998 Stock
Option and Incentive Plan of Borrower, up to the maximum number of shares
authorized for issuance thereunder as of the date hereof and otherwise as
provided for under the terms of the plan, and (ii) such issuance will not
constitute or result in a "Change in Control" as defined in the Indenture, or
result in a termination of the Voting Agreement.
(f) Enter into any agreement or undertaking the consummation of which
would violate or require consent under the Indenture, or trigger any redemption
or other rights of the holders of the Richmont Subordinated Notes, unless such
agreement or undertaking is expressly conditioned on obtaining the consent of,
or waiver of any such rights of redemption or otherwise by, the holders of the
Richmont Subordinated Notes, and such transactions are not consummated without
obtaining such waiver or consent in form and substance satisfactory to Agent.
(g) Enter into any agreement or undertaking the consummation of which
would violate or require consent under this Agreement, unless such agreement or
undertaking expressly conditions the Companies' obligations thereunder on
obtaining consent thereto from Lenders or Required Lenders, as applicable.
6.11. Restrictive Agreements. Except for agreements relating to: (a) Liens
permitted pursuant to Subparagraphs 6.4(i) or 6.4(v); (b) leases of property; or
(c) the sale or disposition of assets permitted hereunder, provided such
agreement relates only to the property subject to such Lien, leased or sold or
disposed of, provided such agreement relates only to the property subject to
such Lien, leased or sold or disposed of (and only pending the closing of such
sale or disposition), and except under Permitted Revolver Financing, the
Companies will not, and will not permit any of their Subsidiaries to, directly
or indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of any Company or any Subsidiary to create, incur or permit to exist any
lien upon any of its material property or assets, or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to any Company or any
other Subsidiary or to guarantee indebtedness of any Company or any other
Subsidiary; provided that the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement.
6.12. Use of Proceeds. Use any of the proceeds of the Loan, directly or
indirectly, to purchase or carry margin securities within the meaning of
Regulation U of the
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Board of Governors of the Federal Reserve System; or engage as its principal
business in the extension of credit for purchasing or carrying such securities.
SECTION 7
DEFAULT
7.1. Events of Default. Each of the following events shall be an Event of
Default hereunder:
(a) If Borrower shall fail to pay when due any installment of
principal, or fail to pay within three (3) Business Days of when due any
interest, fees, costs, expenses or any other sum, payable to Lenders or Agent
under the Senior Obligations;
(b) If any representation or warranty made herein or in connection
herewith or in any statement, certificate or other document furnished hereunder
is false or misleading in any material respect when made;
(c) If any Company shall default (after expiration of any applicable
cure or grace periods) in the payment or performance of any obligation or
Indebtedness to another either singly or in the aggregate in excess of One
Million Dollars ($1,000,000), whether now or hereafter incurred (other than
obligations to Monroe & Company, LLC under that certain advisory agreement dated
as of May 11, 1998);
(d) If there shall be a default in or failure to observe at any test
date the covenants set forth in Paragraphs 5.14 through 5.19 hereof or in
Section 6 hereof;
(e) If any Company shall default in the performance of any other
agreement or covenant contained herein (other than as provided in subparagraphs
(a), (b) or (d) above) or in any document executed or delivered in connection
herewith or otherwise in connection with the Senior Obligations, including
without limitation with respect to any Collateral, and such default shall
continue uncured for thirty (30) days after notice thereof to Borrower given by
Agent;
(f) If Borrower shall cease to own, directly or indirectly, one hundred
percent (100%) of the outstanding capital stock of each Guarantor (except as a
result of the merger of such Guarantor into a Company as permitted pursuant to
Paragraph 6.8(iii) hereof);
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(g) A Change of Control shall occur. As used in this Subparagraph (g),
the following terms have the following meanings:
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
(i) the Permitted Holders either (x) cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of at least 35% of the aggregate of the total voting power of the
Voting Stock of the Borrower, whether as a result of issuance of securities of
the Borrower, any merger, consolidation, liquidation or dissolution of the
Borrower, any direct or indirect transfer of securities by any Permitted Holder
or otherwise, or (y) do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors (for purposes of this clause (i), the Permitted Holders shall be
deemed to own beneficially any Voting Stock of an entity (the "specified
entity") held by any other entity (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(ii) (x) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in clause (i) above, except that such person
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 35% of
