EXHIBIT 10.2
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
dated as of
April 15, 1998
among
ADVANCE HOLDING CORPORATION,
ADVANCE STORES COMPANY, INCORPORATED, as Borrower,
The Lenders Party Hereto,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
___________________________
CHASE SECURITIES INC.,
as Arranger,
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent,
and
FIRST UNION NATIONAL BANK,
as Documentation Agent
================================================================================
[6700-550]
TABLE OF CONTENTS
ARTICLE I
Definitions Page
----------- ----
SECTION 1.01. Defined Terms ........................................ 1
SECTION 1.02. Classification of Loans and
Borrowings.......................................... 34
SECTION 1.03. Terms Generally ...................................... 35
SECTION 1.04. Accounting Terms; GAAP; Fiscal
Months .............................................. 35
SECTION 1.05. Interim Financial Calculations......................... 36
ARTICLE II
The Credits
-------------
SECTION 2.01. Commitments ........................................... 36
SECTION 2.02. Loans and Borrowings .................................. 37
SECTION 2.03. Requests for Borrowings ............................... 38
SECTION 2.04. Swingline Loans ....................................... 39
SECTION 2.05. Letters of Credit ..................................... 40
SECTION 2.06. Funding of Borrowings ................................. 46
SECTION 2.07. Interest Elections .................................... 47
SECTION 2.08. Termination and Reduction of
Commitments.......................................... 49
SECTION 2.09. Repayment of Loans; Evidence of Debt .................. 50
SECTION 2.10. Amortization of Term Loans ............................ 51
SECTION 2.11. Prepayment of Loans ................................... 53
SECTION 2.12. Fees .................................................. 55
SECTION 2.13. Interest .............................................. 57
SECTION 2.14. Alternate Rate of Interest............................. 58
SECTION 2.15. Increased Costs ....................................... 58
SECTION 2.16. Break Funding Payments ................................ 60
SECTION 2.17. Taxes ................................................. 61
SECTION 2.18. Payments Generally; Pro Rata Treatment;
Sharing of Set-Offs.. ............................... 62
SECTION 2.19. Mitigation Obligations; Replacement
of Lenders .......................................... 65
i
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers................................... 66
SECTION 3.02. Authorization; Enforceability.......................... 66
SECTION 3.03. Governmental Approvals; No Conflicts................... 67
SECTION 3.04. Financial Condition; No Material Adverse
Change............................................... 67
SECTION 3.05. Properties............................................. 68
SECTION 3.06. Litigation and Environmental Matters................... 69
SECTION 3.07. Compliance with Laws and Agreements.................... 69
SECTION 3.08. Investment and Holding Company Status.................. 70
SECTION 3.09. Taxes.................................................. 70
SECTION 3.10. ERISA.................................................. 70
SECTION 3.11. Disclosure............................................. 70
SECTION 3.12. Subsidiaries........................................... 71
SECTION 3.13. Insurance.............................................. 71
SECTION 3.14. Labor Matters.......................................... 71
SECTION 3.15. Solvency............................................... 71
SECTION 3.16. Senior Indebtedness.................................... 72
SECTION 3.17. Security Documents..................................... 72
SECTION 3.18. Year 2000 Compliance................................... 73
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date......................................... 74
SECTION 4.02. Each Credit Event...................................... 81
ARTICLE V
Affirmative Covenants
---------------------
SECTION 5.01. Financial Statements and Other
Information.......................................... 82
SECTION 5.02. Notices of Material Events............................. 84
SECTION 5.03. Information Regarding Collateral....................... 85
SECTION 5.04. Existence; Conduct of Business......................... 86
SECTION 5.05. Payment of Obligations................................. 86
SECTION 5.06. Maintenance of Properties.............................. 86
SECTION 5.07. Insurance.............................................. 86
SECTION 5.08. Casualty and Condemnation.............................. 88
SECTION 5.09. Books and Records, Inspection and
Audit Rights......................................... 88
SECTION 5.10. Compliance with Laws................................... 89
SECTION 5.11. Use of Proceeds and Letters of Credit.................. 89
SECTION 5.12. Additional Subsidiaries................................ 90
ii
SECTION 5.13. Further Assurances..................................... 90
SECTION 5.14. Collection Deposit Accounts............................ 91
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Indebtedness; Certain Equity Securities................ 92
SECTION 6.02. Liens.................................................. 94
SECTION 6.03. Fundamental Changes.................................... 95
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions.......................... 96
SECTION 6.05 Asset Sales............................................ 98
SECTION 6.06. Hedging Agreements..................................... 99
SECTION 6.07. Restricted Payments; Certain Payments
of Indebtedness...................................... 99
SECTION 6.08. Transactions with Affiliates........................... 102
SECTION 6.09. Restrictive Agreements................................. 102
SECTION 6.10. Amendment of Material Documents........................ 103
SECTION 6.11. Sale and Lease-Back Transactions....................... 104
SECTION 6.12. Capital Expenditures................................... 104
SECTION 6.13. Leverage Ratio......................................... 105
SECTION 6.14. Consolidated Interest Expense Coverage Ratio........... 105
SECTION 6.15. Minimum Retained Cash Earnings......................... 106
SECTION 6.16. Purchase and Sale of Vehicles; Vehicle Subsidiary...... 106
ARTICLE VII
Events of Default............................ 107
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ARTICLE VIII
The Administrative Agent........................ 110
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ARTICLE IX
Miscellaneous
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SECTION 9.01. Notices................................................ 113
SECTION 9.02. Waivers; Amendments.................................... 114
SECTION 9.03. Expenses; Indemnity; Damage Waiver..................... 116
SECTION 9.04. Successors and Assigns................................. 118
SECTION 9.05. Survival............................................... 121
iii
SECTION 9.06. Counterparts; Integration; Effectiveness............... 121
SECTION 9.07. Severability........................................... 122
SECTION 9.08. Right of Setoff........................................ 122
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process................................ 122
SECTION 9.10. WAIVER OF JURY TRIAL................................... 123
SECTION 9.11. Headings............................................... 124
SECTION 9.12. Confidentiality........................................ 124
SECTION 9.13. Interest Rate Limitation............................... 125
SCHEDULES:
---------
Schedule 1.01(b) - Mortgaged Property
Schedule 2.01 - Commitments
Schedule 3.06 - Disclosed Matters
Schedule 3.12 - Subsidiaries
Schedule 3.13 - Insurance
Schedule 3.17 - Mortgage Filing Offices
Schedule 6.01 - Existing Indebtedness
Schedule 6.02 - Existing Liens
Schedule 6.04 - Investment
Schedule 6.08 - Existing Affiliated Leases
Schedule 6.09 - Existing Restrictions
EXHIBITS:
--------
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Forms of Opinions of Borrower's Counsel
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit E - Form of Guarantee Agreement
Exhibit F - Form of Pledge Agreement
Exhibit G - Form of Security Agreement
iv
CREDIT AGREEMENT dated as of April 15,
1998, among ADVANCE HOLDING CORPORATION,
ADVANCE STORES COMPANY, INCORPORATED, the
LENDERS party hereto, and THE CHASE MANHATTAN
BANK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted Consolidated Net Income" means, for any period, net income
--------------------------------
or loss of the Borrower and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
--------
excluded (a) the income of any Person in which any other Person (other than the
Borrower or any of the Subsidiaries or any director holding qualifying shares in
compliance with applicable law) has a joint interest, except income shall be
included to the extent of the amount of dividends or other distributions
actually paid to the Borrower or any of the Subsidiaries by such Person during
such period, (b) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Borrower or any
of the Subsidiaries or the date that Person's assets are acquired by the
Borrower or any of the Subsidiaries, (c) gains and losses from the sale or other
disposition of material assets outside the ordinary course of business and (d)
Excluded Charges for such period; provided further that, to the extent that the
----------------
Borrower or any Subsidiary makes any Restricted Payment to Holdings in order to
permit Holdings to pay taxes or other expenses (excluding interest on the
Holdings Senior Discount Debentures), then such taxes or other expenses shall be
deducted in determining Adjusted Consolidated Net Income as though such taxes or
other expenses had been incurred by the Borrower directly.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
------------------
for any Interest Period, an interest
2
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
--------------------
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
----------------------------
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Revolving Lender,
---------------------
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day (a) with respect to any Tranche B
---------------
Term Loan, the applicable Tranche B Rate and (b) with respect to any ABR Loan or
Eurodollar Loan that is a Revolving Loan or a Delayed Draw Loan, as the case may
be, the applicable rate per annum set forth below under the caption "ABR Spread"
or "Eurodollar Spread", as the case may be, based upon the Leverage Ratio as of
the most recent determination date; provided that until the delivery of the
--------
financial statements pursuant to Section 5.01 for the first
3
four full fiscal quarters commencing with the quarter in which the Effective
Date occurs, the "Applicable Rate" for purposes of clause (b) shall be the
applicable rate per annum set forth below in Category 3:
=======================================================
ABR Eurodollar
Leverage Ratio: --- ----------
--------------- Spread Spread
------ ------
-------------------------------------------------------
Category 1
---------- 0.75% 1.75%
Leverage Ratio is less than
or equal to 4.00 to 1.00
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Category 2
---------- 1.00% 2.00%
Leverage Ratio is greater
than 4.00 to 1.00 and less
than or equal to 4.50 to
1.00
-------------------------------------------------------
Category 3
---------- 1.25% 2.25%
Leverage Ratio is greater
than 4.50 to 1.00
=======================================================
For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; provided
--------
that the Leverage Ratio shall be deemed to be in Category 3 (A) at any time that
an Event of Default has occurred and is continuing or (B) if the Borrower fails
to deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the expiration of the
time for delivery thereof until such consolidated financial statements are
delivered.
"Approved Fund" means, with respect to any Lender that is a fund that
-------------
invests in commercial loans, any other fund that invests in commercial loans and
is managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"Assessment Rate" means, for any day, the annual assessment rate in
---------------
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning
4
of 12 C.F.R. Part 327 (or any successor provision) to the Federal Deposit
Insurance Corporation for insurance by such Corporation of time deposits made in
dollars at the offices of such member in the United States; provided that if,as
--------
a result of any change in any law, rule or regulation, it is no longer possible
to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
------------
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of
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the United States of America.
"Borrower" means Advance Stores Company, Incorporated, a Virginia
--------
corporation.
"Borrowing" means (a) Loans of the same Class and Type, made,
---------
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Base" means, as of any date of determination, an amount
--------------
calculated by reference to the most recently delivered Borrowing Base
Certificate equal to the sum, without duplication, of (a) 60% of the value
(determined as provided below) of Eligible Inventory included in the
Distribution Centers' Inventory and in the PDQs' Inventory, plus (b) 50% of the
value (determined as provided below) of Eligible Inventory included in the
Stores' Inventory, plus (c) 25% of the value (determined as provided below) of
Eligible Inventory included in the Master PDQ's Inventory. For purposes of
determining the Borrowing Base, Eligible Inventory shall be valued at the lower
of cost or market or, if the Borrower has previously notified the Administrative
Agent on its Borrowing Base Certificate, a new basis of valuation satisfactory
to the Administrative Agent. The Borrowing Base shall be computed as of the end
of each fiscal month; provided that Borrowing Base at any time in effect shall
be determined by reference to the Borrowing
5
Base Certificate most recently delivered hereunder. Standards of eligibility of
the Borrowing Base may be adjusted and revised from time to time by the
Administrative Agent in its sole discretion and consistent with its standard
practice, with any changes in such standards to be effective 10 days after
delivery of notice thereof to the Borrower.
"Borrowing Base Certificate" means a certificate in the form of
--------------------------
Exhibit C or any other form approved by the Administrative Agent, together with
all attachments contemplated thereby.
"Borrowing Request" means a request by the Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
--------
the term "Business Day" shall also exclude any day on which banks are not open
------------
for dealings in dollar deposits in the London interbank market.
"Cash Concentration Account" means the "Cash Concentration Account",
--------------------------
as defined in the Security Agreement.
"Capital Expenditures" means, for any period, (a) the additions to
--------------------
property, plant and equipment and other capital expenditures of the Borrower and
its consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Borrower for such period prepared in accordance
with GAAP and (b) without duplication, Capital Lease Obligations incurred by the
Borrower and its consolidated Subsidiaries during such period.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means at any time, (a) the acquisition of
-----------------
ownership, directly or indirectly, beneficially or of record, by any Person
other than Holdings of any
6
shares of capital stock of the Borrower; (b) prior to an IPO, the failure by
FS&C and its Affiliates to collectively own, directly or indirectly,
beneficially and of record, shares representing at least 50.10% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
Holdings; (c) after an IPO, (i) the failure by FS&C Investors and their
Affiliates to collectively own, directly or indirectly, beneficially and of
record, shares representing at least 20% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Holdings, and/or (ii)
the failure by FS&C and its Affiliates to collectively own directly or
indirectly, beneficially and of record, shares representing at least 50% of the
aggregate ordinary voting power represented by the shares owned by FS&C
Investors and their Affiliates referred to in clause (i) above, and/or (iii) any
Person or group (within the meaning of Rule 13d-5 under the United States
Securities and Exchange Act of 1934 as in effect on the date hereof), other than
FS&C Investors and their Affiliates, shall beneficially own, directly or
indirectly, shares of capital stock of Holdings representing more than the
percentage of the aggregate ordinary voting power represented by the shares
beneficially owned, directly or indirectly, by FS&C Investors and their
Affiliates at such time; (d) occupation of a majority of the seats (other than
vacant seats) on the board of directors of Holdings by Persons who were not
Continuing Directors; or (e) while any of the Subordinated Debt or Holdings
Senior Discount Debentures is outstanding, a "Change of Control" (as defined in
the Subordinated Debt Documents or the Holdings Senior Discount Debenture
Documents, as applicable) shall have occurred.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Delayed Draw I Loans, Delayed Draw II Loans, Tranche B Term Loans or Swingline
Loans and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving
7
Commitment, Delayed Draw I Commitment, Delayed Draw II Commitment or Tranche B
Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" means any and all "Collateral", as defined in any
----------
applicable Security Document.
"Collateral Agent" means the "Collateral Agent", as defined in any
----------------
applicable Security Document.
"Collection Deposit Account" means the "Collection Deposit Account",
--------------------------
as defined in the Security Agreement.
"Collection Deposit Letter Agreement" means the "Collection Deposit
-----------------------------------
Letter Agreement", as defined in the Security Agreement.
"Commitment" means a Revolving Commitment, Delayed Draw I Commitment,
----------
Delayed Draw II Commitment or Tranche B Commitment, or any combination thereof
(as the context requires).
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
-------------------
Income for such period, plus, without duplication and to the extent deducted
from revenues in determining Adjusted Consolidated Net Income, the sum of (a)
Consolidated Interest Expense for such period, (b) the aggregate amount of
letter of credit fees accrued during such period, (c) the aggregate amount of
income tax expense for such period, (d) all depreciation and amortization
expense for such period and (e) other non-cash charges for such period, and
minus, without duplication and to the extent added to revenues in determining
Adjusted Consolidated Net Income for such period, all non-cash gains during such
period, all as determined on a consolidated basis with respect to the Borrower
and the Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the interest
-----------------------------
expense of the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Continuing Directors" means the directors of Holdings on the
--------------------
Effective Date, after giving effect to the Merger and the other transactions
contemplated hereby, and each other director, if in each case, such other
director's nomination for election to the board of directors of Holdings is
recommended by a majority of the then Continuing
8
Directors or such other director receives the vote of FS&C in his or her
election by the stockholders of Holdings.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Delayed Draw Commitments" means the Delayed Draw I Commitments and
------------------------
the Delayed Draw II Commitments.
"Delayed Draw I Availability Period" means the period from and
----------------------------------
including the Effective Date to but excluding the earlier of the Delayed Draw I
Commitment Termination Date and the date of termination of the Delayed Draw I
Commitments.
"Delayed Draw I Commitment Termination Date" means October 15, 1999.
