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Exhibit 10.8
RACING CHAMPIONS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 17, 1997
BANKBOSTON, N.A., Agent
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TABLE OF CONTENTS
Page
1. Restatement; Definitions; etc.........................................
1.1. Amendment and Restatement.......................................
1.2. Definitions; Certain Rules of Construction......................
2. The Credits...........................................................
2.1. Revolving Credit................................................
2.1.1. Revolving Loan..........................................
2.1.2. Maximum Amount of Revolving Credit......................
2.1.3. Borrowing Requests......................................
2.1.4. Revolving Notes.........................................
2.2. Term Loan Credit................................................
2.2.1. Term Loan...............................................
2.2.2. Term Loan Notes.........................................
2.3. Letters of Credit...............................................
2.3.1. Issuance of Letters of Credit...........................
2.3.2. Requests for Letters of Credit..........................
2.3.3. Form and Expiration of Letters of Credit................
2.3.4. Lenders' Participation in Letters of Credit.............
2.3.5. Presentation............................................
2.3.6. Payment of Drafts.......................................
2.3.7. Uniform Customs and Practice............................
2.3.8. Subrogation.............................................
2.3.9. Modification, Consent, etc..............................
2.4. Application of Proceeds.........................................
2.4.1. Revolving Loan..........................................
2.4.2. Term Loan...............................................
2.4.3. Letters of Credit.......................................
2.4.4. Specifically Prohibited Applications....................
2.5. Nature of Obligations of Lenders to Make Extensions of Credit...
3. Interest; Eurodollar Pricing Options; Fees............................
3.1. Interest........................................................
3.2. Eurodollar Pricing Options......................................
3.2.1. Election of Eurodollar Pricing Options..................
3.2.2. Notice to Lenders and Borrower..........................
3.2.3. Selection of Eurodollar Interest Periods................
3.2.4. Additional Interest.....................................
3.2.5. Violation of Legal Requirements.........................
3.2.6. Funding Procedure.......................................
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3.3. Commitment Fees.................................................
3.4. Letter of Credit Fees...........................................
3.5. Changes in Circumstances; Yield Protection......................
3.5.1. Reserve Requirements, etc...............................
3.5.2. Taxes...................................................
3.5.3. Capital Adequacy........................................
3.5.4. Regulatory Changes......................................
3.5.5. Compensation Claims.....................................
3.5.6. Mitigation..............................................
3.6. Computations of Interest and Fees...............................
4. Payment...............................................................
4.1. Payment at Maturity.............................................
4.2. Scheduled Required Prepayments..................................
4.3. Contingent Required Prepayments.................................
4.3.1. Excess Credit Exposure..................................
4.3.2. Excess Cash Flow........................................
4.3.3. Net Asset Sale Proceeds.................................
4.3.4. Net Equity Proceeds.....................................
4.4. Voluntary Prepayments...........................................
4.5. Letter of Credit................................................
4.6. Reborrowing; Application of Payments. etc.......................
4.6.1. Reborrowing.............................................
4.6.2. Order of Application....................................
4.6.3. Payment with Accrued Interest. etc......................
4.6.4. Payments for Lenders....................................
5. Conditions to Extending Credit........................................
5.1. Conditions on Initial Closing Date..............................
5.1.1. Notes...................................................
5.1.2. Payment of Fees.........................................
5.1.3. Legal Opinions..........................................
5.1.4. Guarantee and Security Agreement: Hong Kong Documents...
5.1.5. Perfection of Security..................................
5.1.6. Public Offering.........................................
5.1.7. Proper Proceedings......................................
5.1.8. General.................................................
5.2. Conditions to Each Extension of Credit..........................
5.2.1. Officer's Certificate...................................
5.2.2. Legality, etc...........................................
6. General Covenants.....................................................
6.1. Taxes and Other Charges; Accounts Payable.......................
6.1.1. Taxes and Other Charges.................................
6.1.2. Accounts Payable........................................
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6.2. Conduct of Business, etc........................................
6.2.1. Types of Business.......................................
6.2.2. Maintenance of Properties...............................
6.2.3. Statutory Compliance....................................
6.2.4. Compliance with Material Agreements.....................
6.3. Insurance.......................................................
6.3.1. Property Insurance......................................
6.3.2. Liability Insurance.....................................
6.3.3. Key Executive Life Insurance............................
6.4. Financial Statements and Reports................................
6.4.1. Annual Reports..........................................
6.4.2. Quarterly Reports.......................................
6.4.3. Borrowing Base Reports..................................
6.4.4. Other Reports...........................................
6.4.5. Notice of Litigation, Defaults, etc.....................
6.4.6. ERISA Reports...........................................
6.4.7. Other Information; Audit................................
6.5. Certain Financial Tests.........................................
6.5.1. Consolidated Total Debt to Consolidated EBITDA..........
6.5.2. Consolidated EBITDA to Consolidated Interest Expense....
6.5.3. Consolidated Adjusted EBITDA to Consolidated
Fixed Charges...........................................
6.5.4. Consolidated EBITDA.....................................
6.5.5. Capital Expenditures....................................
6.6. Indebtedness....................................................
6.7. Guarantees; Letters of Credit...................................
6.8. Liens...........................................................
6.9. Investments and Acquisitions....................................
6.10. Distributions...........................................
6.11. Asset Dispositions and Mergers..........................
6.12. Lease Obligations.......................................
6.13. Issuance of Stock by Subsidiaries; Subsidiary
Distributions...........................................
6.13.1. Issuance of Stock by Subsidiaries.......................
6.13.2. No Restrictions on Subsidiary Distributions.............
6.14. Voluntary Prepayments of Other Indebtedness.............
6.15. Derivative Contracts....................................
6.16. Negative Pledge Clauses.................................
6.17. ERISA, etc..............................................
6.18. Transactions with Affiliates............................
6.19. Restricted Operations of Company and Banerjan...........
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7. Representations and Warranties.........................................
7.1. Organization and Business.......................................
7.1.1. The Company.............................................
7.1.2. Subsidiaries............................................
7.1.3. Qualification...........................................
7.1.4. Capitalization..........................................
7.2. Financial Statements and Other Information; Material
Agreements......................................................
7.2.1. Financial Statements and Other Information..............
7.2.2. Material Agreements.....................................
7.3. Agreements Relating to Financing Debt, Investments, etc.........
7.4. Changes in Condition............................................
7.5. Title to Assets.................................................
7.6. Operations in Conformity With Law, etc..........................
7.7. Litigation......................................................
7.8. Authorization and Enforceability................................
7.9. No Legal Obstacle to Agreements.................................
7.10. Defaults........................................................
7.11. Licenses, etc...................................................
7.12. Tax Returns.....................................................
7.13. Certain Business Representations................................
7.13.1. Product Liability Matters..............................
7.13.2. Antitrust..............................................
7.13.3. Consumer Protection....................................
7.13.4. Future Expenditures....................................
7.14. Transactions with Affiliates....................................
7.15. Pension Plans...................................................
7.16. Foreign Trade Regulations; Government Regulation; Margin Stock..
7.16.1. Foreign Trade Regulations..............................
7.16.2. Government Regulation..................................
7.16.3. Margin Stock...........................................
7.17. Disclosure......................................................
8. Defaults..............................................................
8.1. Events of Default...............................................
8.1.1. Payment.................................................
8.1.2. Specified Covenants.....................................
8.1.3. Other Covenants.........................................
8.1.4. Representations and Warranties..........................
8.1.5. Cross Default, etc......................................
8.1.6. Ownership; Liquidation; etc.............................
8.1.8. Judgment................................................
8.1.9. ERISA...................................................
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8.1.10. Bankruptcy, etc.....................................
8.2. Certain Actions Following an Event of Default................
8.2.1. Terminate Obligations to Extend Credit..............
8.2.2. Specific Performance; Exercise of Rights............
8.2.3. Acceleration........................................
8.2.4. Enforcement of Payment; Credit Security; Setoff.....
8.2.5. Cumulative Remedies.................................
8.3. Annulment of Defaults........................................
8.4. Waivers......................................................
9. Expenses; Indemnity.................................................
9.1. Expenses.....................................................
9.2. General Indemnity............................................
9.3. Indemnity With Respect to Letters of Credit..................
10. Operations; Agent...................................................
10.1. Interests in Credits.........................................
10.2. Agent's Authority to Act, etc................................
10.3. Borrower to Pay Agent, etc...................................
10.4. Lender Operations for Advances, Letters of Credit, etc.......
10.4.1. Advances...........................................
10.4.2. Letters of Credit..................................
10.4.3. Agent to Allocate Payments, etc....................
10.4.4. Delinquent Lenders; Nonperforming Lenders..........
10.5. Sharing of Payments, etc.....................................
10.6. Amendments, Consents, Waivers, etc...........................
10.7. Agent's Resignation..........................................
10.8. Concerning the Agent.........................................
10.8.1. Action in Good Faith, etc..........................
10.8.2. No Implied Duties, etc.............................
10.8.3. Validity, etc......................................
10.8.4. Compliance.........................................
10.8.5. Employment of Agents and Counsel...................
10.8.6. Reliance on Documents and Counsel..................
10.8.7. Agent's Reimbursement..............................
10.9. Rights as a Lender...........................................
10.10. Independent Credit Decision..................................
10.11. Indemnification..............................................
11. Successors and Assigns; Lender Assignments and Participations
11.1. Assignments by Lenders.......................................
11.1.1. Assignees and Assignment Procedures................
11.1.2. Terms of Assignment and Acceptance.................
11.1.3. Register...........................................
11.1.4. Acceptance of Assignment and Assumption............
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11.1.5. Federal Reserve Bank................................
11.1.6. Further Assurances..................................
11.2. Credit Participants.........................................
11.3. Replacement of Lender.......................................
12. Confidentiality....................................................
13. Foreign Lenders....................................................
14. Notices............................................................
15. Course of Dealing; Amendments and Waivers..........................
16. Defeasance.........................................................
17. Venue; Service of Process..........................................
18. WAIVER OF JURY TRIAL...............................................
19. No Strict Construction.............................................
20. General............................................................
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EXHIBITS
2.1.4 - Revolving Note
2.2.2 - Term Loan Note
5.1.4 - Guarantee and Security Agreement
5.2.1 - Officer's Certificate
6.9.2 - Foreign Subsidiary Subordination Agreement
7.1 - Company and its Subsidiaries
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.13.1 - Product Liability Claims
7.14 - Affiliate Transactions
7.15 - Multi-employer and Defined Benefit Plans
10.1 - Percentage Interests
11.1.1 - Assignment and Acceptance
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RACING CHAMPIONS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement dated as of June 17, 1997, is among Racing Champions
Corporation, a Delaware corporation formerly known as Collectible Champions,
Inc., the Subsidiaries of Racing Champions Corporation from time to time party
hereto, including Racing Champions Inc., the Lenders from time to time party
hereto and BankBoston, N.A., formerly known as The First National Bank of
Boston, both in its capacity as a Lender and in its capacity as agent for
itself and the other Lenders. The parties agree as follows:
Recitals: Pursuant to this Agreement, the Lenders are extending to the
Borrower a $5,000,000 revolving credit facility, including a $1,500,000 Letter
of Credit facility, and a $22,000,000 term loan facility. All credit
facilities mature on June 28, 2002. These credit facilities are guaranteed by
the Company and the Company's Subsidiaries and are secured by liens on
substantially all the assets (including stock of Subsidiaries) of the Company
and its Subsidiaries.
1. Restatement; Definitions; etc.
1.1. Amendment and Restatement. Effective as of the Initial Closing Date,
this Agreement amends and restates in its entirety the Credit Agreement dated
as of April 30, 1996, as amended and in effect on the date hereof, among the
Company, its Subsidiaries and a group of lenders for which BankBoston, N.A. is
acting as agent. On the Initial Closing Date the Lenders will make such
assignments and other arrangements among themselves so that the Notes and
Letter of Credit Exposure are held by the Lenders in accordance with their
Percentage Interests. Amounts in respect of interest, commitment fees, Letter
of Credit fees and other amounts payable hereunder shall be payable in
accordance with the terms of the Credit Agreement referred to above as in
effect prior to the amendment and restatement on the Initial Closing Date for
periods prior to the Initial Closing Date and in accordance with this Agreement
(as it amends and restates such Credit Agreement) for periods from and after
the Initial Closing Date.
1.2. Definitions; Certain Rules of Construction. Certain capitalized
terms are used in this Agreement and in the other Credit Documents with the
specific meanings defined below in this Section 1. Except as otherwise
explicitly specified to the contrary or unless the context clearly requires
otherwise, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular
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Section include all subsections thereof, (d) the word "including" shall be
construed as "including without limitation", (e) accounting terms not otherwise
defined herein have the meaning provided under GAAP, (f) references to a
particular statute or regulation include all rules and regulations thereunder
and any successor statute, regulation or rules, in each case as from time to
time in effect and (g) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement and the
other Credit Documents. References to "the date hereof" mean the date first
set forth above.
1.3. "Accumulated Benefit Obligations" means the actuarial present value
of the accumulated benefit obligations under any Plan, calculated in accordance
with Statement No. 87 of the Financial Accounting Standards Board.
1.4. "Acquisition" means the following acquisitions consummated on April
30, 1996: (a) the acquisition by the Company of all the stock of the Borrower,
(b) the acquisition by the Borrower of all the assets of Xxxx-Xxxxx, Ltd. and
(c) the acquisition by Banerjan of all the assets of Racing Champions Limited,
Xxxxxxx Services, Inc. and Hosten Investment Limited.
1.5. "Acquisition Agreement" means the Asset and Stock Purchase Agreement
dated as of April 30, 1996 among the Company, the Borrower, Banerjan and the
Sellers furnished to the Lenders without subsequent modification or amendment
except to the extent permitted hereby.
1.6. "Affected Lender" is defined in Section 11.3.
1.7. "Affiliate" means, with respect to the Company (or any other
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
such specified Person), and shall include (a) any officer or director of the
Company (or such specified Person) and (b) any Person of which the Company (or
such specified Person) or any Affiliate (as defined in clause (a) above) of the
Company (or such specified Person) shall, directly or indirectly, beneficially
own at least 10% of the outstanding equity securities having the general power
to vote.
1.8. "Agent" means BankBoston in its capacity as agent for the Lenders
hereunder, as well as its successors and assigns in such capacity pursuant to
Section 10.7.
1.9. "Agreement" means this Agreement as from time to time amended,
modified and in effect.
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1.10. "Applicable Margin" means, on each day during the then current
fiscal quarter, the percentage in the table below set opposite the ratio which
(a) Consolidated Total Debt on the last day of the most recent fiscal quarter
for which financial statements have been (or are required to have been)
furnished to the Lenders in accordance with Section 6.4.2 prior to the
beginning of the then current fiscal quarter bore to (b) Consolidated EBITDA
for the period of four consecutive fiscal quarters ended on the last day of
such most recent fiscal quarter:
Base Rate Eurodollar
Ratio of Consolidated Total Debt Applicable Applicable
to Consolidated EBITDA Margin Margin
--------------------------------------------------------------- ---------- ----------
Greater than or equal to 300% 0.75% 2.25%
Less than 300% and greater than or equal to 250% 0.50% 2.00%
Less than 250% d greater than or equal to 200% 0.25% 1.75%
Less than 200% 0.00% 1.50%
1.11. "Applicable Rate" means, at any date:
-------------------------------------
(a) with respect to each portion of the Loan subject to a Eurodollar
Pricing Option, the sum of the Applicable Margin for Eurodollar Pricing
Options plus the Eurodollar Rate with respect to such Eurodollar Pricing
Option; and
(b) with respect to each other portion of the Loan, the sum of the
Applicable Margin for the Base Rate plus the Base Rate;
provided, however, that the Applicable Rate shall be the sum of 3% plus the
Base Rate on the day the Agent notifies the Company that the interest rates
hereunder are increasing as a result of the occurrence and continuance of an
Event of Default until the earlier of such time as (i) such Event of Default is
no longer continuing or (ii) such Event of Default is deemed no longer to exist
pursuant to Section 8.3.
1.12. "Assignee" is defined in Section 11.1.1.
1.13. "Assignment and Acceptance" is defined in Section 11.1.1.
1.14. "Banerjan" means Racing Champions, Limited, a Hong Kong limited
liability company, formerly known as "Banerjan Company Limited," that is a
Wholly Owned Subsidiary of the Borrower.
1.15. "BankBoston" means BankBoston, N.A., formerly known as The First
National Bank of Boston.
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1.16. "Banking Day" means any day other than Saturday, Sunday or a day on
which banks in Boston, Massachusetts or Chicago, Illinois are authorized or
required by law or other governmental action to close and, if such term is used
with reference to a Eurodollar Pricing Option, any day on which dealings are
effected in the Eurodollars in question by first-class banks in the inter-bank
Eurodollar markets in New York, New York.
1.17. "Bankruptcy Code" means Title 11 of the United States Code.
1.18. "Bankruptcy Default" means an Event of Default referred to in
Section 8.1.10.
1.19. "Base Rate" means, on any date, the greater of (a) the rate of
interest announced by BankBoston at the Boston Office as its Base Rate or (b)
the sum of 1/2% plus the Federal Funds Rate.
1.20. "Borrower" means Racing Champions, Inc., an Illinois corporation.
1.21. "Borrowing Base" means, on any date, the sum of:
(a) 85% of Eligible Accounts Receivable,
plus (b) 50% of Eligible Inventory,
in each case as shown on the most recent monthly Borrowing Base report
furnished (or required to have been furnished) to the Lenders in accordance
with 6.4.3.
1.22. "Boston Office" means the principal banking office of BankBoston in
Boston, Massachusetts.
1.23. "By-laws" means all written by-laws, rules, regulations and all
other documents relating to the management, governance or internal regulation
of any Person other than an individual, or interpretive of the Charter of such
Person, all as from time to time in effect.