the total voting power of the Voting Stock of the Borrower and (y) the Permitted
Holders "beneficially own" (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Borrower than such other Person and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors (for the purposes of this
clause ii), such other Person shall be deemed to own beneficially any Voting
Stock of a specified corporation held by a parent corporation, if such other
person "beneficially owns" (as defined in this clause (ii)), directly or
indirectly, more than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders "beneficially own" (as defined in clause
(i) above), directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent corporation and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent corporation);
or
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(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the Borrower was approved by a vote of a
majority of the directors of the Borrower then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Management Stockholders" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Permitted Holders" means Richmont Enterprises LLC, a Delaware limited
liability company controlled by certain Affiliates of Richmont Capital Partners
I, L.P., a Delaware limited partnership, JR Investment Corp., a Delaware
corporation (including ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the other current stockholders of JR
Investment Corp.), MS Acquisition Limited, a Delaware limited partnership, the
Management Stockholders and any of their respective Affiliates (including any
Person owned or controlled by any such Person, any member of any such Person's
family, any trust for the benefit of any such Person (or a member of his family)
or any Person owned or controlled by any of the foregoing) and any Person acting
in the capacity of an underwriter in connection with a public or private
offering of the Borrower's Capital Stock.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Voting Stock" of a Person means all classes of Capital Stock of such
Person then outstanding that normally entitle the holders of such interests to
participate in the management or to elect those participating in the management
of such Person.
(h) If the Borrower fails to make payment as required by the Indenture
on any Richmont Subordinated Notes tendered for repurchase pursuant to Section
4.08 of the Indenture on or before the earlier of (i) the repurchase date
specified in the notice of the occurrence of a "Change in Control" (as defined
in the Indenture) delivered to the holders of the Richmont Subordinated Notes or
(ii) sixty (60) days after the delivery of such notice of a Change in Control;
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(i) If custody or control of any substantial part of the property of
any Company shall be assumed by any governmental agency or any court of
competent jurisdiction at the instance of any governmental agency; if any
license or franchise of a Company shall be suspended, revoked, not renewed or
otherwise terminated the loss of which would, either singly or in the aggregate,
have a Material Adverse Effect; or if any material contract (as determined in
accordance with Regulation S-K under the Securities Act of 1933, as amended) is
terminated; or if any governmental regulatory authority or judicial body shall
make any other final non-appealable determination the effect of which would,
either singly or in the aggregate, have a Material Adverse Effect;
(j) If any Company or any Subsidiary becomes insolvent, bankrupt or
generally fails to pay its debts as such debts become due; is adjudicated
insolvent or bankrupt; admits in writing its inability to pay its debts; or
shall suffer a custodian, receiver or trustee for it or substantially all of its
property to be appointed and if appointed without its consent, not be discharged
within sixty (60) days; makes a general assignment for the benefit of creditors;
or suffers proceedings under any law related to bankruptcy, insolvency,
liquidation or the reorganization, readjustment or the release of debtors to be
instituted against it and if contested by it not dismissed or stayed within
sixty (60) days; if proceedings under any law related to bankruptcy, insolvency,
liquidation, or the reorganization, readjustment or the release of debtors is
instituted or commenced by any Company or any Subsidiary; if any order for
relief is entered relating to any of the foregoing proceedings; if any Company
or any Subsidiary shall call a meeting of its creditors with a view to arranging
a composition or adjustment of its debts; or if any Company or any Subsidiary
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing;
(k) any event or condition shall occur or exist with respect to any
Hazardous Substance as a result of which event or condition, the Companies have
incurred or in the opinion of Borrower are reasonably likely to incur
liabilities in the aggregate in excess of One Million Dollars ($1,000,000); or
(l) if any judgment, writ, warrant or attachment or execution or
similar process which calls for payment or presents liability in excess of One
Million Dollars ($1,000,000) shall be rendered, issued or levied against any
Company or its respective property and such process shall not be paid, waived,
stayed, vacated, discharged, settled, satisfied or fully bonded within sixty
(60) days after its issuance or levy unless such judgment is covered by
insurance and the insurer has acknowledged coverage in writing with respect
thereto.