------------------------------------------
"Delayed Draw I Commitment" means, with respect to each Lender, the
-------------------------
commitment, if any, of such Lender to make Delayed Draw I Loans hereunder during
the Delayed Draw I Availability Period, expressed as an amount representing the
maximum principal amount of Delayed Draw I Loans to be made by such Lender
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Delayed Draw I Commitment is set forth on Schedule 2.01 or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Delayed Draw I Commitment, as applicable. The initial aggregate amount of the
Lenders' Delayed Draw I Commitments is $50,000,000.
"Delayed Draw I Lender" means a Lender with a Delayed Draw I
---------------------
Commitment or an outstanding Delayed Draw I Loan.
"Delayed Draw I Loan" means a Loan made pursuant to clause (b) of
-------------------
Section 2.01.
9
"Delayed Draw II Availability Period" means the period from and
-----------------------------------
including the Effective Date to but excluding the earlier of the Delayed Draw II
Commitment Termination Date and the date of termination of the Delayed Draw II
Commitments.
"Delayed Draw II Commitment" means, with respect to each Lender, the
--------------------------
commitment, if any, of such Lender to make Delayed Draw II Loans hereunder
during the Delayed Draw II Availability Period, expressed as an amount
representing the maximum principal amount of Delayed Draw II Loans to be made by
such Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial
amount of each Lender's Delayed Draw II Commitment is set forth on Schedule 2.01
or in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Delayed Draw II Commitment, as applicable. The initial aggregate
amount of the Lenders' Delayed Draw II Commitments is $75,000,000.
"Delayed Draw II Commitment Termination Date" means April 15, 2001.
-------------------------------------------
"Delayed Draw II Lender" means a Lender with a Delayed Draw II
----------------------
Commitment or an outstanding Delayed Draw II Loan.
"Delayed Draw II Loan" means a Loan made pursuant to clause (c) of
--------------------
Section 2.01.
"Delayed Draw Exposure" means, at any time, the sum of the outstanding
---------------------
principal amount of Delayed Draw Loans at such time.
"Delayed Draw Loans" means Delayed Draw I Loans and Delayed Draw II
------------------
Loans.
"Delayed Draw Maturity Date" means April 15, 2004.
--------------------------
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"Distribution Centers" means any warehouse facility operated by the
--------------------
Borrower or any of the Subsidiary Loan Parties, which holds Inventory being held
pending the regular replenishment of Store Inventory.
10
"Documentation Agent" means First Union National Bank, in its capacity
-------------------
as documentation agent for the Lenders hereunder.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means the date on which the conditions specified in
--------------
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Effective Date Dividend" means a dividend by the Borrower to Holdings
-----------------------
in an aggregate amount of $183,000,000.
"Eligible Inventory" means, as of any date of determination, the
------------------
amount equal to the value of all Inventory owned by the Borrower or any
Subsidiary Loan Party, minus reserves taken, if any, for (a) the strategic
alliance vendor price reductions based on actual purchasing volume, (b)
defective reclass of receivable reserves representing items classified as
defective for which a claim will be placed with the vendor, (c) defective
reserves representing an accrual for future defective product exposure and (d)
battery warranty as accrued by the Borrower or any of its Subsidiaries which is
in addition to the manufacturer's warranty. Unless otherwise approved from time
to time in writing by the Administrative Agent, no Inventory shall be "Eligible
Inventory" if:
(a) such item of Inventory is core inventory; or
(b) such item of Inventory is held on consignment, is owned by the
Borrower or any of its Subsidiaries and has been consigned to other
Persons, or is located at, or in the possession of, a vendor of the
Borrower or such Subsidiary, or is in transit to or from, or held or stored
by, third parties; or
(c) such item of Inventory includes any profits or transfer price
additions charged or accrued in connection with transfers of such Inventory
between the Borrower and its Subsidiaries or among the Subsidiaries of the
Borrower; provided that such Inventory shall only be excluded as Eligible
Inventory up to an amount equal to such profits and transfer price
additions; or
(d) such item of Inventory is comprised of shipping supplies and/or
packaging, selling or display materials; or
11
(e) such item of Inventory is located at the Distribution Centers or
PDQs and is in excess of a 52 week supply based on sales for the preceding
52 weeks and determined at an individual product level; or
(f) such item of Inventory is comprised of rental tools; provided that
rental tools which would not be Eligible Inventory solely by reason of this
clause (f) may comprise up to $500,000 of Eligible Inventory at any time;
or
(g) the Borrower or a Subsidiary Loan Party, as the case may be, shall
not have good and marketable title as sole owner of such item of Inventory
or any claim disputing the title of the Borrower or the relevant Subsidiary
Loan Party, as the case may be, to, or right to possession of or dominion
over, such item of Inventory shall have been asserted; or
(h) such item of Inventory is not located in the United States of
America; or
(i) such item of Inventory is not subject to a valid and perfected,
first priority security interest in favor of the Collateral Agent pursuant
to the Security Agreement; or
(j) such item of Inventory is subject to any Lien whatsoever, other
than Liens which are expressly permitted to encumber Inventory pursuant to
the Loan Documents; or
(k) such item of Inventory (i) is damaged or not in good condition,
(ii) is a sample in the retail stores or for marketing purposes, (iii) does
not meet all material standards imposed by any Governmental Authority
having regulatory authority over such item of Inventory, its use or sale or
(iv) shall be a discontinued item or otherwise be believed by the
Administrative Agent (using its commercially reasonable judgment) to be not
readily usable or salable under the customary terms upon which it usually
is sold or at prices approximating at least the cost thereof (after giving
effect to any write-downs applicable thereto).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the
12
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings, the Borrower or any Subsidiary directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Financing" means the contribution by the FS&C Investors to
----------------
Mergerco or Holdings of an aggregate amount, in cash, equal to the excess of
$107,500,000 over the Management Equity Contribution, in exchange for all the
common stock of Mergerco.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal
13
or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
the Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
----------
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Excess Cash Flow" means, for any period, the sum (without
----------------
duplication) of:
(a) the consolidated net income (or loss) of the Borrower and its
consolidated Subsidiaries for such period, adjusted to exclude (i) any
gains or losses attributable to Prepayment Events and (ii) to the extent
not otherwise excluded, any Restricted Payments made to Holdings during
such period by the Borrower and its Subsidiaries; plus
----
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such consolidated net income (or loss) for such
period; plus
----
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the
consolidated deferred revenues of the Borrower and its consolidated
Subsidiaries increased during such period plus (iii) the aggregate amount
of Capital Lease Obligations and principal of other Indebtedness incurred
during such period to finance Capital Expenditures, to the extent that
mandatory principal payments in respect of such Indebtedness would not be
excluded from clause (f) below when made; minus
-----
(d) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such period plus (ii) the amount, if
any, by which Net Working Capital increased during such period plus (iii)
the amount, if any, by which the consolidated deferred revenues of the
Borrower and its consolidated Subsidiaries decreased during such period;
minus
-----
14
(e) Capital Expenditures for such period; minus
-----
(f) the aggregate principal amount of Indebtedness repaid or prepaid
by the Borrower and its consolidated Subsidiaries during such period,
excluding (i) Indebtedness in respect of Revolving Loans and Letters of
Credit, (ii) Term Loans prepaid pursuant to Section 2.11(c) or (d), (iii)
repayments or prepayments of Indebtedness financed by incurring other
Indebtedness, to the extent that mandatory principal payments in respect of
such other Indebtedness would not be excluded from this clause (f) when
made, and (iv) Indebtedness referred to in clauses (viii) and (ix) of
Section 6.01(a).
"Excluded Charges" means (a) non-recurring transaction fees and
----------------
expenses incurred in connection with the Recapitalization and (b) bonuses paid
for management and other employees of the Borrower and its Subsidiaries in
connection with, and substantially concurrently with, the Recapitalization, in
an aggregate amount not exceeding $11,500,000.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).
"Existing Credit Agreements" means (a) the Credit Agreement dated as
--------------------------
of December 5, 1994, as amended, between Crestar Bank and Holdings, (b) the
Credit Agreement dated as of October 6, 1994, as amended, between NationsBank,
N.A.
15
and Holdings, (c) the Credit Agreement dated as of December 5, 1994, as amended,
between First Union National Bank of Virginia and Holdings, (d) the Credit
Agreement dated as of December 5, 1994, as amended, between Wachovia Bank of
North Carolina, N.A. and Holdings, (e) the Credit Agreement dated as of October
6, 1994, as amended, between NationsBank, N.A. and Holdings, (f) the Lines of
Credit Commitment and Promissory Notes between First Union National Bank of
Virginia and Holdings and (g) the Letter of Credit and Reimbursement Agreement
dated as of December 1, 1997, as amended, among the Borrower, Holdings and First
Union National Bank.
"Existing LC Issuing Bank" means First Union.
------------------------
"Existing Letters of Credit" means all letters of credit outstanding
--------------------------
as of the Effective Date that have been issued by the Existing LC Issuing Bank
under the Existing Credit Agreements.
"Existing Stockholders" means the holders of the outstanding common
---------------------
stock and outstanding preferred stock of Holdings prior to the Merger.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, vice president
-----------------
of finance, principal accounting officer, treasurer or controller of Holdings or
the Borrower, as applicable.
"Financing Transactions" means (a) the execution, delivery and
----------------------
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder, (b) the execution, delivery and performance by
each Loan Party of the Subordinated Debt Documents to which it is to be a party,
the issuance of the Subordinated Debt and the use of the proceeds thereof, (c)
the Management Equity Contribution and use of the
16
proceeds thereof, (d) the Equity Financing and use of the proceeds thereof and
(e) the execution, delivery and performance by Holdings of the Holdings Senior
Discount Debenture Documents, the issuance of the Holdings Senior Discount
Debentures and the use of the proceeds thereof.
"First Union" means First Union National Bank.
-----------
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the
------------------
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"FS&C" means Xxxxxxx Xxxxxx & Co. Incorporated.
----
"FS&C Investors" means FS&C and certain other investors arranged by
--------------
FS&C.
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"GE Capital Affiliate" means General Electric Capital Corporation,
--------------------
Monogram Credit Card Bank of Georgia or any other entity controlled directly or
indirectly by General Electric Capital Corporation.
"GE Capital Program Agreements" means (a) the Monogram Credit Card
-----------------------------
Bank of Georgia Program Agreement dated as of June 24, 1997 among Holdings, the
Borrower and Monogram Credit Card Bank of Georgia, as such agreement may have
been or may hereafter be amended, restated, supplemented or modified from time
to time in accordance with Section 6.10 hereof, together with any agreements
entered into by Holdings, the Borrower and Monogram Credit Card Bank of Georgia,
or any GE Capital Affiliate, in replacement of such Monogram Credit Card Bank of
Georgia Program Agreement provided that such replacement agreements are, in the
aggregate, no more adverse to the interests of the Borrower or the Lenders than
is such Monogram Credit Card Bank of Georgia Program Agreement; and (b) the
Commercial Credit Program Agreement dated as of November 22, 1996 among
Holdings, the Borrower and General Electric Capital Corporation, as such
agreement may have been or may hereafter be amended, restated, supplemented or
modified
17
from time to time in accordance with Section 6.10 hereof, together with any
agreements entered into by Holdings, the Borrower and General Electric Capital
Corporation, or any GE Capital Affiliate, in replacement or such Commercial
Credit Program Agreement provided that such replacement agreements are, in the
aggregate, no more adverse to the interests of the Borrower or the Lenders than
is such Commercial Credit Program Agreement.
"GE Capital Program Indebtedness" means Indebtedness of the Borrower
-------------------------------
arising under the GE Capital Program Agreements in an aggregated principal
amount not exceeding (a) $25,000,000 at any time outstanding prior to January 1,
2001 and (b) $45,000,000 at any time outstanding thereafter.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term "Guarantee" shall not
--------
include endorsements for collection or deposit in the ordinary course of
business.
"Guarantee Agreement" means the Guarantee Agreement, substantially in
-------------------
the form of Exhibit E, made by Holdings and the Subsidiary Loan Parties in favor
of the Administrative Agent for the benefit of the Secured Parties.
18
"Hazardous Materials" means all explosive or radioactive substances
-------------------
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Holdings" means Advance Holding Corporation, a Virginia corporation.
--------
"Holdings Senior Discount Debenture Documents" means the indenture
--------------------------------------------
pursuant to which the Holdings Senior Discount Debentures are issued and all
other instruments, agreements and other documents evidencing or governing the
Holdings Senior Discount Debentures or providing for any Guarantee or other
right in respect thereof.
"Holdings Senior Discount Debentures" means the Senior Discount
-----------------------------------
Debentures due 2009 to be issued by Holdings on or prior to the Effective Date
in an aggregate principal amount sufficient to yield $60,000,000 of gross cash
proceeds (before deducting underwriting discounts and commissions).
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding accounts payable
incurred in the ordinary course of business that are not overdue by more than 90
days), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of
19
guaranty and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor. The amount of any Indebtedness described in
clause (f) above shall be limited to the maximum amount payable under the
applicable Guarantee of such Person if such Guarantee contains limitations on
the amount payable thereunder.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Indemnity, Subrogation and Contribution Agreement" means the
-------------------------------------------------
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among Holdings, the Borrower, the Subsidiary Loan Parties and the
Administrative Agent.
"Information Memorandum" means the Confidential Information Memorandum
----------------------
dated March, 1998, relating to Holdings, the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan (other
---------------------
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
"Interest Period" means with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
--------
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next
20
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Inventory" means (a) as of any date of determination, "inventory", as
---------
defined in the Uniform Commercial Code as in effect in the State of New York and
(b) all finished goods, wares and merchandise, finished or unfinished parts,
components, assemblies held for sale to third party customers based on perpetual
inventory reports, including reconciling items to the perpetual reports, defined
and classified by the Borrower and its Subsidiaries on a basis consistent with
current and historical accounting practice in accordance with GAAP.
"IPO" means the issuance by Holdings of shares of its common stock to
---
the public pursuant to a bona fide underwritten public offering, resulting in
the receipt by Holdings of at least $40,000,000 of gross cash proceeds.
"Issuing Bank" means (a) The Chase Manhattan Bank, in its capacity as
------------
the issuer of Letters of Credit hereunder, and its successors in such capacity
as provided in Section 2.05(i), (b) any other Lender approved by the
Administrative Agent and the Borrower or (c) solely with respect to the Existing
Letters of Credit, the Existing LC Issuing Bank in respect thereof. An Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of such Issuing Bank, in which case the term "Issuing Bank"
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
---------------
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
21
"Lenders" means the Persons listed on Schedule 2.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the
term "Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement. Each Existing Letter of Credit will be deemed to constitute a Letter
of Credit for all purposes under the Loan Documents as though each Existing
Letter Credit had been issued hereunder on the Effective Date.
"Leverage Ratio" means, on any date (subject to Section 1.05), the
--------------
ratio of (a) Total Debt as of such date to (b) Consolidated EBITDA for the
period of four consecutive fiscal quarters of the Borrower most recently ended
as of such date (or, if such date is not the last day of a fiscal quarter, then
most recently ended prior to such date), all determined on a consolidated basis
in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
---------
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
22
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the promissory notes, if any,
--------------
executed and delivered pursuant to Section 2.09(e), the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and the Security Documents.
"Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
------------
Parties.
"Loans" means the loans made by the Lenders to the Borrower pursuant
-----
to this Agreement.
"Management Equity Contribution" means the investment by certain
------------------------------
members of the existing management of Holdings and the Borrower in Holdings of
an aggregate amount of $5,000,000 to $8,038,000 in cash or, subject to the
limitations of clause (h) of Section 6.04, promissory notes in exchange for
shares of common stock of Holdings.
"Management Investors" means the members of the existing management of
--------------------
Holdings and the Borrower who participate in the Management Equity Contribution.