1.24. "Capital Expenditures" means, for any period, amounts added or
required to be added to the property, plant and equipment or other fixed assets
account on the Consolidated balance sheet of the Company and its Subsidiaries,
prepared in accordance with GAAP, in respect of (a) the acquisition,
construction, improvement or replacement of land, buildings, machinery,
equipment, leaseholds
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and any other real or personal property, (b) to the extent not included in
clause (a) above, materials, contract labor and direct labor relating thereto
(excluding amounts properly expensed as repairs and maintenance in accordance
with GAAP) and (c) software development costs to the extent not expensed.
1.25. "Capitalized Lease" means any lease which is required to be
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
1.26. "Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including Statement Nos.
13 and 98 of the Financial Accounting Standards Board.
1.27. "Cash Equivalents" means:
(a) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a
maturity of 12 months or less and issued by any United States financial
institution having capital and surplus and undivided profits aggregating
at least $100,000,000 and rated at least Prime-1 by Xxxxx'x or A-1 by S&P
or issued by any Lender;
(b) corporate obligations having a maturity of 12 months or less and
rated at least Prime-1 by Xxxxx'x or A-1 by S&P or issued by any Lender;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality
thereof, (i) which has a remaining maturity at the time of purchase of
not more than one year or which is subject to a repurchase agreement with
any Lender (or any other financial institution referred to in clause (a)
above) exercisable within one year from the time of purchase and (ii)
which, in the case of obligations of any state or municipality, is rated
at least Aa by Xxxxx'x or AA by S&P;
(d) any mutual fund or other pooled investment vehicle rated at
least Aa by Xxxxx'x or AA by S&P which invests principally in obligations
described above; and
(e) any similar investments with comparable risk status issued by
Persons located in Hong Kong.
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1.28. "Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other
charter document of any Person other than an individual, each as from time to
time in effect.
1.29. "Closing Date" means the Initial Closing Date and each other date on
which any extension of credit is made pursuant to Sections 2.1, 2.2 or 2.3.
1.30. "Code" means the federal Internal Revenue Code of 1986.
1.31. "Commitment" means, with respect to any Lender, such Lender's
obligations to extend the credits contemplated by Section 2. The original
Commitments are set forth in Exhibit 10.1 and the current Commitments are
recorded from time to time in the Register.
1.32. "Company" means Racing Champions Corporation, a Delaware corporation
formerly known as Collectible Champions, Inc.
1.33. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.13, 6.6.14,
6.7.3, 6.9.5, 6.9.7, 6.10.2, 6.11.1, 6.11.4 and 6.12.2.
1.34. "Consolidated" and "Consolidating", when used with reference to any
term, mean that term as applied to the accounts of the Company (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), or such of its Subsidiaries as may be specified, consolidated (or
combined) or consolidating (or combining), as the case may be, in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries.
1.35. "Consolidated Adjusted EBITDA" means, for any period:
(a) Consolidated EBITDA,
minus (b) Capital Expenditures;
minus (c) taxes based upon or measured by net income that are actually
paid in cash during such period.
1.36. "Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income;
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plus (b) all amounts deducted in computing such Consolidated Net
Income in respect of:
(i) depreciation, amortization and other non-cash
expenses and charges,
(ii) Consolidated Interest Expense,
(iii) taxes based upon or measured by net income, and
(iv) fees and expenses payable on or about the
Initial Closing Date with respect to the
Acquisition or the Credit Documents.
1.37. "Consolidated Excess Cash Flow" means, for any period, the total of:
(a) Consolidated EBITDA,
minus (b) the aggregate amount of Capital Expenditures permitted under
Section 6.5.5 for such period,
minus (c) taxes based upon or measured by net income that are actually
paid in cash,
minus (d) Consolidated Fixed Charges (but in no event including
contingent prepayments required by Section 4.3),
minus (e) voluntary prepayments of the Term Loan in accordance with
Section 4.4,
minus (f) voluntary permanent reductions of the Maximum Amount of
Revolving Credit pursuant to Section 2.1.2(b),
minus (g) in the event Consolidated Working Capital Factor is a positive
number, the lesser of:
(i) $1,000,000 or
(ii) Consolidated Working Capital Factor,
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plus (h) in the event Consolidated Working Capital Factor is a
negative number, the lesser of:
(i) $1,000,000 or
(ii) Consolidated Working Capital Factor; provided, however,
that for all purposes of computing Consolidated Excess
Cash Flow, the amount of Consolidated Working Capital
Factor described in this paragraph (h) shall be treated
as a positive number.
1.38. "Consolidated Fixed Charges" means, for any period, the sum of:
(a) Consolidated Interest Expense;
plus (b) the aggregate amount of all mandatory scheduled payments and
sinking fund payments (to the extent reduced by any voluntary
prepayments) with respect to principal paid by the Company and its
Subsidiaries in respect of Consolidated Total Debt, including payments in
the nature of principal under Capitalized Leases, but in no event
including contingent prepayments required by Section 4.3;
plus (c) any mandatory dividends required to be paid in cash by the
Company or any of its Subsidiaries to third parties.
1.39. "Consolidated Interest Expense" means, for any period, (a) the
aggregate amount of interest expense (other than PIK Interest), including in
any event commitment fees, payments in the nature of interest under Capitalized
Leases, net payments under Interest Rate Protection Agreements and letter of
credit fees and expenses, accrued by the Company and its Subsidiaries in
accordance with GAAP on a Consolidated basis minus (b) to the extent included
in the foregoing clause (a), amortization of Indebtedness financing costs.
1.40. "Consolidated Net Income" means, for any period, the net income (or
loss) of the Company and its Subsidiaries, determined in accordance with GAAP
on a Consolidated basis; provided, however, that Consolidated Net Income shall
not include:
(a) the income (or loss) of any Person accrued prior to the date
such Person becomes a Subsidiary or is merged into or consolidated with
the Company or any of its Subsidiaries;
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(b) the income (or loss) of any Person (other than a Subsidiary) in
which the Company or any of its Subsidiaries has an ownership interest;
provided, however, that (i) Consolidated Net Income shall include amounts
in respect of the income of such Person when actually received in cash by
the Company or such Subsidiary in the form of dividends or similar
Distributions and (ii) Consolidated Net Income shall be reduced by the
aggregate amount of all Investments, regardless of the form thereof, made
by the Company or any of its Subsidiaries in such Person for the purpose
of funding any deficit or loss of such Person;
(c) all amounts included in computing such net income (or loss) in
respect of (i) the write-up of any asset on or after the Initial Closing
Date, including the subsequent amortization or expensing of the
written-up portion of assets, or (ii) the retirement of any Indebtedness
or equity at less than face value after the Initial Closing Date;
(d) non-cash extraordinary or nonrecurring gains and losses;
(e) the income of any Subsidiary to the extent the payment of such
income in the form of a Distribution or repayment of Indebtedness to the
Company or a Wholly Owned Subsidiary is not permitted, whether on account
of any Charter or By-law restriction, any agreement, instrument, deed or
lease or any law, statute, judgment, decree or governmental order, rule
or regulation applicable to such Subsidiary; and
(f) any after-tax gains or losses attributable to returned surplus
assets of any Plan.
1.41. "Consolidated Net Revenue" means, for any period, the net revenues
(including reductions for returns, discounts and commissions) of the Company
and its Subsidiaries in accordance with GAAP on a Consolidated basis.
1.42. "Consolidated Total Debt" means, at any date, all Financing Debt of
the Company and its Subsidiaries on a Consolidated basis.
1.43. "Consolidated Working Capital Factor" means, for any period, the
amount (whether positive or negative) equal to:
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Assets
(a) Account Receivable:
(i) the amount, if any, by which
accounts receivable at the end of such period were
greater than accounts receivable at the beginning of
such period,
minus (ii) the amount, if any, by which accounts receivable at
the end of such period were less than accounts
receivable at the beginning of such period,
(b) Inventory:
plus (i) the amount, if any, by which inventory at the end of
such period was greater than inventory at the
beginning of such period,
minus (ii) the amount, if any, by which inventory at the end of
such period was less than inventory at the beginning
of such period,
(c) Prepaid Expenses:
plus (i) the amount, if any, by which prepaid expenses at the
end of such period were greater than prepaid expenses
at the beginning of such period,
minus (ii) the amount, is any, by which prepaid expenses at the
end of such period were less than prepaid expenses at
the beginning of such period,
(d) Manufacturers Advances and Manufacturers Notes
Receivable:
plus (i) the amount, if any, by which manufacturers advances
and manufacturers notes receivable at the end of such
period were greater than manufacturers advances and
manufacturers notes receivable at the beginning of
such period,
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minus (ii) the amount, if any, by which manufacturers advances
and manufacturers notes receivable at the end of such
period were less than manufacturers advances and
manufacturers notes receivable at the beginning of
such period,
Liabilities
(e) Accounts Payable:
plus (i) the amount, if any, by which accounts payable at the
end of such period were less than accounts payable at
the beginning of such period,
minus (ii) the amount, if any, by which accounts payable at the
end of such period were greater than accounts payable
at the beginning of such period,
(f) Accrued Expenses:
plus (i) the amount, if any, by which accrued expenses at the
end of such period were less than accrued expenses at
the beginning of such period,
minus (ii) the amount, if any, by which accrued expenses at the
end of such period were greater than accrued expenses
at the beginning of such period,
all with respect to the Company and its Subsidiaries as determined in
accordance with GAAP on a Consolidated basis.
1.44. "Credit Documents" means:
(a) this Agreement, the Notes, each Letter of Credit, each draft
presented or accepted under a Letter of Credit, the Guarantee and
Security Agreement, the Hong Kong Guarantee, the Hong Kong Collateral
Debenture, the fee agreement contemplated by Section 5.1.2 and each
Interest Rate Protection Agreement provided by a Lender (or an Affiliate
of a Lender) to the Company or any of its Subsidiaries, each as from time
to time in effect;
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(b) all financial statements, reports, mortgages, assignments, UCC
financing statements or officer certificates delivered to the Agent or
any of the Lenders by the Company, any of its Subsidiaries or any other
Obligor in connection herewith or therewith; and
(c) any other present or future agreement or instrument from time to
time entered into among the Company, any of its Subsidiaries or any other
Obligor, on one hand, and the Agent, any Letter of Credit Issuer or all
the Lenders, on the other hand, amending or modifying this Agreement or
any other Credit Document referred to above or which is stated to be a
Credit Document, each as from time to time in effect.
1.45. "Credit Obligations" means all present and future liabilities,
obligations and Indebtedness of the Company, any of its Subsidiaries or any
other Obligor owing to the Agent or any Lender (or any Affiliate of a Lender)
under or in connection with this Agreement or any other Credit Document,
including obligations in respect of principal, interest, reimbursement
obligations under Letters of Credit and Interest Rate Protection Agreements
provided by a Lender (or an Affiliate of a Lender), commitment fees, Letter of
Credit fees, amounts provided for in Sections 3.2.4, 3.5 and 9 and other fees,
charges, indemnities and expenses from time to time owing hereunder or under
any other Credit Document (whether accruing before or after a Bankruptcy
Default).
1.46. "Credit Participant" is defined in Section 11.2.
1.47. "Credit Security" means all assets now or from time to time
hereafter subjected to a security interest, mortgage or charge (or intended or
required so to be subjected pursuant to the Guarantee and Security Agreement or
any other Credit Document) to secure the payment or performance of any of the
Credit Obligations, including the assets described in section 3.1 of the
Guarantee and the Security Agreement.
1.48. "Default" means any Event of Default and any event or condition
which with the passage of time or giving of notice, or both, would become an
Event of Default and the filing against the Company or any other Obligor of a
petition commencing an involuntary case under the Bankruptcy Code.
1.49. "Delinquency Period" is defined in Section 10.4.4.
1.50. "Delinquent Lender" is defined in Section 10.4.4.
1.51. "Delinquent Payment" is defined in Section 10.4.4.
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1.52. "Designated Affiliate Equity Proceeds" means, with respect to a
particular covenant or other provision in this Agreement, the proceeds from the
issuance of shares of capital stock of the Company to, or from receipt by the
Company of capital contributions from, members of the Management Group, the
Xxxxxx Xxxxx Group or officers, employees and directors of the Obligors, to the
extent that (a) the Company designates in writing to the Agent that such
proceeds will be applied to such covenant or provision and (b) such proceeds
are not then applied to any other covenant or provision.
1.53. "Distribution" means, with respect to the Company (or other
specified Person):
(a) the declaration or payment of any dividend or distribution,
including dividends payable in shares of capital stock of or other equity
interests in the Company (or such specified Person), on or in respect of
any shares of any class of capital stock of or other equity interests in
the Company (or such specified Person);
(b) the purchase, redemption or other retirement of any shares of
any class of capital stock of or other equity interest in the Company (or
such specified Person) or of options, warrants or other rights for the
purchase of such shares, directly, indirectly through a Subsidiary or
otherwise;
(c) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the
Company (or such specified Person);
(d) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Financing Debt of the Company
(or such specified Person) which by its terms or the terms of any
agreement is subordinated to the payment of the Credit Obligations; and
(e) any payment, loan or advance by the Company (or such specified
Person) to, or any other Investment by the Company (or such specified
Person) in, the holder of any shares of any class of capital stock of the
Company (or such specified Person), or any Affiliate of such holder,
including the payment of management and transaction fees and expenses;
provided, however, that the term 'Distribution" shall not include (i) dividends
payable in perpetual common stock of or other similar equity interests in the
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Company (or such specified Person) or (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances and reimbursements to employees for relocation
expenses, travel expenses, drawing accounts and similar expenditures, or (C)
rent paid to, or accounts payable for services rendered or goods sold by,
non-Affiliates that own capital stock of or other equity interests in the
Company (or such specified Person).
1.54. "Domestic Subsidiary" means any Subsidiary that is not a
Foreign Subsidiary.
1.55. "Eligible Accounts Receivable" means, at any date:
(a) the aggregate amount carried as accounts receivable (reduced
in accordance with GAAP for doubtful accounts and customer
returns) on the Consolidated balance sheet of the Company and
its Subsidiaries determined in accordance with GAAP;
minus (b) the aggregate amount of any such accounts receivable that are
more than 60 days past due except to the extent guaranteed by
a Person whose unsecured senior long-term debt obligations
are rated at least Baa by Xxxxx'x and BBB by S&P;
minus (c) discounts, commissions and distribution fees payable by the
Company or any Subsidiary (other than to the Company or a
Wholly owned Subsidiary) in respect of such accounts
receivable;
minus (d) the amount of such accounts receivable due from Affiliates;
minus (e) all payments of such accounts receivable to be made in a
currency other than United States Funds that is not freely
convertible into United States Funds or that may not be freely
withdrawn from the country of origin;
minus (f) such accounts receivable subject to Liens other than Liens
securing the Credit Obligations.
1.56. "Eligible Inventory" means, at any date:
(a) the aggregate amount carried as inventory, at
the lower of cost or market value, on the most recent
Consolidated balance
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sheet of the Company and its Subsidiaries in
accordance with GAAP;
minus (b) advance payments from customers reflected on such balance
sheet.
1.57. "Equity Transaction" means any issuance by the Company or any of its
Subsidiaries to any Person (other than any Obligors, their officers, employees
and directors, the Xxxxxx Xxxxx Group or the Management Group) of any shares of
its capital stock, other equity interests or options, warrants or other
purchase rights to acquire such capital stock or other equity interests;
provided, however, that in no event shall the Public Offering constitute an
"Equity Transaction".
1.58. "ERISA" means the federal Employee Retirement Income Security Act of
1974.
1.59. "ERISA Group Person" means the Company, any Subsidiary of the
Company and any Person which is a member of the controlled group or under
common control with the Company or any Subsidiary within the meaning of section
414 of the Code or section 4001(a)(14) of ERISA.
1.60. "Eurodollars" means, with respect to any Lender, deposits of United
States Funds in a non-United States office or an international banking facility
of such Lender.
1.61. "Eurodollar Basic Rate" means, for any Eurodollar Interest Period,
the rate of interest at which Eurodollar deposits in an amount comparable to
the portion of the Loan as to which a Eurodollar Pricing Option has been
elected and which have a term corresponding to such Eurodollar Interest Period
are offered to BankBoston by first class banks in the inter-bank Eurodollar
market for delivery in immediately available funds at a Eurodollar Office on
the first day of such Eurodollar Interest Period as determined by BankBoston at
approximately 10:00 a.m. (Boston time) two Banking Days prior to the date upon
which such Eurodollar Interest Period is to commence (which determination by
BankBoston shall, in the absence of manifest error, be conclusive).
1.62. "Eurodollar Interest Period" means any period, selected as provided
in Section 3.2.1, of one, two, three or six months, commencing on any Banking
Day and ending on the corresponding date in the subsequent calendar month so
indicated (or, if such subsequent calendar month has no corresponding date, on
the last day of such subsequent calendar month); provided, however, that
subject to Section 3.2.3, if any Eurodollar Interest Period so selected would
otherwise begin
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or end on a date which is not a Banking Day, such Eurodollar Interest Period
shall instead begin or end, as the case may be, on the immediately preceding or
succeeding Banking Day as determined by the Agent in accordance with the then
current banking practice in the inter-bank Eurodollar market with respect to
Eurodollar deposits at the applicable Eurodollar Office, which determination by
the Agent shall, in the absence of manifest error, be conclusive.
1.63. "Eurodollar Office" means such non-United States office or
international banking facility of any Lender as the Lender may from time to
time select.
1.64. "Eurodollar Pricing Options" means the options granted pursuant to
Section 3.2.1 to have the interest on any portion of the Loan computed on the
basis of a Eurodollar Rate.
1.65. "Eurodollar Rate" for any Eurodollar Interest Period means the rate,
rounded upward to the nearest 1/100%, obtained by dividing (a) the Eurodollar
Basic Rate for such Eurodollar Interest Period by (b) an amount equal to 1
minus the Eurodollar Reserve Rate; provided, however, that if at any time
during such Eurodollar Interest Period the Eurodollar Reserve Rate applicable
to any outstanding Eurodollar Pricing Option changes, the Eurodollar Rate for
such Eurodollar Interest Period shall automatically be adjusted to reflect such
change, effective as of the date of such change to the extent required by the
Legal Requirement implementing the change in the Eurodollar Reserve Rate.