7.2. Remedies. Upon the happening of any Event of Default and at any time
during the continuance thereof, at the election of Required Lenders, and by
notice by Agent to Borrower (except if an Event of Default described in
Paragraph 7.1(j) shall occur in which case
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acceleration shall occur automatically without notice), Required Lenders may
declare the entire unpaid balance, principal, interest and fees, of all
Indebtedness of Borrower to Lenders, hereunder or under any other Loan Document,
to be immediately due and payable. In addition to any rights granted hereunder
or in any documents delivered in connection herewith, Lenders shall have all the
rights and remedies granted by any applicable law, all of which shall be
cumulative in nature.
7.3. Right of Set-off. If any obligations hereunder or under any other Loan
Document, including under any interest rate swap or rate protection agreement
with a Lender (collectively, the "Liabilities") shall be due and payable
(subject to notice and cure periods) or any one or more Events of Default shall
have occurred and be continuing, whether or not the Agent shall have made demand
under any Loan Document and regardless of the adequacy of any collateral for the
Liabilities or other means of obtaining repayment of the Liabilities, each
Lender shall have the right, without notice to any Company and is specifically
authorized hereby to set-off against and apply to the then unpaid balance of the
Liabilities any items or funds of any Company held by such Lender or any
affiliate of such Lender, any and all deposits (whether general or special, time
or demand, matured or unmatured) or any other property of any Company including,
without limitation, securities and/or certificates of deposit, now or hereafter
maintained by any Company for its or their own account with such Lender or any
affiliate of such Lender, and any other indebtedness at any time held or owing
by such Lender or any affiliate of such Lender, to or for the credit or the
account of any Company, even if effecting such set-off results in a loss or
reduction of interest or the imposition of a penalty applicable to the early
withdrawal of time deposits. For such purpose, the Lenders shall have, and each
Company hereby grants to each Lender, a first lien on and security interest in
such deposits, property, funds and accounts and the proceeds thereof.
7.4. Turnover of Property Held by Lender's Affiliates. Each Company further
authorizes each affiliate of each Lender, upon the occurrence and during the
continuance of an Event of Default, at the request of any such Lender, and
without notice to any Company, to turn over to the Agent any property of such
Company, including, without limitation, funds and securities, held by such
affiliate for any such Company's account and to debit any deposit account
maintained by such Company with such affiliate (even if such deposit account is
not then due or there results a loss or reduction of interest or the imposition
of a penalty in accordance with law applicable to the early withdrawal of time
deposits), in the amount requested by such Lender up to the amount of the
Liabilities, and to pay or transfer such amount or property to the Agent for
application to the Liabilities.
7.5. Remedies Cumulative; No Waiver. The rights, powers and remedies of the
Lenders provided in this Agreement and any in the other Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by law or
equity. No failure or delay on
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the part of the Agent or any Lender in the exercise of any right, power or
remedy shall operate as a waiver thereof, nor shall any single or partial
exercise preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy.
SECTION 8
AGENCY PROVISIONS
This Section sets forth the relative rights and duties of Agent and Lenders
respecting the Loan and, with the exception of Paragraphs 8.3 and 8.15 hereof,
does not confer any enforceable rights on Borrower against Lenders or create on
the part of Lenders any duties or obligations to Borrower.
8.1. Application of Payments. Agent shall apply all payments of principal,
interest, commitment fee or other amounts hereunder made to Agent by or on
behalf of Borrower with respect to the Loan to Lenders on the basis of their Pro
Rata Shares of the outstanding principal balance of the Loan. Such distribution
of payments shall be made promptly in federal funds immediately available at the
office of each Lender set forth above.
8.2. Set-Off. In the event a Lender, by exercise of its right of set-off,
or otherwise, receives any payment of principal or interest, in an amount
greater than its Pro Rata Share of such payment based upon the Lenders'
respective shares of principal Indebtedness outstanding hereunder immediately
before such payment, such Lender shall purchase a portion of the Indebtedness
hereunder owing to each other Lender so that after such purchase each Lender
shall hold its Pro Rata Share of all the Indebtedness then outstanding
hereunder, provided that if all or any portion of such excess payment is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of any such recovery, but without
interest.