"Master PDQ" means any warehouse facility operated by the Borrower or
----------
any of the Subsidiary Loan Parties, which primarily holds Inventory constituting
slower-moving items.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings, the Borrower and the Subsidiaries taken as a whole, (b) the ability of
any Loan Party to perform any of its obligations under any Loan Document or (c)
the rights of or benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Holdings, the Borrower and their Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Holdings,
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount
23
(giving effect to any netting agreements) that Holdings, the Borrower or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Merger" means the merger of Mergerco with and into Holdings with
------
Holdings as the surviving corporation.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
----------------
March 4, 1998, by and among Holdings, the Borrower, the Existing Stockholders
and FS&C Investors.
"Mergerco" means AHC Corporation, a newly formed Virginia corporation
--------
whose capital stock is owned by the FS&C Investors.
"Moody's" means Xxxxx'x Investors Service, Inc.
-------
"Mortgage" means a mortgage, deed of trust, assignment of leases and
--------
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel of real property
------------------
and the improvements thereto owned or leased by a Loan Party and identified on
Schedule 1.01(b), and includes each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any event (a) the cash
-----------------
proceeds received in respect of such event including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds, and (iii) in the case of a condemnation
or similar event, condemnation awards and similar cash payments, net of (b) the
sum of (i) all commissions, fees and out-of-pocket expenses paid by Holdings,
the Borrower and the Subsidiaries to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or other damage or condemnation or similar proceeding), the amount
of all payments required to be made by Holdings, the Borrower and the
Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event, and
24
(iii) the amount of all taxes paid (or reasonably estimated to be payable) by
Holdings, the Borrower and the Subsidiaries, and the amount of any reserves
established by Holdings, the Borrower and the Subsidiaries to fund (A) retained
liabilities relating to the assets sold or (B) contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next two succeeding years and that are directly attributable to such
event (as determined reasonably and in good faith by the chief financial officer
of the Borrower).
"Net Working Capital" means, at any date, (a) the consolidated current
-------------------
assets of the Borrower and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.
"Obligations" has the meaning assigned to such term in the Security
-----------
Agreement.
"Other Taxes" means any and all current or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"PDQs" means any warehouse facility operated by the Borrower or any of
----
the Subsidiary Loan Parties, which primarily holds Inventory constituting slower
moving items than the SKU allotments at the Distribution Centers but are in
greater quantity and faster moving than the SKU allotments at the Master PDQ.
"Perfection Certificate" means a certificate in the form of Annex 1 to
----------------------
the Security Agreement or any other form approved by the Collateral Agent.
"Permitted Acquisition" means any acquisition by the Borrower or a
---------------------
Subsidiary of the Borrower of all or substantially all the assets of, or all the
shares of
25
capital stock of or other equity interests in, a Person or division or line of
business of a Person if, immediately after giving effect thereto, (a) no Default
has occurred and is continuing or would result therefrom, (b) all transactions
related thereto are consummated in accordance with applicable laws, (c) all the
capital stock of each Subsidiary formed for the purpose of or resulting from
such acquisition shall be owned directly by the Borrower or a Subsidiary of the
Borrower and all actions required to be taken with respect to such acquired or
newly formed Subsidiary under Sections 5.12 and 5.13 have been taken, (d) the
Borrower and its Subsidiaries are in compliance, on a pro forma basis after
giving effect to such acquisition, with the covenants contained in Sections
6.13, 6.14 and 6.15 recomputed as of the last day of the most recently ended
fiscal quarter of the Borrower for which financial statements are available, as
if such acquisition (and any related incurrence or repayment of Indebtedness,
with any new Indebtedness being deemed to be amortized over the applicable
testing period in accordance with its terms, and assuming that any Revolving
Loans borrowed in connection with such acquisition are repaid with excess cash
balances when available) had occurred on the first day of each relevant period
for testing such compliance and (e) the Borrower has delivered to the
Administrative Agent an officers' certificate to the effect set forth in clauses
(a), (b), (c) and (d) above, together with all relevant financial information
for the Person or assets to be acquired.
"Permitted Asset Swap" means any transfer of properties or assets by
--------------------
the Borrower or any of its Subsidiaries in which at least 80% of the
consideration received by the transferor consists of properties or assets (other
than cash) that will be used in the business of such transferor, provided that
--------
(a) the aggregate fair market value (as determined in good faith by the board of
directors of the Borrower) of the property or assets (including cash) being
transferred by the Borrower or such Subsidiary, as the case may be, is not
greater than the aggregate fair market value (as determined in good faith by the
board of directors of the Borrower) of the property or assets (including cash)
received by the Borrower or such Subsidiary, as the case may be, in such
exchange and (b) the aggregate fair market value (as determined in good faith by
the board of directors of the Borrower) of all property or assets transferred by
the Borrower and any of its Subsidiaries in connection with exchanges in any
period of twelve consecutive months shall not exceed $20,000,000.
26
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes or government assessments that are
not yet due or are being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 60 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits (and, to the extent securing a trade contract or
indemnity bond, Liens on assets to which such contract or bond relates) to
secure the performance of bids, trade contracts, leases, statutory
obligations, surety, indemnity and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
interfere with the ordinary conduct of business of Holdings or any
Subsidiary;
(g) any interest or title of a lessor under any lease that is limited
to the property subject to such lease; and
(h) unperfected Liens of any vendor on inventory sold by such vendor
securing the unpaid purchase price of such inventory, to the extent such
Liens are stated to be reserved in such vendor's sale documents (and not
granted by separate agreement of the Borrower or any Subsidiary);
provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
27
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above; and
(e) investments in money market or mutual funds substantially all the
assets of which are comprised of securities of the types described in any
of clauses (a) through (d) above.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the
----------------
form of Exhibit F, among the Borrower,
28
Holdings, the Subsidiaries party thereto and the Collateral Agent for the
benefit of the Secured Parties.
"Prepayment Event" means:
----------------
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Borrower or
any Subsidiary, other than (i) dispositions described in clauses (a), (b),
(d) and (e) of Section 6.05 and (ii) other dispositions resulting in
aggregate Net Cash Proceeds not exceeding $1,000,000 during any fiscal year
of the Borrower; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of the Borrower or any Subsidiary, but only to the extent that the
Net Cash Proceeds therefrom have not been applied to repair, restore or
replace such property or asset within 360 days (or, in the case of a
distribution center, two years, provided that repair, restoration or
--------
replacement commenced within 270 days of such event) after such event; or
(c) the issuance by Holdings, the Borrower or any Subsidiary of any
equity securities, or the receipt by Holdings, the Borrower or any
Subsidiary of any capital contribution, other than (i) any such issuance of
equity securities to, or receipt of any such capital contribution from,
Holdings, the Borrower or a Subsidiary, (ii) the issuance by Holdings of
shares of its common stock for cash to the extent that (A) Holdings or the
Borrower notifies the Administrative Agent at or prior to the time of such
issuance that the Net Cash Proceeds thereof are to be applied to finance a
Permitted Acquisition and (B) such Net Cash Proceeds are so applied within
30 days after such Net Cash Proceeds are received or (iii) the issuance by
Holdings of shares of its common stock to management of Holdings, the
Borrower or any Subsidiary to the extent that the Net Cash Proceeds
therefrom shall not exceed $750,000 during any fiscal year of the Borrower;
or
(d) the incurrence by Holdings, the Borrower or any Subsidiary of any
Indebtedness, other than Indebtedness permitted under Section 6.01;
provided that with respect to any event described in clause (a), if the Borrower
--------
shall deliver a certificate of a
29
Financial Officer to the Administrative Agent at the time of such event setting
forth the Borrower's or a Subsidiary's intent to use the Net Cash Proceeds of
such event to acquire other assets to be used in the same line of business
within 270 days of receipt of such Net Cash Proceeds and certifying that no
Default has occurred and is continuing, such event shall not constitute a
Prepayment Event except to the extent the Net Cash Proceeds therefrom are not so
used at the end of such 270-day period, at which time such event shall be deemed
a Prepayment Event with Net Cash Proceeds equal to the Net Cash Proceeds so
remaining unused.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Recapitalization" means the Merger and recapitalization of Holdings
----------------
pursuant to, and in accordance with the terms of, the Merger Agreement.
"Recapitalization Documents" means the Merger Agreement and all other
--------------------------
agreements and documents relating to the Recapitalization.
"Register" has the meaning set forth in Section 9.04.
--------
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
----------------
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"Restricted Payment" means (a) any dividend or other distribution
------------------
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of Holdings, the Borrower or any Subsidiary, (b) any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of
30
capital stock of Holdings, the Borrower or any Subsidiary, or (c) any loans or
advances made by the Borrower or any Subsidiary to Holdings.
"Retained Cash Earnings" means, as of any date, an amount equal to
----------------------
$125,000,000 plus (a) Adjusted Consolidated Net Income for the period from the
Effective Date to and including the date of determination (treated as a single
accounting period), plus (b) the aggregate amount of proceeds received by
Holdings in respect of the issuance of capital stock of Holdings after the
Effective Date and contributed by Holdings to the Borrower as equity capital
prior to such date of determination minus (c) to the extent not deducted in
calculating such Adjusted Consolidated Net Income, the aggregate amount of
Restricted Payments made by the Borrower or any of its Subsidiaries (other than
Restricted Payments made to the Borrower or any of its Subsidiaries) after the
Effective Date and prior to such date of determination.
"Revolving Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the Revolving Maturity Date
and the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial
amount of each Lender's Revolving Commitment is set forth on Schedule 2.01 or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $125,000,000.
"Revolving Exposure" means, with respect to any Lender at any time,
------------------
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure and Swingline Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if
----------------
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
31
"Revolving Loan" means a Loan made pursuant to clause (d) of Section
--------------
2.01.
"Revolving Maturity Date" means April 15, 2004.
-----------------------
"S&P" means Standard & Poor's.
---
"Secured Parties" shall have the meaning assigned to such term in the
---------------
Security Agreement.
"Security Agreement" means the Security Agreement, substantially in
------------------
the form of Exhibit G, among Holdings, the Borrower, the Subsidiary Loan Parties
and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" means the Security Agreement, the Pledge
------------------
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.
"Senior Subordinated Notes" means the Senior Subordinated Notes to be
-------------------------
issued by the Borrower on or prior to the Effective Date in the aggregate
principal amount of $200,000,000.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Stores" means all owned and leasehold properties where Inventory
------
owned by the Borrower or any of the Subsidiaries is sold to the public.
32
"Subordinated Debt" means the Senior Subordinated Notes, any
-----------------
Guarantees thereof and the Indebtedness represented thereby.
"Subordinated Debt Documents" means the indenture under which the
---------------------------
Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Debt or providing for any
Guarantee or other right in respect thereof.
"subsidiary" means, with respect to any Person (the "parent") at any
---------- ------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of Holdings or the Borrower, as the
----------
context requires.
"Subsidiary Loan Party" means any Subsidiary of the Borrower other
---------------------
than (a) the Vehicle Subsidiary or (b) any Foreign Subsidiary that, if it were
to Guarantee the Obligations, would result in adverse tax consequences to
Holdings or the Borrower.
"Swingline Exposure" means, at any time, the aggregate principal
------------------
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.
"Swingline Lender" means The Chase Manhattan Bank, in its capacity as
----------------
lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
--------------
"Syndication Agent" means DLJ Capital Funding, Inc., in its capacity
-----------------
as syndication agent for the Lenders hereunder.
33
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loans" means Tranche B Term Loans and Delayed Draw Loans.
----------
"Three-Month Secondary CD Rate" means, for any day, the secondary
-----------------------------
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" means, as of the date of determination, an amount equal
----------
to (a) all Indebtedness of the Borrower and its Subsidiaries outstanding on such
date, excluding (i) Indebtedness described in clauses (e), (f) and (h) of the
definition "Indebtedness", and (ii) GE Capital Program Indebtedness, minus (b)
the aggregate amount that would appear as "Cash and cash equivalents" on a
consolidated balance sheet of the Borrower prepared as of such date in
accordance with GAAP; provided that any letters of credit and letters of
--------
guaranty referred to in clause (h) of the definition "Indebtedness" shall not be
excluded from Total Debt to the extent issued to support any other obligations
constituting Indebtedness.
"Total Exposure" means, at any time, the sum of the total Revolving
--------------
Exposures and the Delayed Draw Exposure at such time.
"Tranche B Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make a Tranche B Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum principal
amount of the Tranche B Term Loan to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b)
reduced or increased from time to time pursuant to assignments by or to
34
such Lender pursuant to Section 9.04. The initial amount of each Lender's
Tranche B Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Tranche B
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
B Commitments is $125,000,000.
"Tranche B Lender" means a Lender with a Tranche B Commitment or an
----------------
outstanding Tranche B Term Loan.
"Tranche B Maturity Date" means April 15, 2006.
-----------------------
"Tranche B Rate" means, with respect to any Tranche B Term Loan (a)
--------------
1.50% per annum, in the case of an ABR Loan, or (b) 2.50% per annum, in the case
of a Eurodollar Loan.
"Tranche B Term Loan" means a Loan made pursuant to clause (a) of
-------------------
Section 2.01.
"Transactions" means the Recapitalization and the Financing
------------
Transactions.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Vehicle" means any van, truck, tractor or trailer that is covered by
-------
a certificate of title issued under the laws of any jurisdiction in the United
States of America and used in the distribution and delivery of inventory.
"Vehicle Subsidiary" means Advance Trucking Corporation, a Virginia
------------------
corporation, and wholly owned Subsidiary of the Borrower.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
---------------------------------------
of this Agreement, Loans may be classified and referred to by Class (e.g., a
----
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
----
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
----- ---
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
--- ---
"Eurodollar
35
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
---
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP; Fiscal Month. Except as
-------------------------------------
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided that, if the Borrower notifies the Administrative Agent that the
--------
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith. Except as otherwise provided herein, all references to a fiscal month
shall mean any period of four or five calendar weeks used by
36
the Borrower for recording or reporting its interim financial information.
SECTION 1.05. Interim Financial Calculations. For purposes of
-------------------------------
determining the Leverage Ratio and for purposes of determining compliance with
Sections 6.13 and 6.14:
(a) Consolidated EBITDA shall be deemed to be equal to (i)
$17,154,000 for the fiscal quarter ended January 3, 1998, and (ii)
$21,032,000 for the fiscal quarter ended April 25, 1998; and
(b) Consolidated Interest Expense for the period of four consecutive
fiscal quarters ended (i) September 12, 1998, shall be deemed to be equal
to the product of Consolidated Interest Expense for the two consecutive
fiscal quarters then ended multiplied by two, and (ii) January 2, 1999,
shall be deemed to be equal to the product of Consolidated Interest Expense
for the three consecutive fiscal quarters then ended multiplied by four-
thirds.
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments. Subject to the terms and conditions set
------------
forth herein, each Lender agrees (a) to make a Tranche B Term Loan to the
Borrower on the Effective Date in a principal amount not exceeding its Tranche B
Commitment, (b) to make Delayed Draw I Loans to the Borrower from time to time
on or after the Effective Date during the Delayed Draw I Availability Period in
a principal amount not exceeding such Lender's remaining Delayed Draw I
Commitment, (c) to make Delayed Draw II Loans to the Borrower from time to time
on or after the Effective Date during the Delayed Draw II Availability Period in
a principal amount not exceeding such Lender's remaining Delayed Draw II
Commitment and (d) to make Revolving Loans to the Borrower from time to time
during the Revolving Availability Period in an aggregate principal amount that
will not result in such Lender's Revolving Exposure exceeding such Lender's
Revolving Commitment; provided that (i) any Delayed Draw I Borrowing, Delayed
--------
Draw II Borrowing or Revolving Borrowing shall not result in the Total Exposure
exceeding the Borrowing Base then in effect, (ii) the Borrower shall not be
permitted to make more than four Delayed Draw I Borrowings that increase the
aggregate principal amount of Delayed Draw I Borrowings outstanding and (iii)
the Borrower
37
shall not be permitted to make more than six Delayed Draw II Borrowings that
increase the aggregate principal amount of Delayed Draw II Borrowings
outstanding. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Amounts repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a
---------------------
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
--------
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Notwithstanding anything to the
contrary contained herein, all Borrowings made on the Effective Date shall be
ABR Borrowings. Each Swingline Loan shall be an ABR Loan. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
--------
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $3,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $100,000 and not less than $1,000,000; provided that
--------
an ABR Revolving Borrowing or ABR Delayed Draw Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the Commitments of the
applicable Class, as applicable, or in the case of an ABR Revolving Borrowing,
that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that
is an integral multiple of $100,000 and not less than $200,000. Borrowings of
more than one Type and Class may be outstanding at the same time; provided that
--------
there shall not at any time be more than a total of 8 Eurodollar Borrowings
outstanding.