1.66. "Eurodollar Reserve Rate" means the stated maximum rate (expressed
as a decimal) of all reserves (including any basic, supplemental, marginal or
emergency reserve or any reserve asset), if any, as from time to time in
effect, required by any Legal Requirement to be maintained by any Lender
against (a) "Eurocurrency liabilities" as specified in Regulation D of the
Board of Governors of the Federal Reserve System applicable to Eurodollar
Pricing Options, (b) any other category of liabilities that includes Eurodollar
deposits by reference to which the interest rate on portions of the Loan
subject to Eurodollar Pricing Options is determined, (c) the principal amount
of or interest on any portion of the Loan subject to a Eurodollar Pricing
Option or (d) any other category of extensions of credit, or other assets, that
includes loans subject to a Eurodollar Pricing Option by a non-United States
office of any of the Lenders to United States residents.
1.67. "Event of Default" is defined in Section 8.1.
1.68. "Exchange Act" means the federal Securities Exchange Act of 1934.
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1.69. "Federal Funds Rate" means, for any day, the rate equal to the
weighted average (rounded to the nearest 1/8%) of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, (a) as such weighted average is published for such
day (or, if such day is not a Banking Day, for the immediately preceding
Banking Day) by the Federal Reserve Bank of New York or (b) if such rate is not
so published for such Banking Day, as determined by the Agent using any
reasonable means of determination. Each determination by the Agent of the
Federal Funds Rate shall, in the absence of manifest error, be conclusive.
1.70. "Final Maturity Date" means June 28, 2002.
1.71. "Financial Officer" of the Company (or other specified Person) means
its chief executive officer, chief financial officer, chief operating officer,
chairman, president, controller, treasurer, assistant treasurer or any of its
vice presidents whose primary responsibility is for its financial affairs, all
of whose incumbency and signatures have been certified to the Agent by the
secretary or other appropriate attesting officer of the Company (or such
specified Person).
1.72. "Financing Debt" means each of the items described in clauses (a)
through (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items; provided, however, that in no event
will the Junior Subordinated Notes constitute Financing Debt.
1.73. "Foreign Subsidiary" means each Subsidiary that is organized under
the laws of, and conducting its business primarily in a jurisdiction outside
of, the United States of America.
1.74. "Foreign Trade Regulations" means (a) any act that prohibits or
restricts, or empowers the President or any executive agency of the United
States of America to prohibit or restrict, exports to or financial transactions
with any foreign country or foreign national, (b) the regulations with respect
to certain prohibited foreign trade transactions set forth at 22 C.F.R. Parts
120-130 and 31 C.F.R. Part 500 and (c) any order, regulation, ruling,
interpretation, direction, instruction or notice relating to any of the
foregoing.
1.75. "Funding Liability" means (a) any Eurodollar deposit which was used
(or deemed by Section 3.2.6 to have been used) to fund any portion of the Loan
subject to a Eurodollar Pricing Option, and (b) any portion of the Loan subject
to a Eurodollar Pricing Option funded (or deemed by Section 3.2.6 to have been
funded) with the proceeds of any such Eurodollar deposit.
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1.76. "GAAP" means generally accepted accounting principles as from time
to time in effect, including the statements and interpretations of the United
States Financial Accounting Standards Board; provided, however, that for
purposes of compliance with Section 6 (other than Section 6.4) and the related
definitions, "GAAP" means such principles as in effect on December 31, 1996 as
applied by the Company in the preparation of the annual financial statements
referred to in Section 7.2.1(a), and consistently followed, without giving
effect to any subsequent changes thereto.
1.77. "Guarantee" means, with respect to the Company (or other specified
Person):
(a) any guarantee by the Company (or such specified Person) of the
payment or performance of, or any contingent obligation by the Company
(or such specified Person) in respect of, any Indebtedness or other
obligation of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or
such specified Person), including any binding "comfort letter" or "keep
well agreement" written by the Company (or such specified Person), to a
creditor or prospective creditor of such primary obligor, to (i) pay the
Indebtedness of such primary obligor, (ii) purchase an obligation owed by
such primary obligor, (iii) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (iv) maintain the
capital, working capital, solvency or general financial condition of such
primary obligor;
(c) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(d) any liability of the Company (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture;
(e) any liability of the Company (or such specified Person) with
respect to the tax liability of others as a member of a group (other than
a group consisting solely of the Company and its Subsidiaries) that is
consolidated for tax purposes; and
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(f) reimbursement obligations, whether contingent or matured, of the
Company (or such specified Person) with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and
Interest Rate Protection Agreements,
whether or not any of the foregoing are reflected on the balance sheet of the
Company (or such specified Person) or in a footnote thereto; provided, however,
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee and the
amount of Indebtedness resulting from such Guarantee shall be the maximum
amount that the guarantor may become obligated to pay in respect of the
obligations (whether or not such obligations are outstanding at the time of
computation) and, for purposes of covenant calculations, shall be without
duplication of guaranteed Indebtedness that is already included in such
calculations.
1.78. "Guarantee and Security Agreement" is defined in Section 5.1.4.
1.79. "Guarantor" means the Company, Banerjan and each Subsidiary which
subsequently becomes party to the Guarantee and Security Agreement or any other
Credit Document as a Guarantor.
1.80. "Hong Kong Collateral Debenture" means the Debenture dated as of
April 30, 1996, as from time to time in effect, from Banerjan to the Agent.
1.81. "Hong Kong Guarantee" means the Guarantee Agreement dated as of
April 30, 1996, as from time to time in effect, from Banerjan to the Agent.
1.82. "Indebtedness" means all obligations, contingent or otherwise, which
in accordance with GAAP are required to be classified upon the face of the
balance sheet of the Company (or other specified Person) as liabilities, but in
any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or securities, including
related noncompetition and consulting obligations, payable in cash (other
than ordinary trade accounts payable in the ordinary course of business);
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(e) mandatory redemption or dividend rights on capital stock (or
other equity) required to be paid in cash;
(f) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Interest Rate Protection Agreements (without
duplication of other Indebtedness supported or guaranteed thereby);
(g) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(h) all Guarantees in respect of Indebtedness of others.
1.83. "Indemnified Party" is defined in Section 9.2.
1.84. "Initial Closing Date" means June 17, 1997 or such other date prior
to June 30, 1997 agreed to by the Company and the Agent as the first Closing
Date hereunder.
1.85. "Interest Rate Protection Agreement" means any interest rate swap,
interest rate cap, interest rate hedge or other contractual arrangement that
converts variable interest rates into fixed interest rates, fixed interest
rates into variable interest rates or other similar arrangements.
1.86. "Investment" means, with respect to the Company (or other specified
Person):
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued to the
Company (or other specified Person) by any other Person;
(b) any loan, advance or extension of credit by the Company (or
other specified Person) to, or contribution to the capital of, any other
Person;
(c) any Guarantee by the Company (or other specified Person) of the
Indebtedness of any other Person;
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(d) any acquisition by the Company (or other specified Person) of
all, or any division or similar operating unit of, the business of any
other Person or the assets comprising such business,
division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall
be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (i) current trade and customer accounts
receivable for property leased, goods furnished or services rendered in the
ordinary course of business and payable in accordance with customary trade
terms, (ii) deposits, advances or prepayments to suppliers or licensors for
property leased or licensed, goods furnished or services rendered in the
ordinary course of business, (iii) advances to employees for travel,
entertainment and relocation expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Company (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus any
returns of capital in cash on such Investment (determined in accordance
with GAAP without regard to amounts realized as income on such
Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall include the amount of any Financing Debt
assumed in connection with such purchase or secured by any asset acquired
in such purchase (whether or not any Financing Debt is assumed) or for
which any Person that becomes a Subsidiary is liable on the date on which
the securities of such Person are acquired, and shall be reduced to the
extent of any reduction in such Financing Debt; and
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
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1.87. "Legal Requirement" means any present or future requirement imposed
upon any of the Lenders or the Company and its Subsidiaries by any law,
statute, rule, regulation, directive, order, decree, guideline (or any
interpretation thereof by courts or of administrative bodies) of the United
States of America, or any jurisdiction in which any Eurodollar Office is
located or any state or political subdivision of any of the foregoing, or by
any board, governmental or administrative agency, central bank or monetary
authority of the United States of America, any jurisdiction in which any
Eurodollar Office is located, or any political subdivision of any of the
foregoing. Any such requirement imposed on any of the Lenders not having the
force of law shall be deemed to be a Legal Requirement for purposes of Section
3 if such Lender reasonably believes that compliance therewith is in the best
interest of such Lender.
1.88. "Lender" means each of the Persons listed as lenders on the
signature page hereto, including BankBoston in its capacity as a Lender and
such other Persons who may from time to time own a Percentage Interest in the
Credit Obligations, but the term "Lender" shall not include any Credit
Participant.
1.89. "Lending Officer" means such individuals whom the Agent may
designate by notice to the Company from time to time as an officer who may
receive telephone requests for borrowings under Section 2.1.3.
1.90. "Letter of Credit" is defined in Section 2.3.1.
1.91. "Letter of Credit Exposure" means, at any date, the sum of (a) the
aggregate face amount of all drafts that may then or thereafter be presented by
beneficiaries under all Letters of Credit then outstanding, (b) the aggregate
face amount of all drafts that the Letter of Credit Issuer has previously
accepted under Letters of Credit but has not paid.
1.92. "Letter of Credit Issuer" means, for any Letter of Credit,
BankBoston or any other Lender designated by the Company to issue such Letter
of Credit in accordance with Section 2.3.
1.93. "Lien" means, with respect to the Company (or any other specified
Person):
(a) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Company (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom;
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(b) the acquisition of, or the agreement to acquire, any property or
asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
(c) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Company (or such
specified Person), with or without recourse; and
(d) the transfer of any tangible property or assets for the purpose
of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the
Company (or such specified Person).
1.94. "Loan" means, collectively, the Revolving Loan and the Term Loan.
1.95. "Management Group" means each of the Sellers and those members of
management of the Company or any of its Subsidiaries party to the Stockholders
Agreement dated April 30, 1996 among the Company and the stockholders of the
Company as of the Initial Closing Date, as from time to time in effect.
1.96. "Margin Stock" means "margin stock" within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
1.97. "Material Adverse Change" means, since any specified date or from
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in (a) the business, assets, financial
condition or income of the Company and its Subsidiaries (on a Consolidated
basis) or (b) the rights and remedies of the Agent and the Lenders under the
Credit Documents.
1.98. "Material Agreements" is defined in Section 7.2.2.
1.99. "Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
1.100. "Moody's" means Xxxxx'x Investors Service, Inc.
1.101. "Multiemployer Plan" means any Plan that is a "multiemployer plan"
as defined in section 4001(a)(3) of ERISA.
1.102. "Net Asset Sale Proceeds" means the cash proceeds of the sale or
disposition of assets (including by way of merger) by the Company or any of its
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Subsidiaries net of (a) any Indebtedness permitted by Section 7.6.7
(Capitalized Leases and purchase money indebtedness) secured by assets being
sold in such transaction required to be paid from such proceeds, (b) taxes
that, as estimated by the Company in good faith, will be required to be paid by
the Company or any of its Subsidiaries in cash as a result of, and within 15
months after such sale or disposition, (c) reasonable reserves for liabilities
resulting from the sale of assets and (d) all reasonable fees, commissions and
expenses of the Company or any of its Subsidiaries payable in connection with
such sale or disposition; provided, however, that "Net Asset Sale Proceeds"
shall not include cash proceeds of (i) asset sales permitted by clauses (a) and
(b) of Section 6.11.1, (ii) asset sales permitted by clause (c) of Section
6.11.1, the proceeds of which are not expended within 30 days to make Capital
Expenditures permitted by Section 6.5.5, (iii) mergers permitted by Section
6.11.2 or (iv) sales of accounts receivable permitted by Section 6.11.6.
1.103."Net Equity Proceeds" means the cash proceeds received by the
Company or any of its Subsidiaries in connection with any Equity Transaction
(net of reasonable out-of-pocket fees and expenses).
1.104. "Nonfacility Letter of Credit Exposure" means, at any date, the sum
of (a) the aggregate face amount of all drafts that may then or thereafter be
presented by beneficiaries under all letters of credit permitted by Section
6.7.4 then outstanding, plus (b) the aggregate face amount of all drafts that
the issuers of such letters of credit have previously accepted under such
letters of credit but have not paid.
1.105. "Nonperforming Lender" is defined in Section 10.4.4.
1.106. "Notes" means, collectively, the Revolving Notes and the Term Loan
Notes.
1.107. "Obligor" means the Borrower, each Guarantor and each Person
guaranteeing or providing collateral for the Credit Obligations.
1.108. "Overdue Reimbursement Rate" means, at any date, the highest
Applicable Rate then in effect.
1.109. "Payment Date" means the last Banking Day of each March, June,
September and December occurring after the Initial Closing Date.
1.110. "PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
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1.111. "Percentage Interest" means (a) at all times when no Event of
Default under Section 8.1.1 and no Bankruptcy Default exists, the ratio that
the respective Commitments of the Lenders bear to the total Commitments of all
Lenders as from time to time in effect and reflected in the Register, and (b)
at all other times, the ratio that the respective amounts of the outstanding
Credit Obligations (including Letter of Credit Exposure) owing to the Lenders
in respect of extensions of credit under Section 2 bear to the total
outstanding Credit Obligations owing to all Lenders.
1.112. "Performing Lender" is defined in Section 10.4.4
1.113. "Person" means any present or future natural person or any
corporation, association partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
1.114. "PIK Interest" means any accrued interest payments on Financing
Debt that are postponed, evidenced by book-entry accrual or made through the
issuance of "payment-in-kind" notes or other securities, all in accordance with
the terms of such Financing Debt; provided, however, that in no event shall PIK
Interest include payments made with cash or Cash Equivalents.
1.115. "Plan" means, at any date, any pension benefit plan subject to
Title IV of ERISA maintained, or to which contributions have been made or are
required to be made, by any ERISA Group Person within six years prior to such
date.
1.116. "Public Offering" is defined in Section 5.1.6.
1.117. "Register" is defined in Section 11.1.3.
1.118. "Replacement Lender" is defined in Section 11.3.
1.119. "Required Lenders" means, with respect to any approval, consent,
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least a majority of the Percentage Interests; provided,
however, that with respect to any matters referred to in the proviso to Section
10.6, Required Lenders means such Lenders as own at least the respective
portions of the Percentage Interests required by Section 10.6.
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1.120. "Revolving Loan" is defined in Section 2.1.4.
1.121. "Revolving Notes" is defined in Section 2.1.4.
1.122. "S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill Corporation.
1.123. "Sellers" means Xxxx X. Xxxxx, Xxxxxx X. Xxxx, Xxxxx Xxxxx,
Xxxx-Xxxxx, Ltd.. Racing Champions Limited, Xxxxxxx Services, Inc. and Hosten
Investment Limited.
1.124. "Securities Act" means the federal Securities Act of 1933.
1.125. "Specified Event of Default" means, collectively, a Bankruptcy
Default, an Event of Default under Section 8.1.1 and an Event of Default
arising under Section 8.1.2 as a result of the failure by the Company or any of
its Subsidiaries to perform or observe any of the provisions of Sections 6.5
through 6.12.
1.126. "Subsidiary" means any Person of which the Company (or other
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own at least 50% of the outstanding capital stock (or
other shares of beneficial interest) entitled to vote generally, (b) hold at
least 50% of the partnership, joint venture or similar interests or (c) be a
managing general partner or managing joint venturer.
1.127. "Tax" means any present or future tax, levy, duty, impost,
deduction, withholding or other charges of whatever nature at any time required
by any Legal Requirement (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made to any Lender,
in each case on or with respect to its obligations hereunder, the Loan, any
payment in respect of the Credit Obligations or any Funding Liability not
included in the foregoing; provided, however, that the term "Tax" shall not
include taxes imposed upon or measured by the net income of such Lender (other
than withholding taxes that are not creditable for the jurisdiction imposing
such withholding taxes against taxes imposed upon or measured by the net income
of such Lender) or franchise taxes.
1.128. "Term Loan" is defined in Section 2.2.1.
1.129. "Term Loan Note" is defined in Section 2.2.2.
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1.130. "Tranche" means each of the Revolving Loan and the Term Loan,
considered as a separate credit facility.
1.131. "Uniform Customs and Practice" is defined in Section 2.3.7.
1.132. "United States Funds" means such coin or currency of the United
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.133. "Wholly Owned Subsidiary" means any Subsidiary of which all of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally (other than directors' qualifying shares and, in the case of
Foreign Subsidiaries, shares required by Legal Requirements to be held by
foreign nationals) is owned by the Company (or other specified Person)
directly, or indirectly through one or more Wholly Owned Subsidiaries.
1.134. "Xxxxxx Xxxxx Group" means (a) Xxxxxx Xxxxx & Partners, L.P.,
Nassau Capital Partners L.P., NAS Partners I L.L.C., Xxxxx Capital Partners II
Limited Partnership and BCP II, Affiliates Fund Limited Partnership, (b)
Affiliates of any of the Persons described in the foregoing clause (a) and (c)
members, managers and limited and general partners of the Persons described in
the foregoing clause (a) and investors in funds managed by Persons described in
the foregoing clause (b).
2. The Credits.
2.1. Revolving Credit.
2.1.1. Revolving Loan. Subject to all the terms and conditions of
this Agreement and so long as no Default exists, from time to time on and
after the Initial Closing Date and prior to the Final Maturity Date, the
Lenders will, severally in accordance with their respective Commitments
in the Revolving Loan, make loans to the Borrower in such amounts as may
be requested by the Borrower in accordance with Section 2.1.3. The sum
of the aggregate principal amount of loans made under this Section 2.1.1
at any one time outstanding plus the Letter of Credit Exposure shall in
no event exceed the lesser of (a) the Borrowing Base or (b) the Maximum
Amount of Revolving Credit. In no event will the principal amount of
loans at any one time outstanding made by any Lender pursuant to this
Section 2.1 exceed such Lender's Commitment with respect to the Revolving
Loan.