8.3. Modifications and Waivers. No modification or amendment hereof,
consent hereunder or waiver of any Event of Default shall be effective except by
written consent of the Required Lenders (or such combination of Lenders and
Revolver Lenders that, as to certain actions, is required under the
Intercreditor Agreement and is further described therein); provided, however,
that the written consent of all Lenders shall be required to (i) modify, amend,
waive, discharge, terminate or suspend compliance with (A) any rate of interest
applicable to the Loan to the extent it is proposed to be decreased, (B) the
date or amounts of payment of the Loan or interest thereon, to postpone payment
thereof, (C) the definition of Required Lenders, (D) this Paragraph 8.3, or (E)
the definition of Pro Rata Share; (ii) release
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all or substantially all of the Collateral; or (iii) release any Guarantor that
is a Material Subsidiary except pursuant to mergers permitted pursuant to
Paragraph 6.8(iii) hereof.
8.4. Obligations Several. The obligations of the Lenders hereunder are
several, and each Lender hereunder shall not be responsible for the obligations
of the other Lenders hereunder, nor will the failure of one Lender to perform
any of its obligations hereunder relieve the other Lenders from the performance
of their respective obligations hereunder.
8.5. Lenders' Representations. Each Lender represents and warrants to the
other Lenders that (i) it has been furnished all information it has requested
for the purpose of evaluating its proposed participation under this Agreement;
and (ii) it has decided to enter into this Agreement on the basis of its
independent review and credit analysis of Borrower, this Agreement and the
documentation in connection therewith and has not relied for such analysis on
any information or analysis provided by any other Lender.
8.6. Investigation. No Lender shall have any obligation to the others to
investigate the condition of Borrower or any of the Collateral or any other
matter concerning the Loan.
8.7. Powers of Agent. Agent shall have and may exercise those powers
specifically delegated to Agent herein, together with such powers as are
reasonably incidental thereto.
8.8. General Duties of Agent, Immunity and Indemnity. Upon receipt of
notices and reports delivered by Borrower to the Agent under this Agreement, the
Agent shall promptly deliver the same in the form received to the Lenders.
Required Lenders shall also have the right to request Agent to inspect
Borrower's books and records and take the other steps provided in Paragraph 5.7
hereof. In performing its duties as Agent hereunder, Agent will take the same
care as it takes in connection with loans in which it alone is interested,
subject to the limitations on liabilities contained herein; provided that Agent
shall not be obligated to ascertain or inquire as to the performance of any of
the terms, covenants or conditions hereof by Borrower. Neither Agent nor any of
its directors, officers, agents or employees, shall be liable for any action or
omission by any of them hereunder or in connection herewith except for gross
negligence or willful misconduct. Subject to such exception, each of the Lenders
hereby indemnifies Agent (in its capacity as Agent) on the basis of such
Lender's Pro Rata Share, against any liability, claim, loss or expense arising
from or relating to any action taken or omitted to be taken with respect to this
Agreement, any other Loan Document or the transactions contemplated thereby or
Borrower, to the extent that the Agent has not been reimbursed therefor by
Borrower, without affecting any obligation of Borrower to reimburse.
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8.9. No Responsibility for Representations or Validity, etc. Each Lender
agrees that Agent shall not be responsible to any Lender for any
representations, statements, or warranties of Borrower herein or in the other
Loan Documents. Neither Agent nor any of its directors, officers, employees or
agents, shall be responsible for the validity, effectiveness, sufficiency,
perfection or enforceability of this Agreement or the other Loan Documents, or
any Collateral, or any documents relating thereto or for the priority of any of
Lenders' security interests in any such Collateral.
8.10. Action on Instruction of Lenders; Right to Indemnity. Agent shall act
upon written instruction of Lenders or Required Lenders, as appropriate, and in
all cases Agent shall be fully protected in acting or refraining from acting
hereunder in accordance with such written instructions to it signed by Required
Lenders unless the consent of all the Lenders is expressly required hereunder in
which case Agent shall be so protected when acting in accordance with such
instructions from all the Lenders. Such instructions and any action taken or
failure to act pursuant thereto shall be binding on all the Lenders, provided
that except as otherwise provided herein, Agent may act hereunder in its own
discretion without requesting such instructions.
8.11. Employment of Agents. In connection with its activities hereunder,
Agent may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents, for
the default or misconduct of agents or attorneys-in-fact selected with
reasonable care.
8.12. Reliance on Documents. Agent shall be entitled to rely upon (a) any
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and (b) upon the opinion of its
counsel with respect to legal matters.
8.13. Agent's Rights as a Lender. With respect to their share of the
indebtedness hereunder, Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not Agent. Each of
the Lenders may accept deposits from and generally engage in other banking or
trust business with Borrower as if it were not Agent or a Lender hereunder.