38
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, Delayed Draw Maturity Date or Tranche B
Maturity Date, as applicable.
SECTION 2.03. Requests for Borrowings. To request a Revolving
------------------------
Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
--------
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing,
Delayed Draw I Borrowing, Delayed Draw II Borrowing or Tranche B Term
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If
39
no Interest Period is specified with respect to any requested Eurodollar
Revolving Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration. Promptly following receipt of a
Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and
----------------
conditions set forth herein, the Swingline Lender agrees to make Swingline
Loans to the Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $15,000,000, (ii) the sum of the total Revolving Exposures exceeding
the total Revolving Commitments or (iii) the Total Exposure exceeding the
Borrowing Base then in effect; provided that the Swingline Lender shall not be
--------
required to make a Swingline Loan to refinance an outstanding Swingline Loan.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested
date (which shall be a Business Day) and amount of the requested Swingline Loan.
The Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m.,
New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative
Agent will
40
give notice thereof to each Revolving Lender, specifying in such notice such
Lender's Applicable Percentage of such Swingline Loan or Loans. Each Revolving
Lender hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Administrative Agent, for the account of the
Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or
Loans. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Each Revolving
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
-------
mutandis, to the payment obligations of the Revolving Lenders), and the
--------
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Lenders. The Administrative Agent shall notify
the Borrower of any participations in any Swingline Loan acquired pursuant to
this paragraph, and thereafter payments in respect of such Swingline Loan shall
be made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms
------------------ --------
and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, an Issuing
Bank relating to any
41
Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
-----------
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) to
the applicable Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If there is more than
one Issuing Bank, the Borrower may select among the Issuing Banks in connection
with the issuance of any Letter of Credit. If requested by the Issuing Bank,
the Borrower also shall submit a letter of credit application on the Issuing
Bank's standard form in connection with any request for a Letter of Credit. A
Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
$25,000,000, (ii) the total Revolving Exposures shall not exceed the total
Revolving Commitments and (iii) the Total Exposure shall not exceed the
Borrowing Base then in effect.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
----------------
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
---------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a
42
participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
--------------
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of the receipt, or (ii) the Business
Day immediately following the day that the Borrower receives such notice, if
such notice is not received prior to such time on the day of receipt; provided
--------
that, if such LC Disbursement is not less than $100,000, the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender
43
shall pay to the Administrative Agent its Applicable Percentage of the payment
then due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
-------
mutandis, to the payment obligations of the Revolving Lenders), and the
--------
Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
---------------------
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision herein or therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in
44
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
--------
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
------------------------
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
--------
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
--------
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank,
45
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. An Issuing Bank may be replaced
--------------------------------
at any time by written agreement among the Borrower, the Administrative Agent
and the successor to such Issuing Bank. The Administrative Agent shall notify
the Lenders of any such replacement of an Issuing Bank. At the time any such
replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued by it
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
-----------------------
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
--------
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. The
Borrower also shall deposit cash collateral pursuant to this paragraph as and to
the extent required by Section 2.11(b), and any such cash collateral so
deposited and held by the Administrative Agent hereunder shall constitute part
of the Borrowing Base for purposes of determining compliance with Section
2.11(b). Each such
46
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived. If
the Borrower is required to provide an amount of cash collateral hereunder
pursuant to Section 2.11(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower as and to the extent that, after
giving effect to such return, the Borrower would remain in compliance with
Section 2.11(b) and no Default shall have occurred and be continuing.
(k) Existing Letters of Credit. Each Existing LC Issuing Bank shall
---------------------------
deliver to the Administrative Agent, on or prior to the Effective Date, a
schedule identifying all Existing Letters of Credit issued by it. Each Existing
LC Issuing Bank also shall notify the Administrative Agent of any LC
Disbursement or any expiration, termination or renewal of any Existing Letters
of Credit issued by it.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make
----------------------
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made as
--------
provided in Section 2.04. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts
47
so received, in like funds, to an account of the Borrower designated by the
Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans
--------
made to finance the reimbursement of an LC Disbursement as provided in Section
2.05(e) shall be remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing and
-------------------
Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing. This Section shall not apply
to Swingline Borrowings, which may not be converted or continued.
48
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable
49
thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
(f) A Borrowing of any Class may not be converted to or continued as
a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
-----------------------------------------
previously terminated, (i) the Tranche B Commitments shall terminate at 5:00
p.m., New York City time, on the Effective Date, (ii) the Delayed Draw I
Commitments shall terminate at 5:00 p.m., New York City time, on the Delayed
Draw I Commitment Termination Date, (iii) the Delayed Draw II Commitments shall
terminate at 5:00 p.m., New York City time, on the Delayed Draw II Commitment
Termination Date and (ii) the Revolving Commitments shall terminate on the
Revolving Maturity Date. The Delayed Draw I Commitment of each Lender shall be
reduced by the amount of each Delayed Draw I Loan made by such Lender at the
time such Loan is made. The Delayed Draw II Commitment of each Lender shall be
reduced by the amount of each Delayed Draw II Loan made by such Lender at the
time such Loan is made.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
--------
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with
50
Section 2.11, the sum of the Revolving Exposures would exceed the total
Revolving Commitments.
(c) In the event that, on the date on which any prepayment would be
required pursuant to Section 2.11(c) or 2.11(d), no Term Borrowings remain
outstanding or the amount of the prepayment required by Section 2.11(c) or
2.11(d), as the case may be, exceeds the aggregate principal amount of Term
Borrowings then outstanding, the Commitments shall be reduced by an amount equal
to the excess of the required prepayment over the principal amount, if any, of
Term Borrowings actually prepaid. Any reduction of Commitments required
pursuant to this paragraph shall be allocated (i) first, to the Delayed Draw I
Commitment, if any, and the Delayed Draw II Commitments, if any, ratably, and,
(ii) second, to the Revolving Commitments.
(d) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section, or any required reduction of the Revolving Commitments under paragraph
(c) of this Section, at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
--------
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Class shall be permanent. Each reduction of the Commitments of any Class
shall be made ratably among the Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The
-------------------------------------
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan of such Lender as provided in Section 2.10 and (iii) to
the Swingline Lender the then unpaid principal amount of each Swingline Loan on
the earlier of the Revolving Maturity Date and the first date after such
Swingline Loan is made that is the 15th or last day of a calendar month and is
at least two
51
Business Days after such Swingline Loan is made; provided that on each date
--------
that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans
then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment
---------------------------
pursuant to paragraph (d) of this Section, the Borrower shall repay Tranche B
Term Borrowings
52
on each date set forth below in the aggregate principal amount set
forth opposite such date:
Date Amount
---- ------
October 15, 1999 $ 500,000
April 15, 2000 $ 500,000
October 15, 2000 $ 500,000
April 15, 2001 $ 500,000
October 15, 2001 $ 500,000
April 15, 2002 $ 500,000
October 15, 2002 $ 500,000
April 15, 2003 $ 500,000
October 15, 2003 $ 500,000
April 15, 2004 $ 500,000
October 15, 2004 $30,000,000
April 15, 2005 $30,000,000
October 15, 2005 $30,000,000
Tranche B Maturity Date $30,000,000
(b) (i) Subject to adjustment pursuant to paragraph (d) of this
Section, the Borrower shall repay Delayed Draw I Borrowings on each date set
forth below in the aggregate principal amount set forth opposite such date:
Date Amount
---- ------
April 15, 2000 $ 500,000
October 15, 2000 $ 500,000
April 15, 2001 $ 500,000
October 15, 2001 $ 500,000
April 15, 2002 $ 500,000
October 15, 2002 $ 500,000
April 15, 2003 $ 500,000
October 15, 2003 $ 500,000
Delayed Draw Maturity Date $46,000,000
(ii) Subject to adjustment pursuant to paragraph (d) of this Section,
the Borrower shall repay Delayed Draw II Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:
Date Amount
---- ------
October 15, 2001 $ 500,000
April 15, 2002 $ 500,000
October 15, 2002 $ 500,000
April 15, 2003 $ 500,000
October 15, 2003 $ 500,000
Delayed Draw Maturity Date $72,500,000
53
(c) To the extent not previously paid, (i) all Tranche B Term Loans
shall be due and payable on the Tranche B Maturity Date and (ii) all Delayed
Draw Loans shall be due and payable on the Delayed Draw Maturity Date.
(d) If the initial aggregate amount of the Lenders' (i) Tranche B
Commitments exceeds the aggregate principal amount of Tranche B Term Loans that
are made on the Effective Date, (ii) Delayed Draw I Commitments exceeds the
aggregate principal amount of Delayed Draw I Loans that are made during the
Delayed Draw I Availability Period or (iii) Delayed Draw II Commitments exceeds
the aggregate principal amount of Delayed Draw II Loans that are made during the
Delayed Draw II Availability Period, then the scheduled repayments of Tranche B
Borrowings, Delayed Draw I Borrowings or Delayed Draw II Borrowings, as the case
may be, to be made pursuant to this Section shall be reduced ratably by an
aggregate amount equal to such excess. Any prepayment of a Term Borrowing of
any Class shall be applied to reduce the subsequent scheduled repayments of the
Term Borrowings of such Class to be made pursuant to this Section in reverse
chronological order; provided that any prepayment made pursuant to Section
--------
2.11(a) shall be applied, first, to reduce the next scheduled repayments of the
Term Borrowings of such Class to be made pursuant to this Section in
chronological order, to the extent such repayments are scheduled to be due
within 12 months after such prepayment is made, until such next scheduled
repayments have been eliminated as a result of reductions hereunder and, second,
to reduce the subsequent scheduled repayments of the Term Borrowings of such
Class to be made pursuant to this Section in reverse chronological order.
(e) Prior to any repayment of any Term Borrowings of any Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment; provided that each repayment of Term Borrowings of any Class shall be
--------
applied to repay any outstanding ABR Term Borrowings of such Class before any
other Borrowings of such Class. Each repayment of a Borrowing shall be applied
ratably to the Loans included in the repaid Borrowing. Repayments of Term
Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
--------------------
right at any time and from time to
54
time to prepay any Borrowing in whole or in part, subject to the requirements of
this Section.
(b) In the event and on such occasion that the Total Exposure exceeds
the Borrowing Base, the Borrower shall prepay Revolving Borrowings or Swingline
Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral
in an amount equal to the total LC Exposure in an account with the
Administrative Agent pursuant to Section 2.05(j)) in an aggregate amount equal
to such excess.
(c) In the event and on each occasion that any Net Cash Proceeds are
received by or on behalf of Holdings, the Borrower or any Subsidiary in respect
of any Prepayment Event, the Borrower shall, immediately after such Net Cash
Proceeds are received, prepay Term Borrowings in an aggregate amount equal to
such Net Cash Proceeds.
(d) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending January 1, 2000, the Borrower shall prepay Term
Borrowings in an aggregate amount equal to 50% of Excess Cash Flow for such
fiscal year. Each prepayment pursuant to this paragraph shall be made on or
before the date that is ten days after the date on which financial statements
are delivered pursuant to Section 5.01 with respect to the fiscal year for which
Excess Cash Flow is being calculated (and in any event within 90 days after the
end of such fiscal year).
(e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (f) of this Section; provided that each prepayment of Borrowings of
--------
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class. In the event of any optional or mandatory
prepayment of Term Borrowings made at a time when Term Borrowings of more than
one Class remain outstanding, the Borrower shall select Term Borrowings to be
prepaid so that the aggregate amount of such prepayment is allocated among the
Delayed Draw I Borrowings, Delayed Draw II Borrowings and Tranche B Term
Borrowings pro rata based on the aggregate principal amount of outstanding
Borrowings of each such Class; provided that any Tranche B Lender may elect, by
--------
notice to the Administrative Agent by telephone (confirmed by telecopy) at least
one Business Day prior to the prepayment date, to decline all or any portion of
any prepayment of its Tranche B Term Loans pursuant to this Section (other than
an optional prepayment pursuant to paragraph (a) of this
55
Section, which may not be declined), in which case the aggregate amount of the
prepayment that would have been applied to prepay Tranche B Term Loans but was
so declined shall be applied to prepay Delayed Draw Borrowings on a pro rata
basis.
(f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
--------
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments as contemplated by Section 2.08,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following receipt of any such
notice (other than a notice relating solely to Swingline Loans), the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
-----
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the rate of 1/2 of 1% per annum on the Delayed Draw I
Commitment, the Delayed Draw II Commitment and the average daily unused amount
of the Revolving Commitment of such Lender during the period from and including
the Effective Date to but excluding the date on which such Commitments
terminate. Accrued commitment fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the date on which any
Commitment terminates,
56
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day). For purposes of computing commitment fees, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative Agent for
the account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of 1/4 of 1% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Revolving Commitments and
the date on which there ceases to be any LC Exposure, as well as the Issuing
Bank's standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day
of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date to
occur after the Effective Date; provided that all such fees shall be payable on
--------
the date on which the Revolving Commitments terminate and any such fees accruing
after the date on which the Revolving Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in
57
the amounts and at the times separately agreed upon between the Borrower and the
Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
---------
(including each Swingline Loan) shall bear interest at the Alternate Base Rate
plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
--------
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
58
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their
Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
59
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section, and, in reasonable detail, the basis therefor, shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 days after receipt thereof.
60
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
--------
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
-------- -------
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the
-----------------------
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(g) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section, and, in reasonable
detail, the basis therefor,
61
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of
------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrower
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability, and
setting forth, in reasonable detail, the basis therefor, delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
62
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Code, the law of the jurisdiction in
which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate. Any
Foreign Lender which is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code and intends to claim exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest" shall deliver to the Borrower (with a copy for the
Administrative Agent) a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Foreign Lender delivers a Form W-8, a
certificate representing that such Foreign Lender is not a bank for purposes of
Section 881(c) of the Code, is not a ten-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Foreign
Lender claiming complete exemption from, or a reduced rate of, U.S. Federal
withholding tax on payments of interest by the Borrower under this Agreement and
the other Loan Documents.
(f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all out-
of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided that the Borrower, upon the request of
--------
the Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the
63
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
Nothing contained in this Section 2.17(f) shall require the Administrative Agent
or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-
------------------------------------------------------
offs. (a) The Borrower shall make each payment required to be made by it
-----
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made
in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
64
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving Loans, Term Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
--------
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent
65
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a)
-----------------------------------------------
If any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.15 or 2.17, as the case may be, in the future and (ii) in the
reasonable judgment of such Lender, would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
--------
shall have received the prior
66
written consent of the Administrative Agent (and, if a Revolving Commitment is
being assigned, the Issuing Bank and Swingline Lender), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements and Swingline Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a material
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
------------------------------
Each of Holdings and the Borrower represents and warrants to the
Lenders that:
SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower
---------------------
and their Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions to be
------------------------------
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of Holdings, the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency,
67
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
-------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except (i) such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents or (ii) where the failure to
obtain such consent or approval or make such registration or filing,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect, (b) will not violate any applicable law or regulation
or the charter, by-laws or other organizational documents of Holdings, the
Borrower or any of their Subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any material
indenture, agreement or other instrument binding upon Holdings, the Borrower or
any of their Subsidiaries or their assets, or give rise to a right thereunder to
require any payment to be made by Holdings, the Borrower or any of their
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of Holdings, the Borrower or any of their Subsidiaries, except
Liens created under the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
------------------------------------------------
Holdings has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the fiscal year ended January 3, 1998, reported on by Xxxxxx Xxxxxxxx LLP
independent public accountants, and (ii) as of the end of and for each fiscal
month ended after the end of such fiscal year and prior to the date 30 days
prior to the Effective Date, certified by one of its Financial Officers. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of Holdings and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes in
the case of the statements referred to in clause (ii) above.