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2.1.2. Maximum Amount of Revolving Credit. The term "Maximum Amount
of Revolving Credit" means, on any date, the lesser of (a) (i) $5,000,000
minus (ii) to the extent not used to reduce the Term Loan in accordance
with Section 4.3, Net Asset Sale Proceeds described in Section 4.3.3 and
Net Equity Proceeds described in Section 4.3.4, minus (iii) to the extent
not used to reduce the Term Loan in accordance with Section 4.3.2, 50 %
of Consolidated Excess Cash Flow, or (b) the amount (in an integral
multiple of $100,000) to which the then applicable amount shall have been
irrevocably reduced from time to time by notice from the Borrower to the
Agent.
2.1.3. Borrowing Requests. The Borrower may from time to time
request a loan under Section 2.1.1 by providing to the Agent a notice
(which may be given by a telephone call received by a Lending Officer if
promptly confirmed in writing). Such notice must be not later than noon
(Boston time) on the first Banking Day (third Banking Day if any portion
of such loan will be subject to a Eurodollar Pricing Option on the
requested Closing Date) prior to the requested Closing Date for such
loan. The notice must specify (a) the amount of the requested loan
(which shall be not less than $100,000) and (b) the requested Closing
Date therefor (which shall be a Banking Day). Upon receipt of such
notice, the Agent will promptly inform each other Lender (by telephone or
otherwise). Each such loan will be made at the Boston Office by
depositing the amount thereof to the general account of the Borrower with
the Agent or as otherwise directed by the Borrower. In connection with
each such loan, the Borrower shall furnish to the Agent a certificate in
substantially the form of Exhibit 5.2.1.
2.1.4. Revolving Notes. The aggregate principal amount of the loans
outstanding from time to time under this Section 2.1 is referred to as
the "Revolving Loan". The Revolving Loan shall be deemed owed to each
Lender having a Commitment therein severally in accordance with such
Lender's Percentage Interest therein, and all payments thereon shall be
for the account of each Lender in accordance with its Percentage Interest
therein. The Borrower's obligations to pay each Lender's Percentage
Interest in the Revolving Loan shall be evidenced by a separate note of
the Borrower in substantially the form of Exhibit 2.1.4 (the "Revolving
Notes"), payable to each Lender in accordance with such Lender's
Percentage Interest in the Revolving Loan.
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2.2. Term Loan Credit.
2.2.1. Term Loan. Subject to all the terms and conditions of this
Agreement and so long as no Default exists, on the Initial Closing Date
the Lenders will, in accordance with their respective Commitments in the
Term Loan, severally lend $35,000,000 to the Borrower as a term loan.
The aggregate principal amount of the loans made pursuant to this Section
2.2.1 at any one time outstanding is referred to as the "Term Loan". In
connection with the Term Loan, the Borrower shall furnish to the Agent a
certificate in substantially the form of Exhibit 5.2.1.
2.2.2. Term Loan Notes. The Term Loan shall be made at the Boston
Office by depositing the amount of such loan to the general account of
the Borrower with the Agent against delivery to the Agent of the separate
term notes of the Borrower (the "Term Loan Notes") payable to the
respective Lenders. The Term Loan Note issued to each Lender shall be in
a principal amount equal to such Lender's Percentage Interest in the Term
Loan, and shall be in substantially the form of Exhibit 2.2.2.
2.3. Letters of Credit.
2.3.1. Issuance of Letters of Credit. Subject to all the terms and
conditions of this Agreement and so long as no Default exists, from time
to time on and after the Initial Closing Date and prior to the Final
Maturity Date, the Letter of Credit Issuer will issue for the account of
the Borrower one or more irrevocable documentary or standby letters of
credit (the "Letters of Credit"). Letter of Credit Exposure plus the
Revolving Loan shall in no event exceed the lesser of (a) the Borrowing
Base or (b) the Maximum Amount of Revolving Credit. Letter of Credit
Exposure shall not exceed $1,500,000 minus Nonfacility Letter of Credit
Exposure at any one time outstanding.
2.3.2. Requests for Letters of Credit. The Borrower may from time
to time request a Letter of Credit to be issued by providing to the
Letter of Credit Issuer (and the Agent if the Letter of Credit Issuer is
not the Agent) a notice which is actually received not less than three
Banking Days prior to the requested Closing Date for such Letter of
Credit specifying (a) the amount of the requested Letter of Credit, (b)
the beneficiary thereof, (c) the requested Closing Date and (d) the
principal terms of the text for such Letter of Credit. Each Letter of
Credit will be issued by forwarding it to the Borrower or to such other
Person as directed in writing by the Borrower. In connection with the
issuance of any Letter of Credit, the Borrower shall
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furnish to the Letter of Credit Issuer (and the Agent if the Letter of
Credit Issuer is not the Agent) a certificate in substantially the form
of Exhibit 5.2.1 and any customary application forms required by the
Letter of Credit Issuer, which forms shall be used to obtain the
information provided by the Borrower therein and which, in the case of
conflict with this Agreement, shall be subject to the provisions of this
Agreement.
2.3.3. Form and Expiration of Letters of Credit. Each Letter of
Credit issued under this Section 2.3 and each draft accepted or paid
under such a Letter of Credit shall be issued, accepted or paid, as the
case may be, by the Letter of Credit Issuer at its principal office. No
Letter of Credit shall provide for the payment of drafts drawn
thereunder, and no draft shall be payable, at a date which is later than
the earlier of (a) the date 12 months after the date of issuance or (b)
the Final Maturity Date. Each Letter of Credit and each draft accepted
under a Letter of Credit shall be in such form and minimum amount, and
shall contain such terms, as the Letter of Credit Issuer and the Borrower
may agree upon at the time such Letter of Credit is issued, including a
requirement of not less than three Banking Days after presentation of a
draft before payment must be made thereunder.
2.3.4. Lenders' Participation in Letters of Credit. Upon the
issuance of any Letter of Credit, a participation therein, in an amount
equal to each Lender's Percentage Interest in the Revolving Loan, shall
automatically be deemed granted by the Letter of Credit Issuer to each
such Lender on the date of such issuance and such Lenders shall
automatically be obligated, as set forth in Section 10.4, to reimburse
the Letter of Credit Issuer to the extent of their respective Percentage
Interests in the Revolving Loan for all obligations incurred by the
Letter of Credit Issuer to third parties in respect of such Letter of
Credit not reimbursed by the Borrower. The Letter of Credit Issuer will
send to each Lender (and the Agent if the Letter of Credit Issuer is not
the Agent) a confirmation regarding the participations in Letters of
Credit outstanding during such month.
2.3.5. Presentation. The Letter of Credit Issuer may accept or pay
any draft presented to it, regardless of when drawn and whether or not
negotiated, if such draft, the other required documents and any
transmittal advice are presented to the Letter of Credit Issuer and dated
on or before the expiration date of the Letter of Credit under which such
draft is drawn. Except insofar as instructions actually received may be
given by the Borrower in writing expressly to the contrary with regard
to, and prior to, the Letter of Credit Issuer's issuance of any Letter of
Credit for the account of the Borrower and such contrary instructions are
reflected in such Letter
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of Credit, the Letter of Credit Issuer may honor as complying with the
terms of the Letter of Credit and with this Agreement any drafts or other
documents otherwise in order signed or issued by an administrator,
executor, conservator, trustee in bankruptcy, debtor in possession,
assignee for benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of Credit to
draw or issue such drafts or other documents.
2.3.6. Payment of Drafts. At such time as a Letter of Credit
Issuer makes any payment on a draft presented or accepted under a Letter
of Credit, the Borrower will on demand pay to such Letter of Credit
Issuer in immediately available funds the amount of such payment. Unless
the Borrower shall otherwise pay to the Letter of Credit Issuer the
amount required by the foregoing sentence, such amount shall be
considered a loan under Section 2.1.1 and part of the Revolving Loan as
if the Borrower had paid in full the amount required with respect to the
Letter of Credit by borrowing such amount under Section 2.1.1.
2.3.7. Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber
of Commerce Publication No. 500, and any subsequent revisions thereof
approved by a Congress of the International Chamber of Commerce and
adhered to by the Letter of Credit Issuer (the "Uniform Customs and
Practice"), shall be binding on the Borrower and the Letter of Credit
Issuer except to the extent otherwise provided herein, in any Letter of
Credit or in any other Credit Document. Anything in the Uniform Customs
and Practice to the contrary notwithstanding:
(a) Neither the Borrower nor any beneficiary of any Letter of
Credit shall be deemed an agent of any Letter of Credit Issuer.
(b) With respect to each Letter of Credit, neither the Letter of
Credit Issuer nor its correspondents shall be responsible for or shall
have any duty to ascertain (unless the Letter of Credit Issuer or such
correspondent is grossly negligent or willful in failing so to
ascertain):
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency, accuracy, genuineness
or legal effect of any endorsements;
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(iii) delay in giving, or failure to give, notice of arrival,
notice of refusal of documents or of discrepancies in respect of
which any Letter of Credit Issuer refuses the documents or any
other notice, demand or protest;
(iv) the performance by any beneficiary under any Letter of
Credit of such beneficiary's obligations to the Borrower;
(v) inaccuracy in any notice received by the Letter of Credit
Issuer;
(vi) the validity, form, sufficiency, accuracy, genuineness
or legal effect of any instrument, draft, certificate or other
document required by such Letter of Credit to be presented before
payment of a draft if such instrument, draft, certificate or other
document appears on its face to comply with the requirements of
the Letter of Credit, or the office held by or the authority of
any Person signing any of the same; or
(vii) failure of any instrument to bear any reference or
adequate reference to such Letter of Credit, or failure of any
Person to note the amount of any instrument on the reverse of such
Letter of Credit or to surrender such Letter of Credit or to
forward documents in the manner required by such Letter of Credit.
(c) The occurrence of any of the events referred to in the Uniform
Customs and Practice or in the preceding clauses of this Section 2.3.7
shall not affect or prevent the vesting of any of the Letter of Credit
Issuer's rights or powers hereunder or the Borrower's obligation to make
reimbursement of amounts paid under any Letter of Credit or any draft
accepted thereunder.
(d) The Borrower will promptly examine (i) each Letter of Credit
(and any amendments thereof) sent to it by the letter of Credit Issuer
and (ii) all instruments and documents delivered to it from time to time
by the Letter of Credit Issuer. The Borrower will notify the Letter of
Credit Issuer of any claim of noncompliance by notice actually received
within three Banking Days after receipt by the Borrower of any of the
foregoing documents, the Borrower being conclusively deemed to have
waived any such claim against such Letter of Credit Issuer and its
correspondents unless such notice is given. The Letter of Credit Issuer
shall have no obligation or responsibility to send any such Letter of
Credit or any such instrument or document to the Borrower.
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(e) In the event of any conflict between the provisions of this
Agreement and the Uniform Customs and Practice, the provisions of this
Agreement shall govern.
2.3.8. Subrogation. Upon any payment by a Letter of Credit Issuer
under any Letter of Credit and until the reimbursement of such Letter of
Credit Issuer by the Borrower with respect to such payment, the Letter of
Credit Issuer shall be entitled to be subrogated to, and to acquire and
retain, the rights which the Person to whom such payment is made may have
against the Borrower, all for the benefit of the Lenders. The Borrower
will take such action as the Letter of Credit Issuer may reasonably
request, including requiring the beneficiary of any Letter of Credit to
execute such documents as the Letter of Credit Issuer may reasonably
request, to assure and confirm to the Letter of Credit Issuer such
subrogation and such rights, including the rights, if any, of the
beneficiary to whom such payment is made in accounts receivable,
inventory and other properties and assets of any Obligor.
2.3.9. Modification, Consent, etc. If the Borrower requests or
consents in writing to any modification or extension of any Letter of
Credit, or waives any failure of any draft, certificate or other document
to comply with the terms of such Letter of Credit, and if the Letter of
Credit Issuer consents thereto, the Letter of Credit Issuer shall be
entitled to rely on such request, consent or waiver. This Agreement
shall be binding upon the Borrower with respect to such Letter of Credit
as so modified or extended, and with respect to any action taken or
omitted by such Letter of Credit Issuer pursuant to any such request,
consent or waiver.
2.4. Application of Proceeds.
2.4.1. Revolving Loan. Subject to Section 2.4.4, the Borrower will
apply the proceeds of the Revolving Loan for working capital and other
lawful corporate purposes of the Company and its Subsidiaries.
2.4.2. Term Loan. The Borrower will apply the proceeds of the Term
Loan for lawful corporate purposes of the Company and its Subsidiaries.
2.4.3. Letters of Credit. Letters of Credit shall be issued only
for such lawful corporate purposes as the Borrower has requested in
writing
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and to which the Letter of Credit Issuer consents, which consent shall
not be unreasonably withheld.
2.4.4. Specifically Prohibited Applications. The Borrower will not,
directly or indirectly, apply any part of the proceeds of any extension
of credit made pursuant to the Credit Documents to purchase or to carry
Margin Stock in amounts that would result in a violation of Rules G, T, U
or X of the Board of Governors of the Federal Reserve System or to any
transaction prohibited by the Foreign Trade Regulations, by other Legal
Requirements applicable to the Lenders or by the Credit Documents.
2.5. Nature of Obligations of Lenders to Make Extensions of Credit. The
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail
to perform its obligations under this Agreement, the aggregate amount of
Commitments to make the extensions of credit under this Agreement shall be
reduced by the amount of unborrowed Commitment of the Lender so failing to
perform and the Percentage Interests shall be appropriately adjusted. Lenders
that have not failed to perform their obligations to make the extensions of
credit contemplated by Section 2 may, if any such Lender so desires, assume, in
such proportions as such Lenders may agree, the obligations of any Lender who
has so failed and the Percentage Interests shall be appropriately adjusted.
The provisions of this Section 2.5 shall not affect the rights of the Borrower
against any Lender failing to perform its obligations hereunder.
3. Interest; Eurodollar Pricing Options: Fees.
3.1. Interest. The Loan shall accrue and bear interest at a rate per
annum which shall at all times equal the Applicable Rate. Prior to any stated
or accelerated maturity of the Loan, the Borrower will, on each Payment Date,
pay the accrued and unpaid interest on the portion of the Loan which was not
subject to a Eurodollar Pricing Option. On the last day of each Eurodollar
Interest Period or on any earlier termination of any Eurodollar Pricing Option,
the Borrower will pay the accrued and unpaid interest on the portion of the
Loan which was subject o the Eurodollar Pricing Option which expired or
terminated on such date. In the case of any Eurodollar Interest Period longer
than three months, the Borrower will also pay the accrued and unpaid interest
on the portion of the Loan subject to the Eurodollar Pricing Option having such
Eurodollar Interest Period at three-month intervals, the first such payment to
be made on the last Banking Day of the three-month period which begins on the
first day of such Eurodollar Interest Period. On the stated or any accelerated
maturity of the Loan, the Borrower will pay all accrued and unpaid
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interest on the Loan, including any accrued and unpaid interest on any portion
of the Loan which is subject to a Eurodollar Pricing Option. Upon the
occurrence and during the continuance of an Event of Default, the Lenders may
require accrued interest to be payable at monthly intervals. All payments of
interest hereunder shall be made to the Agent for the account of each Lender in
accordance with such Lender's Percentage Interest.
3.2. Eurodollar Pricing Options.
3.2.1. Election of Eurodollar Pricing Options. Subject to all of
the terms and conditions hereof and so long as no Default exists, the
Borrower may from time to time, by irrevocable notice to the Agent
actually received not less than three Banking Days prior to the
commencement of the Eurodollar Interest Period selected in such notice,
elect to have such portion of the Loan as the Borrower may specify in
such notice accrue and bear interest during the Eurodollar Interest
Period so selected at the Applicable Rate computed on the basis of the
Eurodollar Rate. In the event the Borrower at any time fails to elect a
Eurodollar Pricing Option under this Section 3.2.1 for any portion of the
Loan, such portion of the Loan will accrue and bear interest at the
Applicable Rate based on the Base Rate. Simultaneous elections by the
Borrower for the same Eurodollar Interest Period of a portion of either
the Revolving Loan or the Term Loan or both of them on a combined basis
shall be deemed to be the election of a single Eurodollar Pricing Option.
No election of a Eurodollar Pricing Option shall become effective:
(a) if, prior to the commencement of any such Eurodollar Interest
Period, the Agent determines that (i) the electing or granting of the
Eurodollar Pricing Option in question would violate a Legal Requirement,
(ii) Eurodollar deposits in an amount comparable to the principal amount
of the Loan as to which such Eurodollar Pricing option has been elected
and which have a term corresponding to the proposed Eurodollar Interest
Period are not readily available in the inter-bank Eurodollar market, or
(iii) by reason of circumstances affecting the inter-bank Eurodollar
market, adequate and reasonable methods do not exist for ascertaining the
interest rate applicable to such deposits for the proposed Eurodollar
Interest Period; or
(b) if any Lender shall have advised the Agent by telephone or
otherwise at or prior to noon (Boston time) on the second Banking Day
prior to the commencement of such proposed Eurodollar Interest Period
(and shall have subsequently confirmed in writing) that, after reasonable
efforts to determine the availability of such Eurodollar deposits, such
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Lender reasonably anticipates that Eurodollar deposits in an amount equal
to the Percentage Interest of such Lender in the portion of the Loan as
to which such Eurodollar Pricing Option has been elected and which have a
term corresponding to the Eurodollar Interest Period in question will not
be offered in the Eurodollar market to such Lender at a rate of interest
that does not exceed the anticipated Eurodollar Basic Rate (unless the
foregoing results from a deterioration subsequent to the date hereof in
the creditworthiness of such Lender or a change in the availability of
Eurodollar markets to such Lender pursuant to legal or regulatory
restrictions).