8.14. Expenses. Each of the Lenders shall reimburse Agent from time to time
at the request of Agent for its Pro Rata Share of any expenses incurred by Agent
in connection with the performance of its functions hereunder without affecting
any obligation of Borrower to reimburse, provided however that in the event
Lenders shall reimburse Agent for expenses for which Borrower subsequently
reimburses Agent, then Agent shall remit to each Lender the respective amount
received from such Lender against such expenses.
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8.15. Resignation of Agent. Agent may at any time resign its position as
Agent, without affecting its position as a Lender, by giving written notice to
Lenders and Borrower. Such resignation shall take effect upon the appointment of
a successor agent in accordance with this Paragraph 8.15. In the event Agent
shall resign, Required Lenders with the consent of Borrower, which consent will
not be unreasonably withheld, shall appoint a Lender as successor Agent. If
within thirty (30) days of the Agent's notice of resignation no successor agent
shall have been appointed by Lenders and accepted such appointment, then Agent,
in its discretion may appoint any other Lender with banking powers as a
successor agent.
8.16. Successor Agent. The successor Agent appointed pursuant to Paragraph
8.15 shall execute and deliver to its predecessor and Lenders an instrument in
writing accepting such appointment, and thereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the
properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all Collateral,
documents and moneys held by it as Agent, if any, whereupon such predecessor
Agent shall be discharged from its duties and obligations as Agent under this
Agreement.
8.17. Collateral Security and Intercreditor Agreements. Agent, on behalf of
the Lenders, has entered into the Intercreditor Agreement. Lenders have reviewed
and hereby consent to and agree to be bound by the Intercreditor Agreement To
the extent that the following matters are not governed by the Intercreditor
Agreement, Agent and Lenders agree as follows:
(a) Agent will hold, administer and manage any Collateral pledged from
time to time hereunder either in its own name or as Agent on behalf of the
Lenders, but each Lender shall hold a direct, undivided pro-rata beneficial
interest therein, on the basis of its Pro Rata Share, by reason of and as
evidenced by this Agreement.
(b) Lenders hereby agree that the proceeds of any realization on the
Collateral by Agent, and all Post-Default Payments, shall be applied as follows:
first, to the payment of reasonable expenses of Agent, and to the expenses of
sale or other realization upon such Collateral, including reasonable attorney's
fees and expenses of every kind, including without limitation reasonable
allocated costs of staff counsel), (ii) second, equally and ratably to all
amounts of interest, expenses and fees with respect to the Loan, (iii) third,
equally and ratably to all amounts of principal of the Loan, (iv) fourth,
equally and ratably to all other amount representing Senior Obligations, and
(vii) fifth, the balance, if any returned to the Borrower or such other Persons
as are entitled thereto.
(c) No Lender shall have any individual right to exercise remedies with
respect to the Collateral. If at any time during the continuance of an Event of
Default any
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Lender acquires custody, control or possession of any Collateral or any proceeds
thereof other than pursuant to the terms of this Agreement, such Lender shall
promptly cause such Collateral or the proceeds thereof to be delivered or put in
the custody, possession or control of Agent for disposition and distribution in
accordance with this Agreement. Until such time as such Lender shall have
complied with the foregoing, such Lender shall be deemed to hold such Collateral
and the proceeds thereof in trust for the parties entitled thereto hereunder.
(d) The Lenders agree that all Post-Default Payment received by any
Lender from any of the Companies or from any other source shall be paid over to
Agent for distribution in accordance with 8.17(b) above.
8.18. Enforcement by Agent. All rights of action under this Agreement and
under the Notes and all rights to the Collateral hereunder may be enforced by
Agent and any suit or proceeding instituted by Agent in furtherance of such
enforcement shall be brought in its name as Agent, without the necessity of
joining as plaintiffs or defendants any other Lenders, and the recovery of any
judgment shall be for the benefit of Lenders subject to the expenses of Agent.
8.19. Acknowledgment of Intercreditor Agreement. Each Lender hereto
acknowledges having reviewed the Intercreditor Agreement and agrees to the
amendments and modifications to certain duties of the Agent and terms of this
Agreement resulting therefrom.