(b) Holdings and the Borrower have heretofore furnished to the
Lenders (i) the pro forma consolidated balance sheet of Holdings and (ii) the
pro forma consolidated balance sheet of the Borrower, each as of the date of the
most recent balance sheet referred to in paragraph (a) above, prepared giving
effect to the
68
Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheets (i) have been prepared in good faith based on the
same assumptions used to prepare the pro forma financial statements included in
the Information Memorandum (which assumptions are believed by Holdings and the
Borrower to be reasonable), (ii) accurately reflect all adjustments necessary to
give effect to the Transactions and (iii) presents fairly, in all material
respects, the pro forma financial position of Holdings, the Borrower and their
respective consolidated Subsidiaries as of the date of the most recent balance
sheet referred to in paragraph (a) above as if the Transactions had occurred on
such date.
(c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings,
the Borrower or their Subsidiaries has, as of the Effective Date, any material
contingent liabilities.
(d) Since January 3, 1998, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of Holdings, the Borrower and their Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of Holdings, the Borrower and
-----------
their Subsidiaries has good title to, or valid leasehold interests in, all its
real and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of Holdings, the Borrower and their Subsidiaries owns, or is
licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual property material to its business, and the use thereof by Holdings,
the Borrower and their Subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
(c) The Borrower has delivered to the Administrative Agent a schedule
setting forth the address of each real property that is owned or leased by
Holdings or any of its Subsidiaries as of the Effective Date after giving effect
to the Transactions.
69
(d) As of the Effective Date, neither Holdings, the Borrower nor any
of their Subsidiaries has received notice of, or has knowledge of, any pending
or contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein (other than options to purchase any such Mortgaged Property
leased by the Borrower as lessee).
SECTION 3.06. Litigation and Environmental Matters. (a) There are
-------------------------------------
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings, the Borrower or any of their
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, neither Holdings, the Borrower
nor any of their Subsidiaries (i) has failed to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of Holdings,
------------------------------------
the Borrower and their Subsidiaries is in compliance with all laws, regulations
and orders of any Governmental Authority applicable to it or its property and
all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.
70
SECTION 3.08. Investment and Holding Company Status. Neither
--------------------------------------
Holdings, the Borrower nor any of their Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of Holdings, the Borrower and their
------
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which Holdings, the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
------
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed
-----------
to the Lenders all agreements, instruments and corporate or other restrictions
to which Holdings, the Borrower or any of their Subsidiaries is subject, and all
other matters known to any of them, that, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect. Neither
the Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or thereunder
(as modified or
71
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
--------
information, Holdings and the Borrower represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.
SECTION 3.12. Subsidiaries. After giving effect to the consummation
-------------
of the Recapitalization on the Effective Date, Holdings does not have any
Subsidiaries other than the Borrower and the Borrower's Subsidiaries. Schedule
3.12 sets forth the name of, and the ownership interest of the Borrower in, each
Subsidiary of the Borrower and identifies each Subsidiary that is a Subsidiary
Loan Party, in each case as of the Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of
----------
all insurance maintained by or on behalf of Holdings, the Borrower and their
Subsidiaries as of the Effective Date. As of the Effective Date, all premiums
in respect of such insurance have been paid.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against Holdings, the Borrower or any Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. Holdings,
the Borrower and the Subsidiaries have not been in material violation of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with the hours worked by or payments made to employees or
any similar matters. All payments due from Holdings, the Borrower or any
Subsidiary, or for which any claim may be made against Holdings, the Borrower or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
Holdings, the Borrower or such Subsidiary, except where the failure to pay such
liability individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect. The consummation of the Transactions will
not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which Holdings, the
Borrower or any Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the consummation of the
---------
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
72
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. Senior Indebtedness. The Obligations constitute
--------------------
"Senior Debt" under and as defined in the Subordinated Debt Documents.
SECTION 3.17. Security Documents. (a) The Pledge Agreement is
-------------------
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when such Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of each pledgor thereunder in such Collateral, in each case prior and
superior in right to any other Person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
other than the Intellectual Property (as defined in the Security Agreement), to
the extent that a security interest can be perfected in such Collateral by
filing, recording or registering a financing statement or analogous document in
the United States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law in
such jurisdiction, in each case prior and superior in right to any other Person,
other than with respect to Liens expressly permitted by Section 6.02.
73
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Intellectual Property
(as defined in the Security Agreement) in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other Person other than Liens expressly permitted by
Section 6.02 (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a Lien on registered trademarks, trademark applications and
copyrights acquired by the Loan Parties after the date hereof).
(d) The Mortgages are effective to create, subject to the exceptions
listed in each title insurance policy covering such Mortgage, in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable Lien on all of the Loan Parties' right, title and interest in
and to the Mortgaged Properties thereunder and the proceeds thereof, and when
the Mortgages are filed in the offices specified on Schedule 3.17(d), the
Mortgages shall constitute a Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens expressly permitted
by Section 6.02.
SECTION 3.18. Year 2000 Compliance. To the best of the Borrower's
---------------------
knowledge, any reprogramming required to permit the proper functioning, in and
following the year 2000, of (a) the computer systems of the Borrower and its
Subsidiaries and (b) equipment containing embedded microchips (including systems
and equipment supplied by others or with which systems of the Borrower and its
Subsidiaries interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed in all material respects by August 31, 1999. To
the best of the Borrower's knowledge, the cost to the Borrower and its
Subsidiaries of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to the Borrower and its Subsidiaries (including
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Effect.
74
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of each of (i) Xxxxxxx & XxXxxxxx, counsel for the Loan
Parties, substantially in the form of Exhibit B-1, (ii) Flippin Xxxxxxxx
Xxxxx Xxxxxxxxxx & Xxxxxx, Virginia counsel for the Loan Parties,
substantially in the form of Exhibit B-2, (iii) Xxxxxxxx & O'Neil, special
New York counsel for the Loan Parties, substantially in the form of Exhibit
B-3, and (iv) local counsel in each jurisdiction where a Mortgaged Property
is located, substantially in the form of Exhibit B-4, and, in the case of
each such opinion required by this paragraph, covering such other matters
relating to the Loan Parties, the Vehicle Subsidiary, the Loan Documents or
the Transactions as the Required Lenders shall reasonably request. Holdings
and the Borrower hereby request such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
75
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of each of Holdings and the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(f) The Administrative Agent shall have received counterparts of the
Pledge Agreement signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party, together with stock certificates representing all
the outstanding shares of capital stock of the Borrower and each Subsidiary
owned by or on behalf of any Loan Party as of the Effective Date after
giving effect to the Transactions (except that stock certificates
representing shares of common stock of a Foreign Subsidiary that is not a
Subsidiary Loan Party may be limited to 65% of the outstanding shares of
common stock of such Foreign Subsidiary), promissory notes evidencing all
intercompany Indebtedness owed to any Loan Party by Holdings, the Borrower
or any Subsidiary as of the Effective Date after giving effect to the
Transactions and stock powers and instruments of transfer, endorsed in
blank, with respect to such stock certificates and promissory notes.
(g) The Administrative Agent shall have received counterparts of the
Security Agreement signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party, together with the following:
(i) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded to create
or perfect the Liens intended to be created under the Security
Agreement; and
(ii) a completed Perfection Certificate dated the Effective Date
and signed by an executive officer or Financial Officer of each of
Holdings and the Borrower, together with all attachments contemplated
thereby, including the results of a search of the Uniform Commercial
Code (or
76
equivalent) filings made with respect to the Loan Parties in the
jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Administrative
Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 or have been
released.
(h) The Administrative Agent shall have received (i) counterparts of
the Guarantee Agreement signed on behalf of Holdings and each Subsidiary
Loan Party, (ii) counterparts of the Indemnity, Subrogation and
Contribution Agreement signed on behalf of each Loan Party and (iii)
evidence that the Cash Concentration Account and the Collection Deposit
Accounts shall have been established.
(i) The Administrative Agent shall have received (i) counterparts of
a Mortgage with respect to each Mortgaged Property signed on behalf of the
record owner of such Mortgaged Property, (ii) a policy or policies of title
insurance (or binding commitments to issue such title insurance policies)
issued by a nationally recognized title insurance company, insuring the
Lien of each such Mortgage as a valid first Lien on the Mortgaged Property
described therein, free of any other Liens except as permitted by Section
6.02, in form and substance reasonably acceptable to the Collateral Agent,
together with such endorsements, coinsurance and reinsurance as the
Collateral Agent or the Required Lenders may reasonably request, (iii) such
surveys, abstracts and appraisals as may be required pursuant to such
Mortgages or as the Administrative Agent or the Required Lenders may
reasonably request, (iv) a copy of the original permanent certificate or
temporary certificate of occupancy as the same may have been amended or
issued from time to time, covering each improvement located upon the
Mortgaged Properties, that were required to have been issued by the
appropriate Governmental Authority for such improvement and (v) written
confirmation from the applicable zoning commission or other appropriate
Governmental Authority stating that with respect to each Mortgaged Property
as built it complies with existing land use and zoning ordinances,
regulations and restrictions applicable to such Mortgaged Property (or in
lieu of the foregoing, the Borrower shall have caused the title companies
insuring the Mortgage with respect to each Mortgage Property to affix a
zoning endorsement to each of its
77
lenders policy of title insurance covering each such Mortgage).
(j) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in
effect.
(k) The Lenders shall have received, and shall be reasonably
satisfied with the results of, environmental assessment reports (including
prior Phase I reports and other publicly available documents regarding
environmental matters) with respect to any Environmental Liabilities that
may be attributable to such properties or operations as have been specified
by the Administrative Agent for review.
(l) The Equity Financing shall have been consummated and Mergerco
shall have received (and as a result of the Merger, Holdings shall receive)
gross cash proceeds therefrom equal to the excess of $107,500,000 over the
Management Equity Contribution. The Management Equity Contribution shall
have been consummated and Holdings shall have received $5,000,000 to
$8,038,000 therefrom in cash or, subject to the limitations of clause (h)
of Section 6.04, promissory notes.
(m) All material consents and approvals required to be obtained from
any Governmental Authority or other Person in connection with the
Recapitalization shall have been obtained, and all applicable waiting
periods and appeal periods shall have expired, in each case without the
imposition of any burdensome conditions. The Recapitalization shall have
been, or substantially simultaneously with the initial funding of Loans on
the Effective Date shall be, consummated in accordance with the
Recapitalization Documents and applicable law, without any amendment to or
waiver of any material terms or conditions of the Recapitalization
Documents not approved by the Required Lenders. As a result of the
Recapitalization (i) the FS&C Investors shall own not less than 79% of the
outstanding common stock of Holdings, (ii) FS&C shall own not less than 63%
of the outstanding common stock of Holdings, (iii) the Management Investors
shall own not less than 4% of the outstanding common stock of Holdings,
(iv) the Existing Stockholders shall own the balance of the outstanding
common stock of Holdings and (v) there shall not be any outstanding
preferred stock of Holdings. The Administrative Agent shall have received
copies of the Recapitalization Documents and all certificates,
78
opinions and other documents delivered thereunder, certified by a Financial
Officer of Holdings or the Borrower as complete and correct. The Lenders
shall (i) be satisfied with the Recapitalization Documents (to the extent
not delivered prior to date of the execution of this Agreement) and (b) be
satisfied with the capitalization, structure and equity ownership of
Holdings after giving effect to the Transactions. In connection with the
Recapitalization, on or prior to the Effective Date all Subsidiaries of
Holdings (other than the Borrower and its Subsidiaries) shall be either
merged into the Borrower or a Subsidiary thereof, or transferred to the
Borrower, or liquidated (in which case all assets of such Subsidiary shall
be transferred to the Borrower), with the result that Holdings shall not
have any Subsidiaries (other than the Borrower and its Subsidiaries).
(n) The Lenders shall have received (a) combined audited consolidated
balance sheets and related statements of income, stockholders' equity and
cash flows of Holdings for the 1994, 1995, 1996 and 1997 fiscal years ended
prior to the Effective Date and (b) unaudited consolidated balance sheets
and related statements of income and stockholders' equity of Holdings for
each fiscal month ended after January 3, 1998, and prior to the date 30
days prior to the Effective Date, which audited and unaudited financial
statements shall not be materially inconsistent with the financial
statements or forecasts previously provided to the Lenders.
(o) The Lenders shall have received a pro forma consolidated balance
sheets of both Holdings and the Borrower as of the date of the most recent
balance sheet referred to in clause (a) of Section 3.04, reflecting all pro
forma adjustments as if the Transactions had been consummated on such date,
and such pro forma consolidated balance sheets shall be consistent in all
material respects with the forecasts and other information previously
provided to the Lenders. After giving effect to the Transactions, neither
Holdings, the Borrower nor any of the Subsidiaries shall have outstanding
any shares of preferred stock or any Indebtedness, other than (i)
Indebtedness incurred under the Loan Documents, (ii) in the case of
Holdings, the Holdings Senior Discount Debentures, (iii) the Senior
Subordinated Notes, and (iv) other Indebtedness permitted under Section
6.01. The aggregate amount of fees and expenses (including underwriting
discounts and
79
commissions) payable or otherwise borne by Holdings, the Borrower and their
Subsidiaries in connection with the Transactions shall not exceed
$24,000,000.
(p) The Administrative Agent shall have received a solvency letter,
in form and substance satisfactory to the Lenders, from Valuation Research,
with respect to the solvency of the Loan Parties after giving effect to the
Transactions.
(q) The Administrative Agent shall be reasonably satisfied with the
results of an examination by the Administrative Agent of (i) the inventory
of Holdings and its Subsidiaries and (ii) the systems providing for the
monitoring and reporting of such inventory after giving effect to the
Transactions.
(r) The Lenders shall be reasonably satisfied in all respects with
the tax position and the contingent tax and other liabilities of, and with
any tax sharing agreements among, Holdings and its Subsidiaries after
giving effect to the Transactions and the other transactions contemplated
hereby, and with the plans of Holdings with respect thereto.
(s) The Administrative Agent shall be reasonably satisfied with the
sufficiency of amounts available under the Revolving Commitments to meet
the ongoing working capital requirements of the Borrower and its
Subsidiaries following the consummation of the Transactions.
(t) The Administrative Agent shall have received a completed
Borrowing Base Certificate dated the Effective Date and signed by a
Financial Officer of the Borrower.
(u) Holdings shall have received not less than $60,000,000 (less
underwriting discounts and commissions) in gross cash proceeds from the
issuance of the Holdings Senior Discount Debentures in a public offering or
in a Rule 144A or other private placement satisfactory to the
Administrative Agent. The Administrative Agent shall have received copies
of the Holdings Senior Discount Debenture Documents and the terms and
conditions of the Holdings Senior Discount Debenture Documents (including
but not limited to terms and conditions relating to the fees, amortization,
maturity, subordination, covenants, events of defaults and remedies) shall
be reasonably satisfactory in all respects to the Lenders (it being
understood that terms
80
and conditions disclosed in the preliminary offering memorandum for the
Holdings Senior Discount Debentures, dated March 23, 1998, are satisfactory
to the Lenders). The Holdings Senior Discount Debentures shall be unsecured
and shall not be Guaranteed.
(v) The Borrower shall have received not less than $200,000,000 (less
underwriting discounts and commissions) in gross cash proceeds from the
issuance of the Senior Subordinated Notes in a public offering or in a Rule
144A or other private placement satisfactory to the Administrative Agent.
The Administrative Agent shall have received copies of the Subordinated
Debt Documents and the terms and conditions of the Subordinated Debt
Documents (including but not limited to terms and conditions relating to
the fees, amortization, maturity, subordination, covenants, events of
defaults and remedies) shall be satisfactory in all respects to the Lenders
(it being understood that terms and conditions disclosed in the preliminary
offering memorandum for the Senior Subordinated Notes, dated March 23,
1998, are satisfactory to the Lenders). The Subordinated Debt shall be
unsecured and shall not be Guaranteed by any Person other than Subsidiary
Loan Parties.