3.2.2. Notice to Lenders and Borrower. The Agent will promptly
inform each Lender (by telephone or otherwise) of each notice received by
it from the Borrower pursuant to Section 3.2.1 and of the Eurodollar
Interest Period specified in such notice. Upon determination by the
Agent of the Eurodollar Rate for such Eurodollar Interest Period or in
the event such election shall not become effective, the Agent will
promptly notify the Borrower and each Lender (by telephone or otherwise)
of the Eurodollar Rate so determined or why such election did not become
effective, as the case may be.
3.2.3. Selection of Eurodollar Interest Periods. Eurodollar
Interest Periods shall be selected so that:
(a) the minimum portion of the Loan subject to any Eurodollar
Pricing Option shall be $5,000,000;
(b) no more than six Eurodollar Pricing Options shall be
outstanding at any one time;
(c) a portion of the Term Loan equal to or greater than the amount
of the next mandatory prepayment required by Section 4.2 shall not be
subject to a Eurodollar Pricing Option on the date such mandatory
prepayment is required to be made; and
(d) no Eurodollar Interest Period with respect to any part of the
Loan subject to a Eurodollar Pricing Option shall expire later than the
Final Maturity Date.
3.2.4. Additional Interest. If any portion of the Loan subject to a
Eurodollar Pricing Option is repaid, or any Eurodollar Pricing Option is
terminated for any reason (including acceleration of maturity), on a date
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which is prior to the last Banking Day of the Eurodollar Interest Period
applicable to such Eurodollar Pricing Option, the Borrower will pay to
the Agent for the account of each Lender in accordance with such Lender's
Percentage Interest, in addition to any amounts of interest otherwise
payable hereunder, an amount equal to the present value (calculated in
accordance with this Section 3.2.4) of interest for the unexpired portion
of such Eurodollar Interest Period on the portion of the Loan so repaid,
or as to which a Eurodollar Pricing Option was so terminated, at a per
annum rate equal to the excess, if any, of (a) the Eurodollar Basic Rate
applicable to such Eurodollar Pricing Option minus (b) the rate of
interest obtainable by the Agent upon the purchase of debt securities
customarily issued by the Treasury of the United States of America which
have a maturity date approximating the last Banking Day of such
Eurodollar Interest Period. The present value of such additional
interest shall be calculated by discounting the amount of such interest
for each day in the unexpired portion of such Eurodollar Interest Period
from such day to the date of such repayment or termination at a per annum
interest rate equal to the interest rate determined pursuant to clause
(b) of the preceding sentence, and by adding all such amounts for all
such days during such period. The determination by the Agent of such
amount of interest shall, in the absence of manifest error, be
conclusive. For purposes of this Section 3.2.4, if any portion of the
Loan which was to have been subject to a Eurodollar Pricing Option is not
outstanding on the first day of the Eurodollar Interest Period applicable
to such Eurodollar Pricing Option other than for reasons described in
Section 3.2.1, the Borrower shall be deemed to have terminated such
Eurodollar Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal Requirement
shall prevent any Lender from funding or maintaining through the purchase
of deposits in the interbank Eurodollar market any portion of the Loan
subject to a Eurodollar Pricing Option or otherwise from giving effect to
such Lender's obligations as contemplated by Section 3.2, (a) the Agent
may by notice to the Borrower terminate all of the affected Eurodollar
Pricing Options, (b) the portion of the Loan subject to such terminated
Eurodollar Pricing Options shall immediately bear interest thereafter at
the Applicable Rate computed on the basis of the Base Rate and (c) the
Borrower shall make any payment required by Section 3.2.4.
3.2.6. Funding Procedure. The Lenders may fund any portion of the
Loan subject to a Eurodollar Pricing Option out of any funds available to
the Lenders. Regardless of the source of the funds actually used by any
of the Lenders to fund any portion of the Loan subject to a Eurodollar
Pricing
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Option, however, all amounts payable hereunder, including the interest
rate applicable to any such portion of the Loan and the amounts payable
under Sections 3.2.4 and 3.5, shall be computed as if each Lender had
actually funded such Lender's Percentage Interest in such portion of the
Loan through the purchase of deposits in such amount of the type by which
the Eurodollar Basic Rate was determined with a maturity the same as the
applicable Eurodollar Interest Period relating thereto and through the
transfer of such deposits from an office of the Lender having the same
location as the applicable Eurodollar Office to one of such Lender's
offices in the United States of America.
3.3. Commitment Fees. In consideration of the Lenders' commitments
to make the extensions of credit provided for in Section 2.1, while such
commitments are outstanding, the Borrower will pay to the Agent for the
account of the Lenders in accordance with the Lenders' respective
Commitments in the Revolving Loan, on each Payment Date and on the Final
Maturity Date, an amount equal to accrued interest computed at the rate
of 0.50% per annum on the amount by which (a) the average daily Maximum
Amount of Revolving Credit during the three-month period or portion
thereof ending on such Payment Date exceeded (b) the sum of (i) the
average daily Revolving Loan during such period or portion thereof plus
(ii) the average daily Letter of Credit Exposure during such period or
portion thereof.
3.4. Letter of Credit Fees. The Borrower will pay to the Agent for
the account of each of the Lenders, in accordance with the Lenders'
respective Percentage Interests, on each Payment Date, a Letter of Credit
fee equal to interest at a per annum rate equal to the Applicable Margin
then in effect for Eurodollar Pricing Options with respect to the
Revolving Loan on the average daily Letter of Credit Exposure during the
three-month period or portion thereof ending on such Payment Date. The
Borrower will pay to the Letter of Credit Issuer customary service
charges and expenses for its services in connection with the Letters of
Credit at the times and in the amounts from time to time in effect in
accordance with its general rate structure, including reasonable fees and
expenses relating to issuance, amendment, negotiation, cancellation and
similar operations.
3.5. Changes in Circumstances; Yield Protection.
3.5.1. Reserve Requirements; Etc. If after the date hereof any
Legal Requirement shall (a) impose, modify, increase or deem applicable
any insurance assessment, reserve, special deposit or similar requirement
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against any Funding Liability or the Letters of Credit, (b) impose,
modify, increase or deem applicable any other requirement or condition
with respect to any Funding Liability or the Letters of Credit, or (c)
change the basis of taxation of Funding Liabilities or payments in
respect of any Letter of Credit (other than changes in the rate of taxes
measured by the overall net income of such Lender) and the effect of any
of the foregoing shall be to increase materially the cost to any Lender
of issuing, making, funding or maintaining its respective Percentage
Interest in any portion of the Loan subject to a Eurodollar Pricing
Option or any Letter of Credit, to reduce materially the amounts received
or receivable by such Lender under this Agreement or to require such
Lender to make any material payment or forego any material amounts
otherwise payable to such Lender under this Agreement (other than any Tax
or any reserves that are included in computing the Eurodollar Reserve
Rate), then such Lender may claim compensation from the Borrower under
Section 3.5.5.
3.5.2. Taxes. All payments of the Credit Obligations shall be made
without setoff or counterclaim and free and clear of any deductions,
including deductions for Taxes, unless the Borrower is required by law to
make such deductions. If after the date hereof (a) any Lender shall be
subject to any Tax with respect to any payment of the Credit Obligations
or its obligations hereunder or (b) the Borrower shall be required to
withhold or deduct any Tax on any payment on the Credit Obligations, then
such Lender may claim compensation from the Borrower under Section 3.5.5.
Whenever Taxes must be withheld by the Borrower with respect to any
payments of the Credit Obligations, the Borrower shall promptly furnish
to the Agent for the account of the applicable Lender official receipts
(to the extent that the relevant governmental authority delivers such
receipts) evidencing payment of any such Taxes so withheld. If the
Borrower fails to pay any such Taxes when due or fails to remit to the
Agent for the account of the applicable Lender the required receipts
evidencing payment of any such Taxes so withheld or deducted, the
Borrower shall indemnify the affected Lender for any incremental Taxes
and interest or penalties that may become payable by such Lender as a
result of any such failure. In the event any Lender receives a refund of
any Taxes for which it has received payment from the Borrower under this
Section 3.5.2, such Lender shall promptly pay the amount of such refund
to the Borrower, together with any interest thereon actually earned by
such Lender.
3.5.3. Capital Adequacy. If any Lender shall determine in good
faith that compliance by such Lender with any Legal Requirement regarding
capital adequacy of banks or bank holding companies has or
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would have the effect of reducing the rate of return on the capital of
such Lender and its Affiliates as a consequence of such Lender's
commitment to make the extensions of credit contemplated hereby, or such
Lender's maintenance of the extensions of credit contemplated hereby, to
a level below that which such Lender could have achieved but for such
compliance (taking into consideration the policies of such Lender and its
Affiliates with respect to capital adequacy immediately before such
compliance and assuming that the capital of such Lender and its
Affiliates was fully utilized prior to such compliance) by an amount
deemed by such Lender to be material, then such Lender may claim
compensation from the Borrower under Section 3.5.5.
3.5.4. Regulatory Changes. If any Lender shall determine that (a)
any change in any Legal Requirement (including any new Legal Requirement)
after the date hereof shall (i) reduce the amount of any sum received or
receivable by such Lender with respect to the Loan or the Letters of
Credit or the return to be earned by such Lender on the Loan or the
Letters of Credit, (ii) impose a cost on such Lender or any Affiliate of
such Lender that is attributable to the making or maintaining of, or such
Lender's commitment to make, its portion of the Loan or the Letters of
Credit, or (iii) require such Lender or any Affiliate of such Lender to
make any payment on, or calculated by reference to, the gross amount of
any amount received by such Lender under any Credit Document (other than
Taxes or income or franchise taxes), and (b) such reduction, increased
cost or payment shall not be fully compensated for by an adjustment in
the Applicable Rate or the Letter of Credit fees, then such Lender may
claim compensation from the Borrower under Section 3.5.5.
3.5.5. Compensation Claims. Within 30 days after the receipt by the
Borrower of a certificate from any Lender setting forth why it is
claiming compensation under this Section 3.5 and computations (in
reasonable detail) of the amount thereof, the Borrower shall pay to such
Lender such additional amounts as such Lender sets forth in such
certificate as sufficient fully to compensate it on account of the
foregoing provisions of this Section 3.5, together with interest on such
amount from the 30th day after receipt of such certificate until payment
in full thereof at the Overdue Reimbursement Rate. The determination by
such Lender of the amount to be paid to it and the basis for computation
thereof hereunder shall, in the absence of manifest error, be conclusive.
In determining such amount, such Lender may use any reasonable averaging
and attribution methods. The Borrower shall be entitled to replace any
such Lender in accordance with Section 11.3.
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3.5.6. Mitigation. Each Lender shall take such commercially
reasonable steps as it may determine are not disadvantageous to it,
including changing lending offices to the extent feasible, in order to
reduce amounts otherwise payable by the Borrower to such Lender pursuant
to Sections 3.2.4 and 3.5 or to make Eurodollar Pricing Options available
under Sections 3.2.1 and 3.2.5. In addition, the Borrower shall not be
responsible for costs (a) arising more than 90 days prior to receipt by
the Borrower of the certificate from the affected Lender pursuant to
Section 3.5 or (b) arising from the termination of Eurodollar Pricing
Options more than 90 days prior to the demand by the Agent for payment
under Section 3.2.4.
3.6. Computations of Interest and Fees. For purposes of this Agreement,
interest, commitment fees and Letter of Credit fees (and any other amount
expressed as interest or such fees) shall be computed on the basis of a 360-day
year for actual days elapsed. If any payment required by this Agreement
becomes due on any day that is not a Banking Day, such payment shall, except as
otherwise provided in the Eurodollar Interest Period, be made on the next
succeeding Banking Day. If the due date for any payment of principal is
extended as a result of the immediately preceding sentence, interest shall be
payable for the time during which payment is extended at the Applicable Rate.
4. Payment.
4.1. Payment at Maturity. On the Final Maturity Date or any accelerated
maturity of the Loan, the Borrower will pay to the Agent for the account of the
Lenders an amount equal to the Loan and Letter of Credit Exposure, together
with all accrued and unpaid interest and fees. In respect thereto and all
other Credit Obligations then outstanding.
4.2. Scheduled Required Prepayments. On the last Banking Day of June 1997
and on each Payment Date thereafter and on the Final Maturity Date, the
Borrower will pay to the Agent or the account of the Lenders as a prepayment of
the Term Loan the lesser of (a) the amount set forth in the table below for
such date or (b) the amount of the Term Loan then outstanding.
Payment Date Amount
---------------------------- ----------
June 1997 through March 1998 $950,000
June 1998 through March 1999 $1,000,000
June 1999 through March 2000 $1,125,000
June 2000 through March 2001 $1,250,000
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June 2001 through Final Maturity Date $940,000
4.3. Contingent Required Prepayments.
4.3.1. Excess Credit Exposure. If at any time the Revolving Loan
exceeds the limits set forth in Section 2.1, the Borrower shall within
one Banking Day pay the amount of such excess to the Agent for the
account of the Lenders. If at any time the Letter of Credit Exposure
exceeds the limits set forth in Section 2.5, the Borrower shall within
one Banking Day pay the amount of such excess to the Agent for the
account of the Lenders to be applied as provided in Section 4.5.
4.3.2. Excess Cash Flow. Within three Banking Days after the date
annual financial statements have been (or are required to have been)
furnished by the Company to the Lenders in accordance with Section 6.4.1,
the Borrower shall prepay the Loan to be applied as provided in Section
4.6.2 in an amount equal to the lesser of (a) 50% of Consolidated Excess
Cash Flow for its most recently completed fiscal year or (b) the amount
of the Loan.
4.3.3. Net Asset Sale Proceeds. Within three Banking Days after the
receipt by the Company and its Subsidiaries of Net Asset Sale Proceeds,
the Borrower shall pay to the Agent as a prepayment of the Loan to be
applied as provided in Section 4.6.2 the lesser of (a) the amount of such
Net Asset Sale Proceeds or (b) the amount of the Loan.
4.3.4. Net Equity Proceeds. Within three Banking Days after the
receipt by the Company or any of its Subsidiaries of Net Equity Proceeds,
the Borrower shall pay to the Agent as a prepayment of the Loan to be
applied as provided in Section 4.6.2 the lesser of (a) the amount of such
Net Equity Proceeds or (b) the amount of the Loan.
4.4. Voluntary Prepayments. In addition to the prepayments required
by Sections 4.2 and 4.3, the Borrower may from time to time prepay all or
any portion of the Loan (in a minimum amount of $100,000 and an integral
multiple of $100,000, or such lesser amount as is then Outstanding)
without premium or penalty of any type (except as provided in Section
3.2.4 with respect to the early termination of Eurodollar Pricing
Options). The Borrower shall give the Agent at least one Banking Day
prior notice of its intention to prepay, specifying the date of payment
the total amount and portion of the Loan to be paid on such date and the
amount of interest to be paid with such prepayment.
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4.5. Letters of Credit. If on the Final Maturity Date or any
accelerated maturity of the Credit Obligations the Lenders shall be
obligated in respect of a Letter of Credit or a draft accepted under a
Letter of Credit, the Borrower will either:
(a) prepay such obligation by depositing with the Agent an
amount of cash, or
(b) deliver to the Agent a standby letter of credit
(designating the Agent as beneficiary and issued by a bank and on
terms reasonably acceptable to the Agent),
in each case in an amount equal to the portion of the then Letter of
Credit Exposure issued for the account of the Borrower. Any such cash so
deposited and the cash proceeds of any draw under any standby Letter of
Credit so furnished, including any interest thereon, shall be returned by
the Agent to the Borrower only when, and to the extent that, the amount
of such cash held by the Agent exceeds the Letter of Credit Exposure at
such time and no Default then exists; provided, however, that if an Event
of Default occurs and the Credit Obligations become or are declared
immediately due and payable, the Agent may apply such cash, including any
interest thereon, to the payment of any of the Credit Obligations as
provided in section 3.5.6 of the Guarantee and Security Agreement.
4.6. Reborrowing; Application of Payments, etc.
4.6.1. Reborrowing. The amounts of the Revolving Loan
prepaid pursuant to Section 4.4 may be reborrowed from time to
time prior to the Final Maturity Date in accordance with Section
2.1, subject to the limits set forth therein. No other portion of
the Loan prepaid hereunder may be reborrowed.
4.6.2. Order of Application. Prepayments of the Loan made
pursuant to Sections 4.3.2, 4.3.3 and 4.3.4 shall be applied as
follows: first to the Term Loan, then any balance to the Revolving
Loan. Contingent required prepayments of the Term Loan made
pursuant to Sections 4.3.2, 4.3.3 or 4.3.4 shall be applied to the
installments required to be made pursuant to Section 4.2 in the
inverse order thereof so that no partial prepayment pursuant to
such Sections shall reduce the next scheduled mandatory prepayment
under Section 4.2. Voluntary prepayments of the Term Loan made
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pursuant to Section 4.4 shall be applied to the installments
required to be made pursuant to Section 4.2 pro rata in the
chronological order thereof. Any prepayment of the Term Loan or
the Revolving Loan shall be applied first to the portion of the
Loan not then subject to Eurodollar Pricing Options, then the
balance of any such prepayment shall be applied to the portion of
the Loan then subject to Eurodollar Pricing Options, in the
chronological order of the respective maturities thereof (or as
the Borrower may otherwise specify in writing), together with any
payments required by Section 3.2.4.
4.6.3. Payment with Accrued Interest, Etc. Upon all
prepayments of the Term Loan, the Borrower shall pay to the Agent
the principal amount to be prepaid, together with unpaid interest
in respect thereof accrued to the date of prepayment. Notice of
prepayment having been given in accordance with Section 4.4, and
whether or not notice is given of prepayments pursuant to Sections
4.2 and 4.3, the amount specified to be prepaid shall become due
and payable on the date specified for prepayment.
4.6.4. Payments for Lenders. All payments of principal
hereunder shall be made to the Agent for the account of the
Lenders in accordance with the Lenders' respective Percentage
Interests in the portion of the Loan so paid.