SECTION 9
MISCELLANEOUS
9.1. Indemnification and Release Provisions. Borrower hereby agrees to
defend Agent and each Lender and their directors, officers, agents, employees
and counsel from, and hold each of them harmless against, any and all losses,
liabilities (including without limitation settlement costs and amounts, transfer
taxes, documentary taxes, or assessments or charges made by any governmental
authority), claims, damages, interest judgments, costs, or expenses, including
without limitation reasonable fees and disbursements of counsel, incurred by any
of them arising out of or in connection with or by reason of this Agreement, the
making of the Loan or any Collateral therefor, other than those resulting from
any such party's own wilful misconduct or gross negligence, including without
limitation, any and all losses, liabilities, claims, damages, interests,
judgments, costs or expenses relating to or arising under any Environmental Law.
Borrower hereby releases Agent and each Lender and their directors, officers,
agents, employees and counsel from any and all claims for loss, damages, costs
or expenses caused or alleged to be caused by any act or omission on the part of
any of them other
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than those resulting from any such party's own wilful misconduct or gross
negligence. All obligations provided for in this Paragraph 9.1 shall survive any
termination of this Agreement and the repayment of the Loan.
9.2. Participations and Assignments. Borrower hereby acknowledges and
agrees that a Lender may at any time: (a) grant participations in its share of
the Loan or any Note or of its right, title and interest therein or in or to
this Agreement (collectively, "Participations") to any other lending office or
to any other bank, lending institution or other Person which has the requisite
sophistication to evaluate the merits and risks of investments in Participations
("Participants"); provided, however, that: (i) all amounts payable by Borrower
hereunder shall be determined as if such Lender had not granted such
Participation; and (ii) any agreement pursuant to which any Lender may grant a
Participation: (A) shall provide that such Lender shall retain the sole right
and responsibility to enforce the obligations of Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement; (B) may provide that such Lender will not
agree to any modification, amendment or waiver of this Agreement requiring
approval of all Lenders pursuant to Paragraph 8.3 hereof without the consent of
the Participant and (C) shall not relieve such Lender from its obligations,
which shall remain absolute, to make Advances as provided hereunder; and (b)
assign (i) all or any percent of its share of the Loan or any Note or right,
title and interest therein or in and to this Agreement, to (x) a Lender; (y) any
Affiliate of a Lender; or (z) any Federal Reserve Bank; or (ii) all or any part
of its share of the Loan or any Note or right, title and interest therein or in
and to this Agreement to a third party; provided, however, that in the absence
of an Event of Default or Default hereunder no assignment pursuant to (b)(ii)
above shall be made without the prior written consent of the Agent and Borrower,
which consent shall not be unreasonably withheld. Any participations and any
assignments pursuant to subparagraph (b) shall be in an amount not less than
Five Million Dollars ($5,000,000) and, shall not result in the aggregate Maximum
Principal Amount of the assigning Lender being less than Five Million Dollars
($5,000,000) unless it is reduced to zero (0). Any assignment pursuant to
subparagraph (b) shall require payment by the applicable Lender to Agent of a
$3,500 service fee. Any assignment pursuant to subparagraph (b) shall be in the
form attached hereto as Exhibit F attached hereto.
9.3. Binding and Governing Law. This Agreement and all documents executed
hereunder shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns and, except as may be
required by mandatory provisions of applicable law, shall be governed as to
their validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania.
9.4. Survival. All agreements, representations, warranties and covenants of
Borrower contained herein or in any documentation required hereunder shall
survive the
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execution of this Agreement and the making of the Loan hereunder, and except for
Paragraphs 5.11 and 9.1 which provide otherwise will continue in full force and
effect as long as any indebtedness or other obligation of Borrower to Lenders
remains outstanding.
9.5. No Waiver; Delay. If Lenders shall waive any power, right or remedy
arising hereunder or under any applicable law, such waiver shall not be deemed
to be a waiver upon the later occurrence or recurrence of any of said events
with respect to Lenders. No delay by Lenders in the exercise of any power, right
or remedy shall, under any circumstances, constitute or be deemed to be a
waiver, express or implied, of the same and no course of dealing between the
parties hereto shall constitute a waiver of Lenders' powers, rights or remedies.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
9.6. Modification; Waiver. Except as otherwise provided in this Agreement,
no modification or amendment hereof, or waiver or consent hereunder, shall be
effective unless made in a writing signed by appropriate officers of the parties
hereto.