(w) The Administrative Agent shall be satisfied with the management
of Holdings and the Borrower after giving effect to the Transactions and
with the arrangements for the retention of such management.
(x) The Vehicle Subsidiary shall have been formed and all the capital
stock thereof shall be owned by the Borrower. The Administrative Agent
shall have received a copy of the certificate or articles of incorporation
of, and the by laws of, the Vehicle Subsidiary, in each case in form and
substance reasonably satisfactory to it. The Administrative Agent shall be
satisfied with the arrangements for the transfer to the Vehicle Subsidiary
of ownership of and title to all Vehicles owned by Holdings, the Borrower
or any Subsidiary, within 60 days after the Effective Date.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior
81
to 3:00 p.m., New York City time, on May 29, 1998 (and, in the event such
conditions are not so satisfied or waived, the Commitments shall terminate at
such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
------------------
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, except for representations and
warranties expressly made as of an earlier date, which shall be true and
correct as of such earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
(c) The Total Exposure shall not exceed the Borrowing Base.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Holdings
and the Borrower on the date thereof as to the matters specified in paragraphs
(a), (b) and (c) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, each of
82
Holdings and the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Holdings
-------------------------------------------
and the Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of Holdings and
the Borrower, both Holdings' and the Borrower's audited consolidated and
consolidating balance sheets and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Xxxxxx Xxxxxxxx LLP or other independent
public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such
consolidated and consolidating financial statements present fairly in all
material respects the financial condition and results of operations of
Holdings or the Borrower, as applicable, and their consolidated
Subsidiaries on a consolidated and consolidating basis in accordance with
GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings and the Borrower, both Holdings'
and the Borrower's consolidated and consolidating balance sheets and
related statements of operations, stockholders' equity and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, all certified by one of
its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of Holdings or the Borrower,
as applicable, and their consolidated Subsidiaries on a consolidated and
consolidating basis in accordance with GAAP consis tently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) within 30 days after the end of each month (other than the last
month) of each fiscal quarter of Holdings and the Borrower, both Holdings'
and the Borrower's consolidated balance sheets and related
83
statements of operations, stockholders' equity as of the end of and for
such fiscal month and the then elapsed portion of the fiscal year, all
certified by one of its Financial Officers as presenting in all material
respects the financial condition and results of operations of Holdings or
the Borrower, as applicable, and their consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth a
reasonably detailed calculation of the Leverage Ratio as of the end of the
period covered by such financial statements, (iii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.12, 6.13,
6.14 and 6.15 and (iv) stating whether any change in GAAP or in the
application thereof has occurred since the date of Holdings' audited
financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(f) within 16 days after the end of each fiscal month, or within 25
days after the end of both the first fiscal month and the last fiscal month
of each fiscal year, a completed Borrowing Base Certificate calculating and
certifying the Borrowing Base as of the last day of such fiscal month,
signed on behalf of the Borrower by a Financial Officer;
(g) as soon as the same are complete, but in no event more that 60
days after the commencement of each fiscal year of Holdings, a detailed
consolidated budget for such fiscal year (including a projected
consolidated balance sheet and related statements of
84
projected operations and cash flow as of the end of and for such fiscal
year) and, promptly when available, any significant revisions of such
budget;
(h) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings, the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by Holdings to its shareholders generally, as the case may be;
(i) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, as the Administrative Agent or any Lender may reasonably
request; and
(j) at the same time as it delivers the financial statements required
under the provisions of this Section 5.01(a), a copies of the "Management
Letter" delivered to Holdings and the Borrower by their independent
certified public accountants in connection with the delivery of such
financial statements.
SECTION 5.02. Notices of Material Events. Upon Holdings or the
---------------------------
Borrower obtaining knowledge thereof, Holdings and the Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting
Holdings, the Borrower or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of Holdings, the Borrower and their Subsidiaries in an
aggregate amount exceeding $1,000,000; and
85
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Holdings or the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) Holdings or the
---------------------------------
Borrower will furnish to the Administrative Agent prompt written notice of any
change (i) in any Loan Party's corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party's chief executive office, its
principal place of business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located (including the establishment of any such new office or
facility), (iii) in any Loan Party's identity or corporate structure or (iv) in
any Loan Party's Federal Taxpayer Identification Number. Holdings and the
Borrower agree not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Administrative Agent to continue at
all times following such change to have a valid, legal and perfected security
interest in all the Collateral. Holdings and the Borrower also agree promptly
to notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.01, Holdings or the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer of Holdings or the Borrower (i) setting forth
the information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section and (ii) certifying
that all Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in
86
each jurisdiction identified pursuant to clause (i) above to the extent
necessary to protect and perfect the security interests under the Security
Agreement for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation statements
to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. Each of Holdings and
-------------------------------
the Borrower will, and will cause each of its Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business; provided that the foregoing shall not prohibit any merger,
--------
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. Each of Holdings and the
-----------------------
Borrower will, and will cause each of its Subsidiaries to, pay its Indebtedness
and other obligations, including Tax liabilities, that, if not paid, would not
reasonably be expected to result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such Subsidiary has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation and the enforcement
of any Lien securing such obligation and (d) the failure to make payment pending
such contest would not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.06. Maintenance of Properties. Each of Holdings and the
--------------------------
Borrower will, and will cause each of its Subsidiaries to, keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) Each of Holdings and the Borrower
----------
will, and will cause each of its Subsidiaries to, maintain, with financially
sound and reputable insurance companies (i) adequate insurance for its insurable
properties, all to such extent and against such risks, including fire, casualty
and other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same or similar
locations, (ii) such other insurance as is required pursuant to the terms of any
Security Document and (iii) business interruption insurance, insuring against
loss of
87
gross earnings for a period of not less than 12 months arising from any risks or
occurrences required to be covered by insurance pursuant to this Section 5.07.
(b) Fire and extended coverage policies maintained with respect to
any Collateral shall be endorsed or otherwise amended to include (i) a non-
contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in each case in
favor of the Administrative Agent and providing for losses thereunder to be
payable to the Administrative Agent or its designee, (ii) a provision to the
effect that neither the Borrower, the Administrative Agent nor any other party
shall be a coinsurer and (iii) such other provisions as the Administrative Agent
may reasonably require from time to time to protect the interests of the
Lenders. Commercial general liability policies shall be endorsed to name the
Administrative Agent as an additional insured. Business interruption policies
shall name the Administrative Agent as loss payee. Each such policy referred to
in this paragraph also shall provide that it shall not be canceled, modified or
not renewed (i) by reason of nonpayment of premium except upon not less than 10
days' prior written notice thereof by the insurer to the Administrative Agent
(giving the Administrative Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 30 days' prior
written notice thereof by the insurer to the Administrative Agent. Holdings or
the Borrower shall deliver to the Administrative Agent, prior to the
cancelation, modification or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent) together with evidence
satisfactory to the Administrative Agent of payment of the premium therefor.
SECTION 5.08. Casualty and Condemnation. (a) Holdings or the
--------------------------
Borrower will furnish to the Administrative Agent and the Lenders prompt written
notice of any casualty or other insured damage to any portion of any Collateral
or the commencement of any action or proceeding for the taking of any Collateral
or any part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section results in
Net Cash Proceeds (whether in the form of insurance proceeds, condemnation award
or otherwise), the Administrative Agent is authorized to collect such Net Cash
Proceeds and, if received by Holdings,
88
the Borrower or any Subsidiary, such Net Cash Proceeds shall be paid over the
Administrative Agent; provided that (i) if the aggregate Net Cash Proceeds in
respect of such event (other than proceeds of business income insurance) are
less than $5,000,000, such Net Cash Proceeds shall be paid over to Holdings or
the Borrower unless a Default has occurred and is continuing, and (ii) all
proceeds of business income insurance shall be paid over to the Borrower unless
a Default has occurred and is continuing. All such Net Cash Proceeds retained by
or paid over to the Administrative Agent shall be held by the Administrative
Agent and released from time to time to pay the costs of repairing, restoring or
replacing the affected property in accordance with the terms of the applicable
Security Document, subject to the provisions of the applicable Security Document
regarding application of such Net Cash Proceeds during a Default.
(c) If any Net Cash Proceeds retained by or paid over to the
Administrative Agent as provided above continue to be held by the Administrative
Agent on the date that is 360 days (or, in the case of a distribution center,
two years, provided that repair, restoration or replacement commenced within 270
--------
days after the occurrence of such event) after the occurrence of the event
resulting in such Net Cash Proceeds, then such Net Cash Proceeds shall be
applied to prepay Term Borrowings as provided in Section 2.11(c).
SECTION 5.09. Books and Records; Inspection and Audit Rights. (a)
-----------------------------------------------
Each of Holdings and the Borrower will, and will cause each of its Subsidiaries
to, keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities. Each of Holdings and the Borrower will, and will cause each of
its Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested;
provided that the Borrower shall be given the opportunity to be present at any
--------
discussion with its independent accountants.
(b) Each of Holdings and the Borrower will, and will cause each of
its Subsidiaries to, permit any representatives designated by the Administrative
Agent (including any consultants, accountants, lawyers and appraisers retained
by the Administrative Agent) to conduct evaluations and appraisals of the
computation of the
89
Borrowing Base and the assets included in the Borrowing Base, all at such
reasonable times and as often as reasonably requested. The Borrower shall pay
the reasonable fees and expenses of any representatives retained by the
Administrative Agent to conduct any such evaluation or appraisal; provided
--------
that the Borrower shall not be required to pay such fees and expenses for more
than two such evaluations or appraisals during any calendar year unless an Event
of Default has occurred and is continuing. The Borrower also agrees to modify
or adjust the computation of the Borrowing Base (which may include maintaining
additional reserves or modifying the eligibility criteria for the components of
the Borrowing Base) to the extent required by the Administrative Agent or the
Required Lenders as a result of any such evaluation or appraisal; provided that
--------
any such adjustment will take effect only 10 day's prior notice to the Borrower.
SECTION 5.10. Compliance with Laws. Each of Holdings and the
---------------------
Borrower will, and will cause each of its Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of
--------------------------------------
the Tranche B Loans, together with the Net Cash Proceeds of the Subordinated
Debt, will be used (a) to pay all amounts outstanding under the Existing Credit
Agreements constituting obligations of the Borrower and any other existing
Indebtedness of the Borrower and its Subsidiaries, other than (i) Indebtedness
in respect of the XxXxxxxx County industrial revenue bond and (ii) Indebtedness
existing under the GE Capital Program Agreements, (b) for the payment of the
Effective Date Dividend and (c) to pay fees and expense allocated to the
Borrower in connection with the Transactions. The proceeds of the Effective
Date Dividend, together with the proceeds of the Holdings Senior Discount
Debentures, the Equity Financing and the Management Equity Contribution, will be
used by Holdings for the payment of (a) the cash consideration to be paid in
connection with the Merger, (b) all amounts outstanding under the Existing
Credit Agreements and all the existing Indebtedness of Holdings and its
Subsidiaries, other than amounts payable by the Borrower referred to in the
preceding sentence, and (c) fees and expenses allocated to Holdings in
connection with the Transactions. The proceeds of the Delayed Draw Loans will
be used only for general corporate purposes. The proceeds of the Revolving
Loans and Swingline Loans will be used only
90
for general corporate purposes. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations G, U and X.
Letters of Credit will be issued only for general corporate purposes.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary
------------------------
is formed or acquired after the Effective Date, Holdings and the Borrower will
notify the Administrative Agent and the Lenders thereof and (a) if such
Subsidiary is a Subsidiary Loan Party, Holdings and the Borrower will cause such
Subsidiary to become a party to the Guarantee Agreement, the Indemnity
Subrogation and Contribution Agreement and each applicable Security Document in
the manner provided therein within three Business Days after such Subsidiary is
formed or acquired and promptly take such actions to create and perfect Liens on
such Subsidiary's assets to secure the Obligations as the Administrative Agent
or the Required Lenders shall reasonably request and (b) if any shares of
capital stock or Indebtedness of such Subsidiary are owned by or on behalf of
any Loan Party, Holdings and the Borrower will cause such shares and promissory
notes evidencing such Indebtedness to be pledged pursuant to the Pledge
Agreement within three Business Days after such Subsidiary is formed or acquired
(except that, if such Subsidiary is a Foreign Subsidiary and is not a Subsidiary
Loan Party, shares of common stock of such Subsidiary to be pledged pursuant to
the Pledge Agreement may be limited to 65% of the outstanding shares of common
stock of such Subsidiary).
SECTION 5.13. Further Assurances. (a) Each of Holdings and the
-------------------
Borrower will, and will cause each Subsidiary Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent or the Required Lenders may reasonably request, to effectuate the
transactions contemplated by the Loan Documents or to grant, preserve, protect
or perfect the Liens created or intended to be created by the Security Documents
or the validity or priority of any such Lien, all at the expense of the Loan
Parties. Holdings and the Borrower also agree to provide to the Administrative
Agent, from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.
91
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary Loan Party after the Effective Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Lien of the Security Agreement upon acquisition thereof), the Borrower will
notify the Administrative Agent and the Lenders thereof, and, if requested by
the Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties; provided that the foregoing shall not require the
--------
Borrower to xxxxx x Xxxx on assets constituting leasehold interests in stores or
Vehicles owned by the Vehicle Subsidiary.
(c) Each of Holdings and the Borrower will, and will cause each of its
Subsidiaries to, transfer to the Vehicle Subsidiary ownership of and title to
any and all Vehicles owned by Holdings, the Borrower or any Subsidiary,
promptly, and in any event within 60 days, after the Effective Date.
SECTION 5.14. Collection Deposit Accounts. As promptly as
----------------------------
practicable and in any event within 90 days after the Effective Date, the
Borrower shall enter into Collection Deposit Letter Agreements for each
Collection Deposit Account.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
92
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The
----------------------------------------
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) in the case of the Borrower, the Subordinated Debt;
(iii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01, but not any extensions, renewals or replacements of any such
Indebtedness;
(iv) Indebtedness of the Borrower to any Subsidiary of the Borrower
and of any Subsidiary of the Borrower to the Borrower or any other
Subsidiary of the Borrower; provided that Indebtedness of any Subsidiary
--------
that is not a Loan Party to the Borrower or any Subsidiary Loan Party shall
be subject to Section 6.04;
(v) Guarantees by the Borrower of Indebtedness of any Subsidiary of
the Borrower and by any Subsidiary of the Borrower of Indebtedness of the
Borrower or any other Subsidiary of the Borrower; provided that (A) the
--------
Indebtedness so guaranteed is permitted by this Section, (B) Guarantees by
the Borrower or any Subsidiary Loan Party of Indebtedness of any Subsidiary
that is not a Loan Party shall be subject to Section 6.04, (C) the
Subordinated Debt shall not be guaranteed by any Subsidiary that is not a
Subsidiary Loan Party and any such Guarantee shall be subordinated to the
obligations hereunder of the applicable Subsidiary on the same terms as the
Subordinated Debt of the Borrower is subordinated to its obligations
hereunder and (D) the Holdings Senior Discount Debentures shall not be
Guaranteed;
(vi) Indebtedness of the Borrower or any Subsidiary of the Borrower
incurred to finance the acquisition, construction or improvement of any
fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets
or secured by a Lien on any such assets prior to the acquisition thereof,
and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an
earlier
93
maturity date or decreased weighted average life thereof; provided
--------
that (A) such Indebtedness is incurred prior to or within 270 days after
such acquisition or the completion of such construction or improvement and
(B) the aggregate principal amount of Indebtedness permitted by this clause
(vi) shall not exceed (A) $15,000,000 at any time outstanding prior to the
third anniversary of the Effective Date and (B) $25,000,000 at any time
outstanding thereafter; provided further that the amount permitted under
-------- -------
clause (vi) above shall not include Indebtedness set forth in Schedule 6.01
relating to XxXxxxxx County industrial revenue bond;
(vii) Indebtedness of (A) any Person that becomes a Subsidiary after
the date hereof pursuant to a Permitted Acquisition to the extent that such
Indebtedness exists at the time such Person becomes a Subsidiary and is not
created in contemplation of or in connection with such Person becoming a
Subsidiary, (B) the Borrower or a Subsidiary to the extent that such
Indebtedness is assumed in connection with a Permitted Acquisition made by
the Borrower or such Subsidiary and is not created in contemplation of such
Permitted Acquisition and (C) the Borrower in respect of unsecured
promissory notes issued as consideration for Permitted Acquisitions;
provided that the aggregate principal amount of Indebtedness permitted by
--------
this clause (vii) shall be subject to the limitations set forth in clause
(i) of Section 6.04;
(viii) other unsecured Indebtedness in an aggregate principal amount
not exceeding $4,000,000 at any time outstanding; and
(ix) GE Capital Program Indebtedness.