5. Conditions to Extending Credit.
5.1. Conditions on Initial Closing Date. The obligations of the Lenders
to make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the conditions set
forth in this Section 5.1 as well as the further conditions in Section 5.2. If
the conditions set forth in this Section 5.1 are not met on or prior to the
Initial Closing Date, the Lenders shall have no obligation to make any
extensions of credit hereunder.
5.1.1. Notes. The Borrower shall have duly executed and delivered
to the Agent the appropriate Notes for each Lender.
5.1.2. Payment of Fees. The Borrower shall have paid to the Agent
the fees contemplated by the separate agreement between the Agent and the
Borrower dated on or prior to the date hereof.
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5.1.3. Legal Opinions. On the Initial Closing Date, the Lenders
shall have received from the following counsel their respective opinions
with respect to the transactions contemplated by the Credit Documents,
which opinions shall be in form and substance satisfactory to the
Required Lenders:
(a) Reinhart, Boerner, Van Deuren, Xxxxxx & Xxxxxxxxxx, S.C.,
special counsel to the Company.
(b) Ropes & Xxxx, special counsel for the Agent.
The Company authorizes and directs its counsel to furnish the
foregoing opinions.
5.1.4. Guarantee and Security Agreement; Hong Kong Documents. Each
of the Borrower and the Guarantors (other than Banerjan) shall have duly
authorized, executed and delivered to the Agent an amended and restated
Guarantee and Security Agreement in substantially the form of Exhibit
5.1.4 (the "Guarantee and Security Agreement"). Banerjan shall have duly
authorized, executed and delivered to the Agent amendments to the Hong
Kong Collateral Debenture and the Hong Kong Guarantee.
5.1.5. Perfection of Security. Each Obligor shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements notices, financing statements and other
instruments as the Agent may have requested in order to perfect the Liens
purported or required pursuant to the Credit Documents to be created in
the Credit Security.
5.1.6. Public Offering.
(a) The Company shall have received at least $60,000,000 in
aggregate net proceeds from the sale by it of not more than 45% of its
common stock in a public offering registered under the Securities Act
(the "Public Offering").
(b) The Company shall have furnished to the Agent a copy of each of
(i) the Registration Statement on Form S-1, together with all amendments
thereto, filed by the Company with the Securities and Exchange Commission
with respect to the Public Offering, (ii) the final Prospectus issued by
the Company with respect to the Public Offering and (iii) all other
material agreements to which the Company or any of its Subsidiaries is
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party, in each case in connection with the Public Offering, and all such
documents shall be in form and substance reasonably satisfactory to the
Agent.
(c) With a portion of the proceeds of the Public Offering, the
Company and the Borrower shall have paid in full all subordinated debt
described in Exhibit 7.3 and repaid at least $3,900,000 of the Loan under
this Agreement.
(d) Contemporaneously with the making by the Lenders of the first
extension of credit under Section 2, the Agent shall have received a
certificate of a Financial Officer to the effect that the Public Offering
has been consummated and to the effect that each of the conditions set
forth in this Section 5.1.6 has been satisfied.
5.1.7. Proper Proceedings. This Agreement, each other Credit
document and the transactions contemplated hereby and thereby shall have
been authorized by all necessary corporate or other proceedings. All
necessary consents, approvals and authorizations of any governmental or
administrative agency or any other Person of any of the transactions
contemplated hereby or by any other Credit Document shall have been
obtained and shall be in full force and effect.
5.1.8. General. All legal and corporate proceedings in connection
with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Agent and the Agent shall have
received copies of all documents, including certified copies of the
Charter and By-Laws of the Company and the other Obligors, records of
corporate proceedings, certificates as to signatures and incumbency of
officers and opinions of counsel, which the Agent may have reasonably
requested in connection therewith such documents where appropriate to be
certified by proper corporate or governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of the
Lenders to make any extension of credit pursuant to Sections 2.1, 2.2 and 2.3
shall be subject to the satisfaction, on or before the Closing Date for such
extension of credit, of the following conditions:
5.2.1. Officer's Certificate. The representations and warranties
contained in Section 7 shall be true and correct in all material respects
on and as of such Closing Date with the same force and effect as though
made on and as of such date (except as to any representation or warranty
which
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refers to a specific earlier date); no Default shall exist on such
Closing Date prior to or immediately after giving effect to the requested
extension of credit; no Material Adverse Change shall have occurred since
the Initial Closing Date; and the Borrower shall have furnished to the
Agent in connection with the requested extension of credit a certificate
to these effects, in substantially the form of Exhibit 5.2.1, signed by a
Financial Officer.
5.2.2. Legality, Etc. The making of the requested extension of
credit shall not (a) subject any Lender to any penalty or special tax
(other than a Tax for which the Borrower is required to reimburse the
Lenders under Section 3.5) or (b) be prohibited by any Legal Requirement.
6. General Covenants. Each of the Borrower and the Guarantors covenants that,
until all of the Credit Obligations shall have been paid in full and until the
Lenders' commitments to extend credit under this Agreement and any other Credit
Document shall have been irrevocably terminated, the Company and its
Subsidiaries will comply with the following provisions:
6.1. Taxes and Other Charges; Account Payable.
6.1.1. Taxes and Other Charges. Each of the Company and its
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments
and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits therefrom,
as well as all claims for labor, materials or supplies which if unpaid
might by law become a Lien upon any of its property; provided, however,
that any such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall at the time be contested in good faith
by appropriate proceedings and if such Person shall, in accordance with
GAAP, have set aside on its books adequate reserves with respect thereto.
6.1.2. Accounts Payable. Each of the Company and its Subsidiaries
shall promptly pay when due, or in conformity with customary trade terms,
all accounts payable incident to the operations of such Person not
referred to m Section 6.1.1; provided, however, that any such
Indebtedness need not be paid if the validity or amount thereof shall at
the time be contested in good faith and if such Person shall, in
accordance with GAAP, have set aside on its books adequate reserves with
respect thereto.
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6.2. Conduct of Business, etc.
6.2.1. Types of Business. The Company and its Subsidiaries shall
engage only in the business of (a) acquiring, developing, manufacturing,
distributing, licensing or marketing consumer collectible products and
(b) other activities related thereto.
6.2.2. Maintenance of Properties. Each of the Company and its
Subsidiaries:
(a) shall keep its properties in such repair, working order and
condition, and shall from time to time make such repairs, replacements,
additions and improvements thereto as are reasonably necessary for the
efficient operation of its businesses and shall comply at all times in
all material respects with all material franchises, licenses and leases
to which it is party so as to prevent any loss or forfeiture thereof or
thereunder, except where failure to comply has not resulted, and does not
create a material risk of resulting, in the aggregate in any Material
Adverse Change; and
(b) shall do all things necessary to preserve, renew and keep in
full force and effect and in good standing its legal existence and
authority necessary to continue its business; provided, however, that
this Section 6.2.2(b) shall not prevent the merger, consolidation or
liquidation of Subsidiaries permitted by Section 6.11.
6.2.3. Statutory Compliance. Each of the Company and its
Subsidiaries shall comply in all material respects with all valid and
applicable statutes, laws, ordinances, zoning and building codes and
other rules and regulations of the United States of America, of the
states and territories thereof and their counties, municipalities and
other subdivisions and of any foreign country or other jurisdictions
applicable to such Person, except where failure so to comply has not
resulted, and does not create a material risk of resulting, in the
aggregate in any Material Adverse Change.
6.2.4. Compliance with Material Agreements. Each of the Company and
its Subsidiaries shall comply in all material respects with the Material
Agreements (to the extent not in violation of the other provisions of
this Agreement or any other Credit Document). Without the prior written
consent of the Required Lenders, no Material Agreement shall be amended,
modified, waived or terminated in any manner that would result in a
violation of this Agreement or any other Credit Document.
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6.3. Insurance.
6.3.1. Property Insurance. Each of the Company and its Subsidiaries
shall keep its assets which are of an insurable character insured by
financially sound and reputable insurers against theft and fraud and
against loss or damage by fire, explosion and hazards insured against by
extended coverage to the extent, in amounts and with deductibles at least
as favorable as those generally maintained by businesses of similar size
engaged in similar activities.
6.3.2. Liability Insurance. Each of the Company and its
Subsidiaries shall maintain with financially sound and reputable insurers
insurance against liability for hazards, risks and liability to persons
and property, including product liability insurance, to the extent, in
amounts and with deductibles at least as favorable as those generally
maintained by businesses of similar size engaged in similar activities;
provided, however, that it may effect workers' compensation insurance or
similar coverage with respect to operations in any particular state or
other jurisdiction through an insurance fund operated by such state or
jurisdiction or by meeting the self-insurance requirements of such state
or jurisdiction.
6.3.3. Key Executive Life Insurance. The Company shall maintain
with financially sound and reputable insurers life insurance policies on
each of Xxxx X. Xxxxx, Xxxxxx X. Xxxx and Xxxxx Xxxxx in an amount of at
least $2,000,000, each in form reasonably satisfactory to the Agent.
6.4. Financial Statements and Reports. Each of the Company and its
Subsidiaries shall maintain a system of accounting in which correct entries
shall be made of all transactions in relation to their business and affairs in
accordance with generally accepted accounting practice. The fiscal year of the
Company and its Subsidiaries shall end on December 31 in each year and the
fiscal quarters of the Company and its Subsidiaries shall end on March 31, June
30, September 30 and December 31 in each year.
6.4.1. Annual Reports. The Company shall furnish to the Lenders as
soon as available, and in any event within 90 days after the end of each
fiscal year, the Consolidated and Consolidating balance sheets of the
Company and its Subsidiaries as at the end of such fiscal year, the
Consolidated and Consolidating statements of income and Consolidated
statements of changes in shareholders' equity and of cash flows of the
Company and its Subsidiaries for such fiscal year (all in reasonable
detail)
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and together with comparative figures for the immediately preceding
fiscal year, all accompanied by:
(a) Reports of independent certified public accountants of
recognized national standing reasonably satisfactory to the Required
Lenders containing no material qualifications to the effect that they
have audited the foregoing Consolidated financial statements in
accordance with generally accepted auditing standards and that such
consolidated financial statements present fairly, in all material
respects, the financial position of the Company and its Subsidiaries
covered thereby at the dates thereof and the results of their operations
for the periods covered thereby in conformity with GAAP.
(b) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Company and its Subsidiaries no facts have come to their attention that
cause them to believe that any Default exists under Sections 6.5 through
6.19 or, if such is not the case, specifying such Default and the nature
thereof. This statement is furnished by such accountants with the
understanding that the examination of such accountants cannot be relied
upon to give such accountants knowledge of any such Default except as it
relates to accounting or auditing matters within the scope of their
audit.
(c) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof, and what action the
Company has taken, is taking or proposes to take with respect thereto.
(d) Computations by the Company comparing the financial statements
referred to above with the most recent budget for such fiscal year
furnished to the Lenders in accordance with Section 6.4.4.
(e) Computations by the Company demonstrating, as of the end of
such fiscal year, compliance with the Computation Covenants, certified by
a Financial Officer.
(f) Calculations, as at the end of such fiscal year, of (i) the
Accumulated Benefit Obligations for each Plan covered by Title IV of
ERISA (other than Multiemployer Plans) and (ii) the fair market value of
the assets of such Plan allocable to such benefits.
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(g) Supplements to Exhibits 7.1, 7.3, 7.13.1 and 7.14 and exhibit
3.3 to the Guarantee and Security Agreement showing any changes in the
information set forth in such exhibits not previously furnished to the
Lenders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Obligors from those previously certified to
the Agent.
(h) In the event of a change in GAAP after the Initial Closing
Date, computations by the Company, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
6.4.2. Quarterly Reports. The Company shall furnish to the Lenders
as soon as available and, in any event, within 45 days after the end of
each of the first three fiscal quarters of the Company, the internally
prepared Consolidated and Consolidating balance sheets of the Company and
its Subsidiaries as of the end of such fiscal quarter, the Consolidated
and Consolidating statements of income and Consolidated statements of
changes in shareholders' equity and of cash flows of the Company and its
Subsidiaries for such fiscal quarter and for the portion of the fiscal
year then ended (all in reasonable detail) and together with comparative
figures for the same period in the preceding fiscal year, all accompanied
by:
(a) A certificate of the Company signed by a Financial Officer to
the effect that such financial statements have been prepared in
accordance with GAAP and present fairly, in all material respects, the
financial position of the Company and its Subsidiaries covered thereby at
the dates thereof and the results of their operations for the periods
covered thereby, subject only to normal year-end audit adjustments and
the addition of footnotes.
(b) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof and what action the
Company has taken, is taking or proposes to take with respect thereto.
(c) Computations by the Company comparing the financial statements
referred to above with the most recent budget for the period covered
thereby furnished to the Lenders in accordance with Section 6.4.4.
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(d) Computations by the Company demonstrating, as of the end of
such quarter, compliance with the Computation Covenants, certified by a
Financial Officer.
(e) Supplements to Exhibits 7.1, 7.3, 7.13.1 and 7.14 and exhibit
3.3 to the Guarantee and Security Agreement showing any changes in the
information set forth in such exhibits not previously furnished to the
Lenders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Obligors from those previously certified to
the Agent.
(f) In the event of a change in GAAP after the Initial Closing
Date, computations by the Company, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
6.4.3. Borrowing Base Reports. The Company shall furnish to the
Lenders, as soon as available and, in any event (a) within 10 days after
the end of each month, or (b) within 10 days following any request by the
Agent if more frequently than monthly, but not more frequently than once
per week, a certificate of a Financial Officer supplying computations of
the Borrowing Base at the end of such month (or week, as the case may
be).
6.4.4. Other Reports. The Company shall promptly furnish to the
Lenders:
(a) As soon as prepared and in any event within 30 days after the
beginning of each fiscal year, an annual budget for such fiscal year of
the Company and its Subsidiaries.
(b) Any material updates of such budget delivered to the Company's
Board of Directors for their review.
(c) Any management letters furnished to the Company or any of its
Subsidiaries by the Company's auditors.
(d) All monthly financial statements furnished generally to the
shareholders of the Company.
(e) Such registration statements, proxy statements and reports,
including Forms S-l, X-0, X-0, X-0, 10-K, 10-Q and 8-K, as may be filed
by
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the Company or any of its Subsidiaries with the Securities and Exchange
Commission.
(f) Any 90-day letter or 30-day letter from the federal Internal
Revenue Service (or the equivalent notice received from state or other
taxing authorities) asserting tax deficiencies against the Company or any
of its Subsidiaries.
6.4.5. Notice of Litigation, Defaults, etc. Promptly after any
Financial Officer acquires knowledge thereof, the Company shall furnish
to the Lenders notice of any litigation or any administrative or
arbitration proceeding (a) which creates a material risk of resulting,
after giving effect to any applicable insurance, in the payment by the
Company and its Subsidiaries of more than $500,000 or (b) which results,
or creates a material risk of resulting, in a Material Adverse Change.
Promptly after any Financial Officer acquires knowledge thereof, the
Company shall notify the Lenders of the existence of any Default or
Material Adverse Change, specifying the nature thereof and what action
the Company or any Subsidiary has taken, is taking or proposes to take
with respect thereto.
6.4.6. ERISA Reports. The Company shall furnish to the Lenders as
soon as available the following items with respect to any Plan:
(a) any request for a waiver of the funding standards or an
extension of the amortization period,
(b) any reportable event (as defined in section 4043 of ERISA),
unless the notice requirement with respect thereto has been waived by
regulation,
(c) any notice received by any ERISA Group Person that the PBGC has
instituted or intends to institute proceedings to terminate any Plan, or
that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by its
administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw,
in whole or in part, from any Multiemployer Plan.
6.4.7. Other Information; Audit. From time to time at reasonable
intervals upon written request of any authorized officer of any Lender,
each
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of the Company and its Subsidiaries shall furnish to the Lenders such
other information (in a form substantially consistent with the
information historically prepared by the Company) regarding the business,
assets, financial condition or income of the Company and its Subsidiaries
as such officer may reasonably request, including copies of all tax
returns and material licenses, agreements, leases and instruments to
which any of the Company or its Subsidiaries is party. The Lenders'
authorized officers and representatives shall have the right during
normal business hours upon reasonable notice and at reasonable intervals
to examine the books and records of the Company and its Subsidiaries, to
make copies and notes therefrom for the purpose of ascertaining
compliance with or obtaining enforcement of this Agreement or any other
Credit Document. The Agent, upon reasonable advance notice, may
undertake to have the Company and its Subsidiaries reviewed by the
Agent's commercial financial examiners one time per year in the absence
of an Event of Default and upon its request upon the occurrence and
during the continuance of an Event of Default.
6.5. Certain Financial Tests.
6.5.1. Consolidated Total Debt to Consolidated EBITDA. Consolidated
Total Debt shall not on the last day of any fiscal quarter of the Company
exceed the percentage set forth in the table below of Consolidated EBITDA
for the then most recently completed period of four consecutive fiscal
quarters.
Period Ending Percentage
---------------------------------- ----------
January 1997 through June 1997 300%
July 1997 through December 1997 275%
January 1998 through December 1998 225%
January 1999 and thereafter 175%
6.5.2. Consolidated EBITDA to Consolidated Interest Expense. For
each period of four consecutive fiscal quarters, Consolidated EBITDA
shall equal or exceed 300% of Consolidated Interest Expense.