9.7. Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
9.8. Notices. Any notice, request or consent required hereunder or in
connection herewith shall be deemed satisfactorily given if in writing and
delivered by hand, mailed (registered or certified mail) or sent by facsimile
transmission to Agent or Borrower at their respective addresses or telecopier
number set forth below, or to Lenders at their respective addresses or
telecopier numbers set forth on Schedule 1 attached hereto, or to any party at
such other addresses or telecopier numbers as may be given by any party to the
others in writing:
if to Borrower:
Marketing Specialists Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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if to Agent:
First Union National Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ 4843
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Syndication Agency Services
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.9. Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, provided however that
such extension of time shall be included in the computation of interest due in
conjunction with such payment or other fees due hereunder, as the case may be.
9.10. Time of Day. All time of day restrictions imposed herein shall be
calculated using Agent's local time.
9.11. Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
9.12. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document, and each such counterpart shall be deemed to be an
original.
9.13. Confidentiality.
(a) All Confidential Information (as defined below) received by a
Lender hereunder shall be kept confidential by such Lender and shall be used
solely in
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connection with such Lender's role as a Lender hereunder (or, in the case of
Agent, as Agent hereunder). "Confidential Information" shall mean all
information delivered to a Lender by Companies hereunder, other than information
which (i) is generally available to the public other than as a result of
disclosure by such Lender, or (ii) is or becomes available to such Lender from a
Person or entity other than Companies or another Lender, unless such Lender
knows, or should have known, that such Person or entity is bound by a
confidentiality agreement or covenant with Companies prohibiting such Person or
entity from publicly disclosing such information.
(b) Notwithstanding the foregoing, nothing herein shall prevent Lenders
from making disclosure (i) to any of their Affiliates, outside auditors, counsel
and other professional advisors in connection with this Agreement or as
reasonably required by any potential transferee, participant or assignee, so
long as said recipient agrees to keep such Confidential Information or
disclosures confidential pursuant to the terms of this Agreement, (ii) as
requested by any examiner, governmental agency or representative thereof or
pursuant to legal process, (iii) as reasonably necessary in connection with the
exercise of any rights or remedies or otherwise in defense of its interests
under or in connection with any Loan Document or otherwise with respect to the
Senior Obligations, or (iv) as reasonably necessary in any suit, action or
proceeding for the purpose of defending itself or reducing its liability.
9.14. Consent to Jurisdiction and Service of Process. Each Company
irrevocably appoints each officer of Borrower as its attorney upon whom may be
served any notice, process or pleading in any action or proceeding against it
arising out of or in connection with this Agreement, the Notes, the Loan
Documents or any of the Collateral; each Company hereby consents that any action
or proceeding against it be commenced and maintained in any court within the
Commonwealth of Pennsylvania or in the United States District Court for the
Eastern District of Pennsylvania by service of process on any officer of
Borrower; and each Company agrees that the courts of the Commonwealth of
Pennsylvania and the United States District Court for the Eastern District of
Pennsylvania shall have jurisdiction with respect to the subject matter hereof
and the person of each Company and the Collateral. Notwithstanding the
foregoing, Agent, in its absolute discretion may also initiate proceedings in
the courts of any other jurisdiction in which any Company may be found or in
which any of its properties or Collateral may be located.
9.15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR THE NOTES OR OTHER LOAN DOCUMENTS OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
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OR ACTIONS OF AGENT OR LENDERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDERS' ENTERING INTO THIS AGREEMENT.
9.16. ACKNOWLEDGMENTS. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE
OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND, SPECIFICALLY,
PARAGRAPH 9.15 HEREOF, AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF
THE FOREGOING WAIVER OF JURY TRIAL HAVE BEEN FULLY EXPLAINED TO BORROWER BY SUCH
COUNSEL.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized officers, as
applicable, have executed this Second Amended and Restated Credit Agreement the
day and year first above written.
Attest: MARKETING SPECIALISTS CORPORATION
By: By:
--------------------------------- --------------------------------------
Name: Name:
Title: Title:
FIRST UNION NATIONAL BANK, for itself and
as Agent
By:
--------------------------------------
Name:
Title:
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Schedule 1
Lenders Pro Rata Shares and Maximum Principal Amount
Pro Rata
Lender Loan Share
------ ---- -----
First Union $35,000,000 100%
National Bank
----------- ----------
TOTAL $35,000,000 100.000000%