(b) Holdings will not create, incur, assume or permit to exist any
Indebtedness except (i) Indebtedness existing on the date hereof and set forth
in Schedule 6.01, but not any extensions, renewals or replacements of any such
Indebtedness, (ii) Indebtedness created under the Loan Documents and (iii) the
Holdings Senior Discount Debentures.
(c) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to (i) create, incur, assume or permit to exist any Indebtedness
(other than Indebtedness created under the Loan Documents) in reliance upon such
Indebtedness constituting a "Credit Facility" (as defined in the Subordinated
Debt Documents) for purposes of determining whether such Indebtedness is
permitted under the
94
Subordinated Debt Documents, regardless of whether such Indebtedness is
permitted by this Section, or (ii) designate any Indebtedness (other than
Indebtedness created under the Loan Documents) as "Designated Senior Debt" (as
defined in the Subordinated Debt Documents).
(d) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, issue any preferred stock or be or become liable in respect of
any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or
make any other payment in respect of any shares of capital stock of Holdings,
the Borrower or any Subsidiary or any option, warrant or other right to acquire
any such shares of capital stock.
SECTION 6.02. Liens. (a) The Borrower will not, and will not permit
------
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset
--------
of the Borrower or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; provided that
--------
(A) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary , as the case may be, (B)
such Lien shall not apply to any other property or assets of the Borrower
or any Subsidiary and (C) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such Person
becomes a Subsidiary, as the case may be and extensions, renewals and
replacements thereof that
95
do not increase the outstanding principal amount thereof;
(v) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (A) such security
--------
interests secure Indebtedness permitted by clause (vi) of Section 6.01(a),
(B) such security interests and the Indebtedness secured thereby are
incurred prior to or within 270 days after such acquisition or the
completion of such construction or improvement, (C) the Indebtedness
secured thereby does not exceed the cost (including design, engineering,
sales taxes, delivery, installation and other similar costs) of acquiring,
constructing or improving such fixed or capital assets and (D) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary; and
(vi) Liens arising under the GE Capital Program Agreements on
accounts receivables sold pursuant to the GE Capital Program Agreements.
(b) Holdings will not create, incur, assume or permit to exist any
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect thereof, except Liens created under the Security Documents and Permitted
Encumbrances.
SECTION 6.03. Fundamental Changes. (a) Neither Holdings nor the
--------------------
Borrower will, nor will they permit any Subsidiary to, merge into or consolidate
with any other Person, or permit any other Person to merge into or consolidate
with it, or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing (i) any Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (ii) any Subsidiary (other than
the Borrower) may merge into any Subsidiary Loan Party in a transaction in which
the surviving entity is a Subsidiary Loan Party, (iii) any Subsidiary (other
than the Borrower) may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders and (iv) any
Subsidiary may merge with another entity to implement a Permitted Acquisition;
provided that any such merger involving a Person that is not a wholly owned
--------
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
96
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and the Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
(c) Holdings will not engage in any business or activity other than
the ownership of all the outstanding shares of capital stock of the Borrower and
activities incidental thereto. Holdings will not own or acquire any assets
(other than shares of capital stock of the Borrower, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, the Holdings Senior Discount Debentures, liabilities imposed by law,
including tax liabilities, and other liabilities incidental to its existence and
permitted business and activities). Holdings will not have any Subsidiaries,
other than the Borrower and its Subsidiaries.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions. The Borrower will not, and will not permit any of its
-------------
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:
(a) the Merger;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on Schedule
6.04, to the extent such investments would not be permitted under any other
clause of this Section;
(d) investments in the capital stock of their respective Subsidiaries;
provided that (i) any such shares of capital stock held by a Loan Party
--------
shall be pledged pursuant to the Collateral Agreement (subject to the
limitations applicable to common stock of a Foreign Subsidiary referred to
in Section 5.12) and (ii) the aggregate amount of investments in, and loans
and advances to, and Guarantees of Indebtedness of,
97
Subsidiaries that are not Loan Parties shall not exceed $500,000 in the
aggregate at any time outstanding;
(e) loans or advances made by the Borrower to any Subsidiary of the
Borrower (or to Holdings, but only as permitted by Section 6.07) and made
by any Subsidiary of the Borrower to the Borrower or any other Subsidiary
of the Borrower; provided that (i) any such loans and advances made by a
--------
Loan Party shall be evidenced by a promissory note pledged pursuant to the
Pledge Agreement and (ii) the amount of all such loans and advances by Loan
Parties to Subsidiaries that are not Loan Parties shall be subject to the
limitation set forth in clause (d)(ii) above;
(f) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) neither the Borrower nor any Subsidiary shall Guarantee
--------
the Holdings Senior Discount Debentures, (ii) the Subordinated Debt shall
not be Guaranteed by Holdings or by any Subsidiary other than a Subsidiary
Loan Party that is a Subsidiary of the Borrower and (iii) the aggregate
principal amount of Indebtedness of Subsidiaries that are not Loan Parties
Guaranteed by any Loan Party shall be subject to the limitation set forth
in clause (d)(ii) above;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(h) promissory notes received from Management Investors as part of the
Management Equity Contribution in an aggregate principal amount not
exceeding $3,000,000 at any time outstanding;
(i) Permitted Acquisitions; provided that (i) the consideration for
--------
each Permitted Acquisition shall consist solely of cash, shares of common
stock of Holdings, the assumption of Indebtedness of the acquired Person or
encumbering the acquired assets , Indebtedness referred to in clauses (vii)
and (viii) of Section 6.01(a) or a combination thereof and (ii) the sum of
all Indebtedness so assumed or otherwise resulting from Permitted
Acquisitions (including Indebtedness referred to in clauses (vii) and
(viii) of Section 6.01(a)) plus the cash consideration paid in connection
with Permitted Acquisitions (other than cash consideration received as Net
Cash Proceeds from the
98
issuance by Holdings of additional shares of its common stock to finance
Permitted Acquisitions, as contemplated by clause (e) of the definition of
"Prepayment Event"), minus the book value (determined, in respect of each
Permitted Acquisition, as of the date of consummation thereof) of all cash,
cash equivalents, prepaid expenses, inventory and accounts receivable
acquired pursuant to Permitted Acquisitions, shall not exceed, during any
fiscal year of the Borrower, when aggregated with the sum of all Capital
Expenditures during such fiscal year, the amount permitted for such fiscal
year pursuant to Section 6.12;
(j) loans or advances to employees in the ordinary course of business;
provided that the aggregate amount of all loans and advances permitted by
--------
this clause (j) shall not exceed $750,000 at any time outstanding;
(k) other investments in an aggregate amount not exceeding $1,000,000
at any time outstanding; and
(l) obligations of management to the Borrower in connection with split
dollar life insurance policies; provided that the aggregate amount of all
--------
obligations permitted by this clause (l) shall not exceed $1,000,000 at any
time outstanding.
SECTION 6.05. Asset Sales. The Borrower will not, and will not
------------
permit any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any capital stock, nor will the Borrower permit any of its
Subsidiaries to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a
--------
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.08; and
(c) sales, transfers and dispositions of assets (other than capital
stock of a Subsidiary) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
--------
transferred or otherwise disposed of in reliance
99
upon this clause (c) shall not exceed $2,000,000 during any fiscal year of
the Borrower;
(d) the Borrower may sell or otherwise convey accounts receivable
pursuant to and in accordance with the GE Capital Program Agreements;
(e) sales of fixed or capital assets made pursuant to sale and lease-
back transactions permitted under Section 6.11; and
(f) sales, transfers and dispositions of assets constituting Permitted
Asset Swaps;
provided that all sales, transfers, leases and other dispositions permitted
--------
hereby (other than those permitted by clause (b) above) shall be made for fair
value and solely for cash consideration, except that consideration for Permitted
Asset Swaps may consist of non-cash consideration as contemplated by the
definition of such term.
SECTION 6.06. Hedging Agreements. The Borrower will not, and will
-------------------
not permit any of its Subsidiaries to, enter into any Hedging Agreement, other
than Hedging Agreements entered into in the ordinary course of business to hedge
or mitigate risks to which the Borrower or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities.
SECTION 6.07. Restricted Payments; Certain Payments of Indebtedness.
------------------------------------------------------
(a) Neither Holdings nor the Borrower will, nor will they permit any Subsidiary
to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, except:
(i) Holdings may declare and pay dividends with respect to its
capital stock payable solely in additional shares of its common stock;
(ii) Subsidiaries of the Borrower may make Restricted Payments to the
Borrower and to wholly owned Subsidiaries of the Borrower and may declare
and pay dividends ratably with respect to their capital stock;
(iii) if at the time thereof and after giving effect thereto no
Default has occurred and is continuing, the Borrower may pay dividends or
make loans to Holdings at such times and in such amounts, not exceeding
$500,000 during any fiscal year, as shall be necessary to permit Holdings
to discharge its permitted liabilities (other than to make any payments
100
with respect to the Holdings Senior Discount Debentures);
(iv) following the fifth anniversary of the Effective Date, if at the
time thereof and after giving effect thereto no Default has occurred and is
continu ing, the Borrower may pay dividends or make loans to Holdings at
such times and in such amounts, not exceeding $14,420,000 during any fiscal
year, as shall be necessary to permit Holdings to pay, as and when due,
interest on the Holdings Senior Discount Debentures accrued subsequent to
the fifth anniversary of the Effective Date;
(v) Holdings may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of Holdings and its Subsidiaries, including the redemption or
purchase of shares of common stock of Holdings held by former employees of
Holdings or any Subsidiary follow ing the termination of their employment,
if (A) at the time thereof and after giving effect thereto no Default has
occurred and is continuing and (B) after giving effect to any such
Restricted Payment, the aggregate cumulative amount of Restricted Payments
made pursuant to this clause (v) shall not exceed the sum of (1) $1,000,000
during any fiscal year or (2) $10,000,000 at any time during this
Agreement, plus the amount of Net Cash Proceeds received by Holdings and
its Subsidiaries after the Effective Date and prior to making such
Restricted Payment from the issuance of additional shares of its common
stock to members of management or employees of Holdings and its
Subsidiaries; provided that the promissory notes permitted under Section
--------
6.04(h) may be forgiven or returned without regard to the limitation in
clause (B) above and the forgiveness or return thereof shall not be treated
as Restricted Payments for purposes of determining compliance with such
clause (B) above;
(vi) the Borrower may pay cash dividends or make loans to Holdings in
such amounts and at such times as Holdings makes Restricted Payments
permitted by clause (v) above; and
(vii) if at the time thereof and after giving effect thereto no
Default has occurred and is continuing, the Borrower may pay dividends or
make loans to Holdings in such amounts and at such times as required to
permit Holdings to pay, as and when due, income taxes payable by Holdings
with respect to the
101
consolidated, combined tax filing group that includes the Borrower and its
Subsidiaries; provided that dividends or loans pursuant to this clause
(vii) shall not at any time exceed the amount of income taxes that would
then be payable by the Borrower and its Subsidiaries if the Borrower and
its Subsidiaries were not a part of a consolidated, combined tax filing
group with Holdings or any other Person.
(b) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any payment
or other distribution (whether in cash securities or other property) in respect
of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments
as and when due in respect of any Indebtedness other than payments in
respect of the Subordinated Debt prohibited by the subordination provisions
thereof;
(iii) refinancings of Indebtedness to the extent permitted by Section
6.01;
(iv) payment of secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(v) payment of interest on the Holdings Senior Discount Debentures
payable solely by the issuance by Holdings of additional Holdings Senior
Discount Debentures, provided that after the fifth anniversary of the
--------
Effective Date, Holdings will be permitted to pay interest in cash on the
Holdings Senior Discount Debentures as and when due;
(vi) repayment of Indebtedness (including Indebtedness under the
Existing Credit Agreements) on the Effective Date in connection with the
Recapitalization; and
(vii) payment of intercompany Indebtedness between or among the
Borrower and its Subsidiaries permitted
102
under clause (iv) of Section 6.01(a) and payment of Indebtedness permitted
under clauses (viii) and (ix) of Section 6.01(a).
SECTION 6.08. Transactions with Affiliates. Neither Holdings nor the
-----------------------------
Borrower will, nor will they permit any Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions that do not involve Holdings and are
at prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties, provided that the Borrower delivers to the Administrative Agent (i)
--------
with respect to any transaction or series of related transactions involving
aggregate consideration in excess of $2,000,000, a resolution of the Borrower's
board of directors set forth in an officers' certificate certifying that such
transaction complies with this clause (a) and that such transaction has been
approved by a majority of the disinterested members of the Borrower's board of
directors and (ii) with respect to any transaction or series of related
transactions involving aggregate consideration in excess of $10,000,000, an
opinion as to the fairness to the Lenders of such transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing, (b) transactions between or among the Borrower and its
Subsidiaries that are Subsidiary Loan Parties which do not involve any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07, (d) loans to
management of Holdings or the Borrower permitted by clause (h) of Section 6.04,
(e) payments made under and in accordance with agreements in effect on the
Effective Date and specified in a Schedule 6.08 (without giving effect to any
amendment or modification thereof that has not been approved by the Required
Lenders), (f) any employment agreements, stock option or other compensation
agreements or plans (and the payment of amounts or the issuance of securities
thereunder) and other reasonable fees, compensation, benefits and indemnities
paid or entered into by Holdings or any of its Subsidiaries in the ordinary
course of business of Holdings or such Subsidiary to or with the officers,
directors or employees of Holdings or its Subsidiaries and (g) sales of common
stock of Holdings, when such sales are exclusively for cash.
SECTION 6.09. Restrictive Agreements. Neither Holdings nor the
-----------------------
Borrower will, nor will they permit any Subsidiary to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
103
prohibits, restricts or imposes any condition upon (a) the ability of Holdings,
the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its 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 the Borrower or any other Subsidiary or
to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that
--------
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document, Subordinated Debt Document or Holdings Senior Discount
Debenture Documents, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.09 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases or other
contracts restricting the assignment thereof.
SECTION 6.10. Amendment of Material Documents. Neither Holdings nor
--------------------------------
the Borrower will, nor will they permit any Subsidiary to, amend, modify or
waive any of its rights under (a) any Subordinated Debt Document, Holdings
Senior Discount Note Document or any agreement specified in Schedule 6.08, (b)
its certificate of incorporation, by-laws or other organizational documents, or
(c) the GE Capital Program Agreements or the documents governing the XxXxxxxx
County industrial revenue bonds, except amendments and modification to
agreements and documents referred to in clauses (b) and (c) shall be permitted
to the extent that the cumulative effect of all such amendments and
modifications do not have a Material Adverse Effect or a material adverse effect
on the interests of the Lenders; provided that amendments and modifications to
--------
the GE Capital Program Agreements that have a monetary effect on the Borrower or
any of its Subsidiaries shall be deemed not to have a Material Adverse Effect or
adversely affect the Lenders in any material respect so long as the cumulative
net monetary effect of such amendments and modifications does not exceed
$5,000,000 during the period from the Effective Date through November 22, 2001,
or $5,000,000
104
during the period subsequent to such date through the Tranche B Maturity Date
(in each case compared to the monetary effect of the existing GE Capital Program
Agreements).