6.5.3. Consolidated Adjusted EBITDA to Consolidated Fixed Charges.
On the last day of each fiscal quarter, Consolidated Adjusted EBITDA for
the period of four consecutive fiscal quarters then ending shall equal or
exceed the percentage of Consolidated Fixed Charges for such period
specified in the table below:
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Period Ending Percentage
------------- ----------
Prior to January 1998 115%
January 1998 and thereafter 125%
6.5.4. Consolidated EBITDA. For each fiscal quarter of the Company,
Consolidated EBITDA for the period of four consecutive fiscal quarters
then ending shall equal or exceed the amount indicated in the table
below:
Fiscal Quarter Ending Amount
--------------------- -----------
March 31, 1997 $17,250,000
June 30, 1997 $17,500,000
September 30, 1997 $17,750,000
December 31, 1997 $19,500,000
March 31, 1998 $19,750,000
June 30, 1998 $20,000,000
September 30, 1998 $20,250,000
December 31, 1998 $21,000,000
March 31, 1999 $21,250,000
June 30, 1999 $21,500,000
September 30, 1999 $21,750,000
December 31, 1999 and thereafter $22,500,000
6.5.5. Capital Expenditures. The aggregate amount of Capital
Expenditures in any fiscal year of the Company shall not exceed the sum
of:
(a) property insurance proceeds received as the result of the
destruction of property, plant or equipment,
plus (b) to the extent not used to make Distributions permitted by
Section 6.10 or prepayments of the Loan required by Section 4.3,
Consolidated Excess Cash Flow for the most recently completed fiscal year
for which financial statements have been (or are required to have been)
furnished to the Lenders in accordance with Section 6.4.1,
plus (c) Designated Affiliate Equity Proceeds,
plus (d) the excess of the amount of Capital Expenditures permitted
to be made under this Section 6.5.5 during the most recently completed
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fiscal year over the amount of Capital Expenditures actually made during
such year,
plus (e) the amount indicated in the table below:
Fiscal Year Ending Amount
------------------ ----------
December 1997 $5,500,000
December 1998 $6,000,000
December 1999 $6,500,000
December 2000 and thereafter $7,000,000
6.6. Indebtedness. Neither the Company nor any of its Subsidiaries shall
create, incur, assume or otherwise become or remain liable with respect to any
Indebtedness, except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt, incurred in
the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the time be
required by Section 6.1, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a) which have
been in force for not more than 10 days past the applicable appeal period
or (b) in respect of which the Company or any Subsidiary shall at the
time in good faith be prosecuting an appeal or proceedings for review
and, in the case of each of clauses (a) and (b), the Company or such
Subsidiary shall have taken appropriate reserves therefor in accordance
with GAAP.
6.6.7. To the extent permitted by Section 6.8.9, Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that the aggregate principal
amount of all Indebtedness permitted by this Section 6.6.7 at any one
time outstanding shall not exceed $1,000,000.
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6.6.8. Indebtedness in respect of deferred taxes arising in the
ordinary course of business.
6.6.9. Indebtedness in respect of inter-company loans and advances
among the Company and its Subsidiaries which are not prohibited by
Section 6.9.
6.6.10. Unfunded pension liabilities and obligations with respect to
Plans so long as the Company is in compliance with Section 6.17.
6.6.11. Indebtedness outstanding on the date hereof and described in
Exhibit 7.3 and (except with respect to any subordinated debt, which
shall be terminated on the Initial Closing Date) all renewals and
extensions thereof not in excess of the amount thereof outstanding
immediately prior to such renewal or extension.
6.6.12. Guaranteed minimum payments under license agreements due
within 12 months.
6.6.13. Notes issued by the Company as payment for the redemption of
stock permitted by Section 6.10.7 in an aggregate amount not exceeding
the sum of $1,500,000 plus Designated Affiliate Equity Proceeds at any
one time outstanding, which notes shall be subordinated to the Credit
Obligations on terms satisfactory to the Required Lenders.
6.6.14. Indebtedness (other than Financing Debt) in addition to the
foregoing; provided, however, that the aggregate amount of all such
Indebtedness at any one time outstanding shall not exceed the sum of
$1,000,000 plus Designated Affiliate Equity Proceeds.
6.7. Guarantees; Letters of Credit. Neither the Company nor any of its
Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or matured, under
letters of credit or other financial guarantees by third parties, except the
following:
6.7.1. Letters of Credit and Guarantees of the Credit Obligations.
6.7.2. Guarantees by the Company, the Borrower or any Subsidiary of
Indebtedness and other obligations incurred by its Subsidiaries and
permitted by Section 6.6.
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6.7.3. Documentary letters of credit issued by financial
institutions reasonably acceptable to the Required Lenders in the event
the Agent and the other Lenders refuse to issue Letters of Credit
requested by the Borrower at commercially reasonable rates; provided,
however, that the sum of (a) Nonfacility Letter of Credit Exposure plus
Letter of Credit Exposure shall not exceed $1,500,000 at any one time
outstanding.
6.7.4. Contingent liabilities of the Borrower in respect of the
negotiation through BankBoston of irrevocable documentary letters of
credit issued to the Borrower in connection with the sale of products to
its customers F.O.B. Hong Kong in the ordinary course of business.
6.8. Liens. Neither the Company nor any of its Subsidiaries shall create
incur or enter into, or suffer to be created or incurred or to exist, any Lien
(or become contractually committed to do so), except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age
pensions or other social security, (b) in connection with casualty
insurance maintained in accordance with Section 6.3,(c) to secure the
performance of bids, tenders, contracts (other than contracts relating to
Financing Debt) or leases, (d) to secure statutory obligations or surety
or appeal bonds, (e) to secure indemnity, performance or other similar
bonds in the ordinary course of business or (f) in connection with
contested amounts to the extent that payment thereof shall not at that
time be required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent that
such judgments or awards are permitted by Section 6.6.6 but only to the
extent that such Liens are junior to the Liens on the Credit Security
granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and similar Liens,
in each case (a) in existence less than 180 days from the date of
creation thereof and the amount being secured thereby becoming due and
payable or
00
00
\
(x) being contested in good faith by the Company or any Subsidiary in
appropriate proceedings (so long as the Company or such Subsidiary shall,
in accordance with GAAP, have set aside on its books adequate reserves
with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning restrictions, (b)
easements, (c) restrictions of record on the use of real property, (d)
landlords' and lessors' Liens on rented premises and (e) restrictions on
transfers or assignment of leases, which in each case do not materially
impair the use thereof in the business of the Company or any Subsidiary.
6.8.7. Restrictions under federal and state securities laws on the
transfer of securities.
6.8.8 Restrictions under Foreign Trade Regulations on the transfer
or licensing of certain assets of the Company and its Subsidiaries.
6.8.9. Liens constituting (a) purchase money security interests
(including mortgages, conditional sales, Capitalized Leases and any other
title retention or deferred purchase devices) in real property, interests
in leases or tangible personal property (other than inventory) existing
or created on the date on which such property is acquired or within 180
days thereafter, and (b) the renewal, extension or refunding of any
security interest referred to in the foregoing clause (a) in an amount
not to exceed the amount thereof remaining unpaid immediately prior to
such renewal, extension or refunding; provided, however, that (i) each
such security interest shall attach solely to the particular item of
property so acquired, and the principal amount of Indebtedness (including
Indebtedness in respect of Capitalized Lease Obligations) secured thereby
shall not exceed the cost (including all such Indebtedness secured
thereby, whether or not assumed) of such item of property; and (ii) he
aggregate principal amount of all Indebtedness secured by Liens permitted
by this Section 6.8.9 shall not exceed the amount permitted by Section
6.6.7.
6.8.10. Lens as in effect on the date hereof described in Exhibit
7.3 and securing Indebtedness permitted by Section 6.6.11.
6.8.11. Licenses and sublicenses to other Persons to the extent
permitted by Section 6.11.
6.8.12. Setoff rights of depository banks.
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6.8.13. Security interests in shipping documents, invoices and
warehouse receipts delivered against payment under letters of credit
permitted by Section 6.7.4 to secure the reimbursement obligations of the
Company and its Subsidiaries with respect thereto.
6.8.14. The sale of defaulted accounts receivable pursuant to a
contingent put exercised by the Company and its Subsidiaries under a
non-notification arrangement with a financial institution providing
credit support for accounts receivable.
6.9. Investments and Acquisitions. Neither the Company nor any of its
Subsidiaries shall have outstanding, acquire or hold any Investment (including
any Investment consisting of the acquisition of any business) (or become
contractually committed to do so regardless of compliance with this Agreement),
except the following:
6.9.1. Cash Investments of the Company and its Subsidiaries in (a)
the Borrower or Wholly Owned Subsidiaries which are Guarantors as of the
date hereof and (b) Persons that have become Wholly Owned Subsidiaries
and Guarantors after that date hereof; provided, however, that no such
Investment shall involve the transfer by the Company of any material
assets other than cash.
6.9.2. Intercompany loans and advances among the Company and its
Wholly Owned Subsidiaries to the extent reasonably necessary for
Consolidated tax planning and working capital management; provided,
however, that loans and advances from a Foreign Subsidiary to the Company
or a Domestic Subsidiary must be subordinated to the Credit Obligations
pursuant to a subordination agreement in substantially the form of
Exhibit 6.9.2.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. Loans and advances in an aggregate amount not exceeding
$2,000,000 at any one time outstanding to manufacturers of the Borrower's
products, which loans and advances that exceed 270 days in duration
(including refinancings thereof by additional such loans and advances)
shall be evidenced by promissory notes and pledged to the Agent pursuant
to the Guarantee and Security Agreement or the Hong Kong Collateral
Debenture.
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6.9.6. So long as immediately before and after giving effect thereto
no Event of Default exists when a particular Investment is made,
Investments of the Company and its Wholly Owned Subsidiaries in Foreign
Wholly Owned Subsidiaries; provided, however, that (a) such Investments
shall not involve the transfer of substantial assets from the Company and
its Domestic Subsidiaries to its Foreign Subsidiaries, other than cash,
and (b) Investments of the Company and its Domestic Subsidiaries in
Foreign Subsidiaries made pursuant to this Section after the Initial
Closing Date shall be permitted only to the extent reasonably necessary
for working capital.
6.9.7. Loans by the Company to members of the Management Group and
other officers employees or directors of the Obligors to finance the
purchase of stock in the Company so long as (a) the aggregate principal
amount of such loans does not exceed $1,000,000 at any one time
outstanding and (b) such loans are evidenced by notes that are pledged to
the Agent in accordance with the Guarantee and Security Agreement.
6.9.8. Mergers permitted by Section 6.11.
6.9.9. Investments outstanding on the date hereof and described in
Exhibit 7.3.
6.9.10. So long as immediately after giving effect thereto no
Default exists, Investments made directly from the proceeds of Designated
Affiliate Equity Proceeds.
6.10. Distributions. Neither the Company nor any of its Subsidiaries
shall make any Distribution, except for the following:
6.10.1. Subsidiaries of the Company may make Distributions to the
Borrower or any Wholly Owned Subsidiary of the Company and the Company
may make Investments permitted by Sections 6.9.1 and 6.9.2.
6.10.2. So long as immediately before and after giving effect
thereto no Default exists, the Company may redeem stock owned by
employees, officers and directors of the Obligors in an aggregate amount
since the Initial Closing Date not exceeding the sum of (i) $500,000 in
cash in any fiscal year plus (ii) notes permitted by Section 6.6.14.
6.10.3. Distributions made directly from the proceeds of Designated
Affiliate Equity Proceeds.
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6.10.4. The Company may reimburse members of the Xxxxxx Xxxxx Group
for their out-of-pocket expenses in connection with the ongoing
management of the Company and its Subsidiaries.
6.10.5. Cash Distributions to the Company to pay its current
obligations in the ordinary course of business, including the payment of
amounts permitted by Section 6.9 and the other provisions
of this Section 6.10.
6.10.6. Repayment on the Initial Closing Date of subordinated debt
at face value described in Exhibit 7.3.
6.10.7. The Company may repurchase its shares of capital stock owned
by the Xxxxxx Xxxxx Group or the Management Group on the Initial Closing
Date as contemplated by the prospectus for the Public Offering.
6.11. Asset Dispositions and Mergers. Neither the Company nor any of
its Subsidiaries shall merge or enter into a consolidation or sell, lease,
sell and lease back, sublease or otherwise dispose of any of its assets
(or become contractually committed to do so), except the following:
6.11.1. The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory and Cash Equivalents in the ordinary
course of business, (b) tangible assets to be replaced in the ordinary
course of business within 12 months by other tangible assets of equal or
greater value and (c) tangible assets that are no longer used or useful
in the business of the Company or such Subsidiary, the fair market value
(or book value if greater) of which shall not exceed $500,000 in any
fiscal year.
6.11.2. Any Wholly Owned Subsidiary of the Company may merge or be
liquidated into the Company or any other Wholly Owned Subsidiary of the
Company so long as after giving effect to any such merger to which the
Borrower is a party the Borrower shall be the surviving or resulting
Person.
6.11.3. Investments permitted by Section 6.9.5.
6.11.4. So long as immediately before and after giving effect
thereto no Default exists, the Company and its Subsidiaries may sell
assets having a fair market value (or book value if greater) not
exceeding
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$1,000,000 in any fiscal year so long as the Net Asset Sale Proceeds
thereof are applied to repay the Loan as required by Section 4.3.3.
6.11.5. Licensing of products and intangible assets for fair value
in the ordinary course of business.
6.11.6. Sales of defaulted accounts receivable permitted by
Section 6.8.15.
6.12. Lease Obligations. Neither the Company nor any of its Subsidiaries
shall be or become obligated as lessee under any lease except (or become
contractually committed to do so), except the following:
6.12.1. Capitalized Leases permitted by Sections 6.6.7 and 6.8.9.
6.12.2. Leases other than Capitalized Leases; provided, however,
that the aggregate fixed rental obligations for any year (excluding
payments required to be made by the lessee in respect of taxes and
insurance whether or not denominated as rent) shall not exceed
$1,500,000.
6.13. Issuance of Stock by Subsidiaries: Subsidiary Distributions.
6.13.1. Issuance of Stock by Subsidiaries. No Subsidiary shall
issue or sell any shares of its capital stock or other evidence of
beneficial ownership to any Person other than (a) the Company or any
Wholly Owned Subsidiary of the Company, which shares shall have been
pledged to the Agent as part of the Credit Security to the extent
required by the Guarantee and Security Agreement and (b) directors of
Subsidiaries as qualifying shares to the extent required by Legal
Requirements and, in the case of Foreign Subsidiaries, shares required by
Legal Requirements to be held by foreign nationals.
6.13.2. No Restrictions on Subsidiary Distributions. Except for
this Agreement and the Credit Documents or to the extent required by law,
neither the Company nor any Subsidiary shall enter into or be bound by
any agreement (including covenants requiring the maintenance of specified
amounts of net worth or working capital) restricting the right of any
Subsidiary to make Distributions or extensions of credit to the Company
(directly or indirectly through another Subsidiary).
6.14. Voluntary Prepayments of Other Indebtedness. Except for the
repayment of subordinated debt described in Exhibit 7.3 on the Initial Closing
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Date, neither the Company nor any of its Subsidiaries shall make any voluntary
prepayment of principal of or interest on any Financing Debt (other than the
Credit Obligations) or make any voluntary redemptions or repurchases of
Financing Debt (other than the Credit Obligations), in each case except in
order to facilitate a refinancing thereof permitted by Section 6.6.
6.15. Derivative Contracts. Neither the Company nor any of its
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in
the ordinary course of business.
6.16. Negative Pledge Clauses. Neither the Company nor any of its
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter acquired, or
which requires the grant of any collateral for such obligation if collateral is
granted for another obligation, except the following:
6.16.1. This Agreement and the other Credit Documents.
6.16.2. Covenants in documents creating Liens permitted by
Section 6.8 prohibiting further Liens on the assets encumbered thereby.
6.17. ERISA., Etc. Each of the Company and its Subsidiaries shall comply,
and shall cause all ERISA Group Persons to comply, in all material respects,
with the provisions of ERISA and the Code applicable to each Plan. Each of the
Company and its Subsidiaries shall meet, and shall cause all ERISA Group
Persons to meet, all minimum funding requirements applicable to them with
respect to any Plan pursuant to section 302 of ERISA or section 412 of the
Code, without giving effect to any waivers of such requirements or extensions
of the related amortization periods which may be granted. At no time shall the
Accumulated Benefit Obligations under any Plan that is not a Multiemployer Plan
exceed the fair market value of the assets of such Plan allocable to such
benefits by more than $500,000. The Company and its Subsidiaries shall not
withdraw and shall cause all other ERISA Group Persons not to withdraw, in
whole or in part, from any Multiemployer Plan so as to give rise to withdrawal
liability exceeding $500,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care benefits,
whether or not provided under a Plan, calculated in a manner consistent with
Statement No. 106 of the Financial Accounting Standards Board, exceed $500,000.
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6.18 Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Company and its Subsidiaries) on a basis less
favorable to the Company and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
6.19. Restricted Operation of Company and Banerjan. The Company will
conduct no operations other than acquiring and owning the capital stock of the
Borrower and activities incidental thereto. The Company will own no material
assets other than the stock of the Borrower and cash expected to be spent
within 90 days in the ordinary course of business. Each of Banerjan and any
other Foreign Subsidiary will own no cash or Cash Equivalents other than
amounts expected to be spent within 90 days in the ordinary course of business.
7. Representations and Warranties. In order to induce the Lenders to extend
credit to the Company hereunder, each of the Company and such of its
Subsidiaries as are party hereto from time to time jointly and severally
represents and warrants as of the date hereof and each Closing Date as follows:
7.1. Organization and Business.
7.1.1. The Company. The Company is a duly organized and validly
existing corporation, in good standing under the laws of Delaware, with
all power and authority, corporate or otherwise, necessary to (a) enter
into and perform this Agreement and each other Credit Document to which
it is party, (b) grant the Agent for the benefit of the Lenders the
security interests in the Credit Security owned by it to secure the
Credit Obligations and (c) own its properties and carry on the business
now conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of the Company have been previously delivered to the
Agent and are correct and complete. Exhibit 7.1, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2, sets
forth, as of the later of the date hereof or the end of the most recent
fiscal quarter for which financial statements are required to be
furnished in accordance with such Sections, (i) the jurisdiction of
incorporation of the Company, (ii) the address of the Company's principal
executive office and chief place of business, (iii) each name, including
any trade name, under which the Company conducts its business and (iv)
the jurisdictions in which the Company keeps tangible personal property.