SECTION 6.11. Sale and Lease-Back Transactions. Neither Holdings nor
---------------------------------
the Borrower will, nor will they permit any Subsidiary to, enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, except for any such sale and
leaseback of property involving the sale of fixed or capital assets, at a price
not less than the cost thereof, that is consummated within 270 days after the
date that such assets are acquired.
SECTION 6.12. Capital Expenditures. The Borrower will not permit the
---------------------
sum of (a) the aggregate amount of Capital Expenditures made by the Borrower and
the Subsidiaries in any fiscal year, plus (b) all amounts that are to be
aggregated with Capital Expenditures for such fiscal year as provided in clause
(i) of Section 6.04 (the sum of the amounts referred to in clauses (a) and (b)
being referred to as "Restricted Expenditures"), to exceed the amount set forth
below opposite such year; provided, that the Restricted Expenditures in any
--------
fiscal year (the "Pending Fiscal Year") may be increased by an amount (not
exceeding $20,000,000) equal to the sum of (x) the excess, if any, of the sum of
the amounts set forth below under "Amount" for each fiscal year referred to
below ending prior to the Pending Fiscal Year, minus the sum of the Restricted
Expenditures for such preceding fiscal years and (y) the amount set forth below
under "Amount" for the fiscal year immediately subsequent to the Pending Fiscal
Year; provided further that (A) clause (x) shall not apply to permit any
-------- -------
increase for the fiscal year commencing January 4, 1998, and (B) the amount of
Restricted Expenditures permitted in any fiscal year shall be reduced by the
amount of any Restricted
105
Expenditures made in the immediately preceding fiscal year in reliance upon
clause (y) of the foregoing proviso:
Fiscal Year
Ending Amount
------ ------
January 2, 1999 $70,000,000
January 1, 2000 $70,000,000
December 30, 2000 $70,000,000
December 29, 2001 $75,000,000
December 28, 2002 $80,000,000
January 3, 2004 $85,000,000
and each fiscal year
thereafter
SECTION 6.13. Leverage Ratio. Subject to Section 1.05, the Borrower
---------------
will not permit the Leverage Ratio as of any date during any period set forth
below to be in excess of the ratio set forth below opposite such period:
Period Ratio
------ -----
July 19, 1998 through April
24, 1999 6.00 to 1.00
April 25, 1999 through July
15, 2000 5.75 to 1.00
July 16, 2000 through July
14, 2001 5.50 to 1.00
July 15, 2001 through July
13, 2002 5.00 to 1.00
July 14, 2002 through July
12, 2003 4.50 to 1.00
July 13, 2003 and thereafter 4.00 to 1.00
SECTION 6.14. Consolidated Interest Expense Coverage Ratio. Subject
---------------------------------------------
to Section 1.05, the Borrower will not permit the ratio of (a) Consolidated
EBITDA to (b) Consolidated Interest Expense (net of interest income), in each
case for any period of four consecutive fiscal quarters of the Borrower ending
during any period set forth below to be less than the ratio set forth below
opposite such period:
Four-Quarter
Period Ending Ratio
------------- -----
July 19, 1998 through April
24, 1999 1.65 to 1.00
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April 25, 1999 through July
15, 2000 1.75 to 1.00
July 16, 2000 through July
14, 2001 2.00 to 1.00
July 15, 2001 through July
13, 2002 2.25 to 1.00
July 14, 2002 and thereafter 2.50 to 1.00
SECTION 6.15. Minimum Retained Cash Earnings. Subject to Section
-------------------------------
1.05, the Borrower will not permit Retained Cash Earnings as of the last day of
any fiscal quarter to be less than the sum of (a) $100,000,000, plus (b) 50% of
the cumulative amount of Adjusted Consolidated Net Income for each fiscal
quarter (other than any fiscal quarter for which Adjusted Consolidated Net
Income is not a positive amount) ending after the Effective Date and on or prior
to the date of determination.
SECTION 6.16. Purchase and Sale of Vehicles; Vehicle Subsidiary. (a)
--------------------------------------------------
Neither Holdings nor the Borrower will, nor will they permit any Subsidiary
(other than the Vehicle Subsidiary) to, own, purchase, acquire or hold title to,
any Vehicle, except Vehicles owned on the Effective Date pending transfer
thereof to the Vehicle Subsidiary.
(b) The Vehicle Subsidiary will not engage in any business or activity
other than acquiring, owning and disposing of Vehicles used in the business of
the Borrower and its Subsidiaries, and activities incidental thereto. The
Vehicle Subsidiary will not own or acquire any assets (other than Vehicles) or
incur any liabilities (other than liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence and permitted
business and activities). The Vehicle Subsidiary will not have any Subsidiaries
or other investments. The Borrower will not make or permit any investments in
the Vehicle Subsidiary, other than contributions of equity capital by the
Borrower to the extent necessary to permit the Vehicle Subsidiary to acquire
Vehicles and to satisfy its permitted liabilities as and when done.
107
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of Holdings, the Borrower or any Subsidiary in or in connection with any
Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to
have been incorrect in any material respect when made or deemed made;
(d) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.04 (with
respect to the existence of Holdings or the Borrower) or 5.11 or in Article
VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) Holdings, the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any
108
Material Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g)
--------
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Holdings, the Borrower or any Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings, the
Borrower or any Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(i) Holdings, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (h)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for Holdings, the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
109
(j) Holdings, the Borrower or any Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against Holdings, the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor (and such action is not effectively stayed) to
attach or levy upon any assets of Holdings, the Borrower or any Subsidiary
to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding (i)
$3,000,000 in any year or (ii) $5,000,000 for all periods;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except (i) as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under
the Loan Documents or (ii) as a result of the Administrative Agent's
failure to maintain possession of any stock certificates, promissory notes
or other instruments delivered to it under the Pledge Agreement;
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees
110
and other obligations of the Borrower accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; and in case of any event
with respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Holdings, the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any
111
duty to disclose, and shall not be liable for the failure to disclose, any
information relating to Holdings, the Borrower or any of its Subsidiaries that
is communicated to or obtained by the bank serving as Administrative Agent or
any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall not be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by
Holdings, the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii)
the contents of any certificate, report or other document delivered thereunder
or in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall
112
apply to any such sub-agent and to the Related Parties of each Administrative
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
113
The provisions of this Article applicable to the Administrative Agent
also shall apply to the Collateral Agent, mutatis mutandis.
------- --------
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Holdings or the Borrower, to Advance Stores Company,
Incorporated at 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, Attention of
Chief Financial Officer (Telecopy No. (000) 000-0000);
with a copy to:
Xxxxxxx Xxxxxx & Co. Incorporated, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxx X. Xxxxx, (Telecopy No. (212)
758-7499;
(b) if to the Administrative Agent or the Collateral Agent, to The
Chase Manhattan Bank, Loan and Agency Services Group, One Chase Xxxxxxxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxxx Xxxxxx
(Telecopy No. (000) 000-0000), with a copy to The Chase Manhattan Bank,
000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx 00000, Attention of Xxxx Xxxxxx
(Telecopy No. (000) 000-0000);
(c) if to the Issuing Bank, to The Chase Manhattan Bank at 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention of
Standby LC Department (Telecopy No. (000) 000-0000);
(d) if to the Swingline Lender, to The Chase Manhattan Bank at One
Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of
Xxxxx Xxxxxx (Telecopy No. (000) 000-0000); and
(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
114
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
--------------------
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of any Loan Document or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, the Collateral Agent,
any Lender or the Issuing Bank may have had notice or knowledge of such Default
at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent or the Collateral Agent, as applicable,
and the Loan Party or Loan Parties that are parties thereto, in each case with
the consent of the Required Lenders; provided that no such agreement shall (i)
--------
increase the Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any
115
fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment, without
the written consent of each Lender affected thereby, (iv) change Section 2.18(b)
or (c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of "Required Lenders" or any other
provision of any Loan Document specifying the number or percentage of Lenders
(or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release Holdings or any Subsidiary Loan Party from its Guarantee
under the Guarantee Agreement (except as expressly provided in the Guarantee
Agreement), or limit its liability in respect of such Guarantee, without the
written consent of each Lender, (vii) except in strict accordance with the
express provisions thereof, release all or any substantial part of the
Collateral from the Liens of the Security Documents, without the written consent
of each Lender, (viii) change any of the provisions of the definitions of
"Borrowing Base" or "Eligible Inventory" in a manner that by their terms
adversely affect in any material respect the interests of the Lenders, without
the written consent of at least 66 2/3% of the Lenders affected thereby, (ix)
change any provisions of any Loan Document in a manner that by its terms
adversely affects the rights in respect of payments due to Lenders holding Loans
of any Class differently than those holding Loans of any other Class, without
the written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each affected Class (in addition to any other
consent required under this paragraph) or (x) change the rights of the Tranche B
Lenders to decline mandatory prepayments as provided in Section 2.11, without
the written consent of Tranche B Lenders holding a majority of the outstanding
Tranche B Loans; provided further that (A) no such agreement shall amend,
-------- -------
modify or otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender without the prior
written consent of the Administrative Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender, as the case may be, and (B) any waiver, amendment
or modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Revolving Lenders (but not any other Lenders), the
Tranche B Lenders (but not any other Lenders), the Delayed Draw I Lenders (but
not any other Lenders) or the Delayed Draw II Lenders (but not any other
Lenders) may be effected by an agreement or agreements in writing entered into
by
116
Holdings, the Borrower and requisite percentage in interest of the affected
Class of Lenders that would be required to consent thereto under this Section if
such Class of Lenders were the only Class of Lenders hereunder at the time.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
-----------------------------------
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, the Syndication Agent, the
Documentation Agent and their respective Affiliates, including the reasonable
fees, charges and disbursements of counsel for the Administrative Agent and the
Collateral Agent, in connection with the syndication of the credit facilities
provided for herein, the preparation and administration of the Loan Documents or
any amendments, modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the
Collateral Agent, the Issuing Bank and each Lender, and each Related Party of
any of the foregoing Persons (each such Person being called an "Indemnitee")
----------
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the
117
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any Mortgaged Property or any other
property currently or formerly owned or operated by Holdings, the Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
Holdings, the Borrower or any of its Subsidiaries, except that this clause (iii)
shall not apply to Environmental Liabilities related to a Mortgaged Property
that are attributable solely to acts or events occurring after completion of
foreclosure proceedings with respect to such Mortgaged Property and surrender of
possession thereof by the Borrower and its Subsidiaries to or as directed by the
Collateral Agent or the purchasers at any such foreclosure sale, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
--------
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, the Collateral
Agent, the Issuing Bank or the Swingline Lender, as the case may be, such
Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
--------
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Collateral Agent, the Issuing Bank or the
Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro
rata share" shall be determined based upon its share of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, neither Holdings nor
the Borrower shall assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated
118
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); provided that (i)
--------
except in the case of an assignment to a Lender or an Affiliate or Approved Fund
of a Lender, each of the Borrower and the Administrative Agent (and, in the case
of an assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure or Swingline Exposure, the Issuing
Bank and the Swingline Lender) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld), (ii) except in
the case of an assignment to a Lender or an Affiliate or Approved Fund of a
Lender or an assignment of the entire remaining amount of the assigning Lender's
Commitment or Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iii) shall not be
119
construed to prohibit the assignment of a proportionate part of all the
assigning Lender's rights and obligations in respect of one Class of Commitments
or Loans, (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500, and (v) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
----------------
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
--------
the Register shall be conclusive, and Holdings, the Borrower, the Administrative
Agent, the Collateral Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower,
the Issuing Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
120
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
-----------
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
--------
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Collateral Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
--------
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is
121
made with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.17 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
--------
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a
122
single contract. This Agreement, the other Loan Document and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and governed
--------
by the law of the State of New York.
123
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or its properties in the courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
124
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
----------------
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below) in accordance with their customary procedures,
except that Information may be disclosed (a) to its and its Affiliates' and
Approved Funds' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower, (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis from a source other than Holdings or the Borrower or (i) to any direct or
indirect contractual counterparty with a Lender or its affiliates in a swap
agreement or such counterparty's professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 9.12). For
the purposes of this Section, "Information" means all information received from
-----------
Holdings or the Borrower relating to Holdings or the Borrower or its business,
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis
125
prior to disclosure by Holdings or the Borrower; provided that, in the case of
--------
information received from Holdings or the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ADVANCE HOLDING CORPORATION,
by
/s/ J O'Xxxx Xxxxxxxx
------------------------
Name: J O'Xxxx Xxxxxxxx
Title: SVP/CFO Secretary Treasurer
ADVANCE STORES COMPANY, INCORPORATED,
by
/s/ J O'Xxxx Xxxxxxxx
------------------------
Name: J O'Xxxx Xxxxxxxx
Title: SVP/CFO Secretary Treasurer
THE CHASE MANHATTAN BANK,
individually and as administrative Agent,
by
/s/ Xxxxxxx Xxxxx
------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
DLJ CAPITAL FUNDING, INC.
by
/s/ Xxxxxx X. Xxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxx
Managing Director
FIRST UNION NATIONAL BANK
by /s/ Xxxx X. Xxxx
---------------------------
Senior Vice President
CRESTAR BANK,
by
/s/
____________________________
THE CIT GROUP/BUSINESS CREDIT, INC.
by
/s/
________________________
CREDIT LYONNAIS NEW YORK Branch
by
/s/ Xxxx Xxxxxxx
--------------------------
Xxxx Xxxxxxx
Vice President
CREDITANSTALT CORPORATE FINANCE,
INC.,
by
/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx
by
/s/ Xxxxxxx X. XxXxxxxx, Xx.
---------------------------
Xxxxxxx X. XxXxxxxx, Xx.
NATIONAL BANK OF CANADA,
by
/s/
-------------------------
by
/s/
-------------------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION,
by
/s/ Xxxxx Xxxxxxxx
------------------------
Xxxxx Xxxxxxxx
Senior Vice President
AT&T COMMERCIAL FINANCE
CORPORATION,
by
/s/ Xxxx Xxxxxxxxx
---------------------
Xxxx Xxxxxxxxx, AVP
BANKBOSTON, N.A.,
by
/s/
-------------------
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG - NEW YORK,
by
/s/ Xxxx Xxxxxxxxxx Xxxx X. Xxxxxxx
--------------------------------------
XXXX XXXXXXXXXX XXXX X. XXXXXXX
Vice President First Vice President
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION,
by
/s/ Xxxx Xxxxxxxx
----------------------------
Xxxx Xxxxxxxx
Senior Vice President
ING (U.S.) CAPITAL CORPORATION,
by /s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
Vice President
STAR BANK, NATIONAL ASSOCIATION,
by /s/ Xxxx X. Xxxxxxx
--------------------------
Xxxx X. Xxxxxxx
Vice President
SUMMIT BANK,
by
/s/
---------------------
UNION BANK OF CALIFORNIA, N.A.
by
/s/ Xxxxx Xxxxx
------------------------
Xxxxx Xxxxx
Vice President
XXXXXXX XXXXX SENIOR FLOATING RATE
FUND, INC.,
by
/s/ Xxxxxx Xxxxxxxx
----------------------------
Xxxxxx Xxxxxxxx
XX
XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by /s/ Xxxxxxx X. Xxxxxxx
----------------------------
XXXXXXX X. XXXXXXX
Senior Vice President & Director
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC.,
BY: ING CAPITAL ADVISORS, INC.,
AS INVESTMENT ADVISOR
by /s/ Xxxxxxx X. Xxxxxx
-------------------------
XXXXXXX X. XXXXXX
VICE PRESIDENT & PORTFOLIO MANAGER
PILGRIM AMERICA PRIME RATE TRUST,
By: PILGRIM AMERICA INVESTMENTS, INC.,
as its Investment Manager
By: /s/ Xxxxxx Tiffen
------------------------------
Name: Xxxxxx Tiffen
Title: Senior Vice President