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7.1.2. Subsidiaries. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, with all power and authority,
corporate or otherwise, necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party, (b) incur
and guarantee the Credit Obligations, (c) grant the Agent for the benefit
of the Lenders the security interest in the Credit Security owned by such
Subsidiary to secure the Credit Obligations and (d) own its properties
and carry on the business now conducted or proposed to be conducted by
it. Certified copies of the Charter and By-laws of each Subsidiary of
the Company have been previously delivered to the Agent and are correct
and complete. Exhibit 7.1, as from time to time hereafter supplemented
in accordance with Sections 6.4.1 and 6.4.2, sets forth, as of the later
of the date hereof or the end of the most recent fiscal quarter for which
financial statements are required to be furnished in accordance with such
Sections, (i) the name and jurisdiction of organization of each
Subsidiary of the Company, (ii) the address of the chief executive office
and principal place of business of each such Subsidiary, (iii) each name
under which each such Subsidiary conducts its business, (iv) each
jurisdiction in which each such Subsidiary keeps tangible personal
property, and (v) the number of authorized and issued shares and
ownership of each such Subsidiary.
7.1.3. Qualification. Each of the Company and its Subsidiaries is
duly and legally qualified to do business as a foreign corporation or
other entity and is in good standing in each state or jurisdiction in
which such qualification is required and is duly authorized, qualified
and licensed under all laws, regulations, ordinances or orders of public
authorities, or otherwise, to carry on its business in the places and in
the manner in which it is conducted, except for failures to be so
qualified, authorized or licensed which would not in the aggregate
result, or create a material risk of resulting, in any Material Adverse
Change.
7.1.4. Capitalization. No options, warrants, conversion rights,
preemptive rights or other statutory or contractual rights to purchase
shares of capital stock or other securities of any Subsidiary now exist,
nor has any Subsidiary authorized any such right, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock or
other securities.
7.2. Financial Statements and Other Information: Material Agreements.
7.2.1. Financial Statements and Other Information. The Company has
previously furnished to the Lenders copies of the following:
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(a) The audited combined balance sheets of the Borrower and
Xxxx-Xxxxx, Ltd. as at December 31 in each of 1995 and 1994 and the
audited combined statements of income, of changes in shareholders' equity
and of cash flows of the Borrower and Xxxx-Xxxxx, Ltd. for each of the
three years in the period ended December 31, 1995.
(b) The audited combined balance sheets of Racing Champions
Limited, Xxxxxxx Services Inc. and Hosten Investment Limited as at March
31 in each of 1995 and 1994 and the audited combined statements of
income, of changes in shareholders' equity and of cash flows of Racing
Champions Limited, Xxxxxxx Services, Inc. and Hosten Investment Limited
for each of the three years in the period ended March 31, 1995 .
(c) The audited Consolidated and unaudited Consolidating balance
sheets of the Company and its Subsidiaries as at December 31, 1996 and
the audited Consolidated and unaudited Consolidating statements of income
and the audited Consolidated statements of changes in shareholders'
equity and of cash flows of the Company and its Subsidiaries for the year
then ended.
(d) The unaudited Consolidated and Consolidating balance sheets of
the Company and its Subsidiaries as at March 31, 1997 and the unaudited
Consolidated statements of income, of changes in shareholders' equity and
of cash flows of the Company and its Subsidiaries for the portion of the
fiscal year then ended.
(e) The three-year financial and operational projections for the
Company and its Subsidiaries dated April 1997.
(f) Calculations demonstrating pro forma compliance with the
Computation Covenants designated by the Agent as of the end of the most
recent month preceding the date hereof.
(g) The Registration Statement on Form S-1, together with all
amendments thereto, filed by the Company with the Securities and Exchange
Commission in connection with the Public Offering.
The audited financial statements (including the notes thereto)
referred to in clauses (a), (b) and (c) above were prepared in accordance
with GAAP and fairly present in all material respects the financial
position of the Persons covered thereby at the respective dates thereof
and the
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results of their operations for the periods covered thereby. The
unaudited Consolidating financial statements referred to in clause (c)
above and the unaudited Consolidated and Consolidating financial
statements referred to in clause (d) above were prepared in accordance
with GAAP and fairly present in all material respects the financial
position of the Company and its Subsidiaries at the respective dates
thereof and the results of their operations for the periods covered
thereby, subject to normal yearend audit adjustment and the addition of
footnotes in the case of interim financial statements. Neither the
Company nor any of its Subsidiaries has any known contingent liability
material to the Company and its Subsidiaries on a Consolidated basis
which is not reflected in the balance sheets referred to in clauses (a),
(b), (c) or (d) above (or delivered pursuant to Sections 6.4.1 or 6.4.2)
or in the notes thereto.
In the Company's judgment, the financial and operational projections
referred to in clause (e) above constitute a reasonable basis as of the
Initial Closing Date for the assessment of the future performance of the
Company and its Subsidiaries during the periods indicated therein, it
being understood that any projected financial information represents an
estimate, based on various assumptions, of future results of operations
which may or may not in fact occur.
The registration statement described in clause (g) above does not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statement contained therein
not misleading in light of the circumstances under which they were made.
7.2.2 Material Agreements. The Company has previously furnished to
the Lenders correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements, each as in effect on
the date hereof, listed in Exhibit 7.2.2 (the "Material Agreements").
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth (a) the amounts (as of the dates indicated in
Exhibit 7.3, as so supplemented) of all Financing Debt of the Company and its
Subsidiaries exceeding $100,000 and all agreements which relate to such
Financing Debt, (b) all Liens and Guarantees with respect to such Financing
Debt, (c) all agreements which directly or indirectly require the Company or
any Subsidiary to make any Investment exceeding $100,000, (d) material license
agreements with respect to the products of the Company and its Subsidiaries,
including the parties thereto and the expiration dates thereof and (e) all
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trademarks, trade names, service marks, service names and patents registered
with the federal Patent and Trademark Office (or with respect to which
applications for such registration have been filed). The Company has furnished
the Lenders with correct and complete copies of any agreements and information
described in clauses (a), (b), (c), (d) and (e) above requested by the Required
Lenders.
7.4. Changes in Condition. Since December 31, 1996 no Material Adverse
Change has occurred. Between December 31, 1996 and the Initial Closing Date,
neither the Borrower nor either of Banerjan or the Company has entered into any
material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements,
including the Acquisition Agreement.
7.5. Title to Assets. The Company and its Subsidiaries have good and
marketable title to, or license or leasehold rights in, all assets necessary
for or used in the operations of their business as now conducted by them and
reflected in the most recent balance sheet referred to in Section 7.2.1 (or the
balance sheet most recently furnished to the Lenders pursuant to Sections 6.4.1
or 6.4.2), and to all assets acquired subsequent to the date of such balance
sheet, subject to no Liens except for Liens permitted by Section 6.8 and except
for assets disposed of as permitted by Section 6.11.
7.6. Operations in Conformity With Law, etc. The operations of the
Company and its subsidiaries as now conducted or proposed to be conducted are
not in violation of, nor is the Company or its Subsidiaries in default under,
any Legal Requirement presently in effect, except for such violations and
defaults as do not and will not, in the aggregate, result, or create a material
risk of resulting, in any Material Adverse Change. Since the Acquisition, the
Company has received no notice of any such violation or default and has no
knowledge of any basis on which the operations of the Company or its
Subsidiaries, as now conducted and as currently proposed to be conducted after
the date hereof, would be held so as to violate or to give rise to any such
violation or default.
7.7. Litigation. No litigation, at law or in equity, or any proceeding
before any court, board or other governmental or administrative agency or any
arbitrator is pending or, to the knowledge of the Company or any Guarantor,
threatened which is likely to result in any final judgment, order or liability
which, after giving effect to any applicable insurance, has resulted, or is
likely to result, in any Material Adverse Change or which seeks to enjoin the
consummation, or which questions the validity, of any of the transactions
contemplated by this Agreement or any other Credit Document. No judgment,
decree or order of any court, board or other governmental or administrative
agency or any arbitrator has
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been issued against or binds the Company or any of its Subsidiaries which has
resulted, or is likely to result, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Company and each other
Obligor has taken all corporate action required to execute, deliver and perform
this Agreement and each other Credit Document to which it is party. No consent
of stockholders of the Company is necessary in order to authorize the
execution, delivery or performance of this Agreement or any other Credit
Document to which the Company is party. Each of this Agreement and each other
Credit Document constitutes the legal, valid and binding obligation of each
Obligor party thereto and is enforceable against such Obligor in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties and general principles of equity.
7.9. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Credit Document, nor the making of any
borrowings hereunder, nor the guaranteeing of the Credit Obligations, nor the
securing of the Credit Obligations with the Credit Security, nor the
consummation of any transaction referred to in or contemplated by this
Agreement or any other Credit Document, nor the fulfillment of the terms hereof
or thereof or of any other agreement, instrument, deed or lease contemplated by
this Agreement or any other Credit Document, has constituted or resulted in or
will constitute or result in:
(a) any breach or termination of the provisions of any agreement,
instrument, deed or lease to which the Company, any of its Subsidiaries
or any other Obligor is a party or by which it is bound, or of the
Charter or By-laws of the Company, any of its subsidiaries or any other
Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company, any of
its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Credit Security which secure the Credit
Obligations) upon any of the assets of the Company, any of its
Subsidiaries or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation of
the Company, any of its Subsidiaries or any other Obligor under any
Charter, By-law, agreement, instrument, deed or lease.
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No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by the Company, any of its Subsidiaries or any
other Obligor in connection with the execution, delivery and performance of
this Agreement, the Notes or any other Credit Document, the transactions
contemplated hereby or thereby, the making of any borrowing hereunder, the
guaranteeing of the Credit Obligations or the securing of the Credit
Obligations with the Credit Security, other than filings necessary to perfect
the security interests in the Credit Security.
7.10. Defaults. Neither the Company nor any of its Subsidiaries is in
default under any provision of its Charter or By-laws. Neither the Company nor
any of its Subsidiaries is in default under any provision of any agreement,
instrument, deed or lease to which it is party or by which it or its property
is bound so as to result, or create a material risk of resulting, in any
Material Adverse Change. Neither the Company nor any of its Subsidiaries has
violated any law, judgment, decree or governmental order, rule or regulation,
in each case so as to result, or create a material risk of resulting, in any
Material Adverse Change.
7.11. Licenses, etc. The Company and its Subsidiaries have all patents,
patent applications patent licenses, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, licenses, franchises,
permits, authorizations and other rights as are reasonably necessary for the
conduct of the business of the Company and its Subsidiaries as now conducted by
them. All of the foregoing are in full force and effect in all material
respects, and each of the Company and its Subsidiaries is in substantial
compliance with the foregoing without any known conflict with the valid rights
of others which has resulted, or creates a material risk of resulting, in any
Material Adverse Change. No event has occurred which permits, or after notice
or lapse of time or both would permit, the revocation or termination of any
such license, franchise or other right or which affects the rights of any of
the Company and its Subsidiaries thereunder so as to result or to create a
material risk of resulting, in any Material Adverse Change. No litigation or
other proceeding or dispute exists with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or creates a material risk of resulting, in any Material Adverse
Change.
7.12. Tax Return. Each of the Company and its Subsidiaries has filed all
material tax and information returns which are required to be filed by it and
has paid, or made adequate provision for the payment of, all taxes which have
or may become due pursuant to such returns or to any assessment received by it,
other than taxes and assessments being contested by the Company and its
Subsidiaries in good faith by appropriate proceedings and for which adequate
reserves have been taken in accordance with GAAP. Neither the Company nor any
of its subsidiaries
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knows of any material additional assessments or any basis therefor. The
Company reasonably believes that the charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes or other
governmental charges are adequate.
7.13. Certain Business Representations.
7.13.1. Product Liability Matters. Exhibit 7.13.1, as from time to
time hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2,
sets forth a listing and description of all products liability claims,
actions, suits or proceedings pending or threatened in writing against
the Company or any Subsidiary.
7.13.2. Antitrust. Each of the Company and its Subsidiaries is in
compliance in all material respects with all federal and state antitrust
laws relating to its business and the geographic concentration of its
business.
7.13.3. Consumer Protection. Neither the Company nor any of its
Subsidiaries is in violation of any rule, regulation, order, or
interpretation of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending), with which the failure to
comply, in the aggregate, has resulted, or creates a material risk of
resulting, in a Material Adverse Change.
7.13.4. Future Expenditures. Neither the Company nor any of its
Subsidiaries anticipate that the future expenditures, if any, by the
Company and its Subsidiaries needed to meet the provisions of any
federal, state or foreign governmental statutes, orders, rules or
regulations will be so burdensome as to result, or create a material risk
of resulting, in any Material Adverse Change.
7.14. Transactions with Affiliates. Exhibit 7.14, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2, and Exhibit
7.2.2 set forth all agreements and transactions between the Company, the
Borrower and any other Obligor on the one hand, and any Affiliate of such
Person on the other hand, except for (a) employee bonuses, benefits and
salaries paid in the ordinary course of business and (b) agreements and
transactions involving payments, property and services with a value of less
than $50,000 in the aggregate for each Affiliate since the Acquisition. The
Company has furnished the Lenders with correct and complete copies of any
agreements described on Exhibit 7.14 requested by the Required Lenders.
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7.15. Pension Plans. Each Plan (other than a Multiemployer Plan) and, to
the knowledge of the Company and its Subsidiaries, each Multiemployer Plan is
in material compliance with the applicable provisions of ERISA and the Code.
Each Multiemployer Plan and each Plan that constitutes a "defined benefit plan"
(as defined in ERISA) are set forth in Exhibit 7.15. Each ERISA Group Person
has met all of the funding standards applicable to all Plans that are not
Multiemployer Plans, and no condition exists which would permit the institution
of proceedings to terminate any Plan that is not a Multiemployer Plan under
section 4042 of ERISA. To the best knowledge of the Company and each
Subsidiary, no Plan that is a Multiemployer Plan is currently insolvent or in
reorganization or has been terminated within the meaning of ERISA.
7.16. Foreign Trade Regulations; Government Regulation; Margin Stock.
7.16.1. Foreign Trade Regulations. Neither the execution and
delivery of this Agreement or any other Credit Document, nor the making
by the Company of any borrowings hereunder, nor the guaranteeing of the
Credit Obligations by any Guarantor, nor the securing of the Credit
Obligations with the Credit Security, has constituted or resulted in or
will constitute or result in the violation of any Foreign Trade
Regulation.
7.16.2. Government Regulation. Neither the Company nor any of its
Subsidiaries, nor any Person controlling the Company or any of its
Subsidiaries or under common control with the Company or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act,
the Interstate Commerce Act or any similar statute or regulation which
regulates the incurring by the Company or any of its Subsidiaries of
Financing Debt as contemplated by this Agreement and the other Credit
Documents.
7.16.3. Margin Stock. Neither the Company nor any of its
Subsidiaries owns any Margin Stock in excess of 25 % of the value of the
assets subject to any negative pledge arrangement.
7.17. Disclosure. Neither this Agreement nor any other Credit Document to
be furnished to the Lenders by or on behalf of the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby or by such
Credit Document contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. As of the Initial Closing Date, no fact is actually known to the
Company or any of its Subsidiaries which has resulted, or in the future (so far
as the Company or any of its
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Subsidiaries can reasonably foresee) will result, or creates a material risk of
resulting, in any Material Adverse Change, except to the extent that present or
future general economic conditions may result in a Material Adverse Change.
8. Defaults.
8.1. Events of Default. The following events are referred to as "Events
of Default":
8.1.1. Payment. The Borrower shall fail to make any payment in
respect of: (a) interest or any fee on or in respect of any of the Credit
Obligations owed by it as the same shall become due and payable, and such
failure shall continue for a period of five days, or (b) any Credit
Obligation with respect to payments made by any Letter of Credit Issuer
under any Letter of Credit or any draft drawn thereunder within five days
after demand therefor by such Letter of Credit Issuer or (c) principal of
any of the Credit Obligations owed by it as the same shall become due,
whether at maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Company or any of its Subsidiaries
shall fail to perform or observe any of the provisions of Section 6.4.6
or Sections 6.5 through 6.19 and, in the case of a failure to perform or
observe any of the provisions of Section 6.5.1 (Consolidated Total Debt
to Consolidated EBITDA), Designated Affiliate Equity Proceeds shall not
have been applied to reduce Consolidated Total Debt to a level that would
have avoided such failure as of the last day of the then most recently
completed fiscal quarter within 10 days after actual knowledge of such
failure by a Financial Officer.
8.1.3. Other Covenants. The Company, any of its Subsidiaries or any
other Obligor shall fail to perform or observe any other covenant,
agreement or provision to be performed or observed by it under this
Agreement or any other Credit Document, and such failure shall not be
rectified or cured to the written satisfaction of the Required Lenders
within 30 days after the earlier of (a) notice thereof by the Agent to
the Company or (b) a Financial Officer shall have actual knowledge
thereof.
8.1.4. Representations and Warranties. Any representation or
warranty of or with respect to the Company, any of its Subsidiaries or
any other Obligor made to the Lenders or the Agent in, pursuant to or in
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connection with this Agreement or any other Credit Document shall be
materially false on the date as of which it was made.
8.1.5. Cross Default, etc.
(a) The Company or any of its Subsidiaries shall fail to make any
payment when due (after giving effect to any applicable grace periods) in
respect of any Financing Debt (other than the Credit Obligations)
outstanding in an aggregate amount of principal (whether or not due) and
accrued interest exceeding $500,000;
(b) the Company or any of its Subsidiaries shall fail to perform or
observe the terms of any agreement or instrument relating to such
Financing Debt, and such failure shall continue, without having been duly
cured, waived or consented to, beyond the period of grace, if any,
specified in such agreement or instrument, and such failure shall permit
the acceleration of such Financing Debt;
(c) all or any part of such Financing Debt of the Company or any of
its Subsidiaries shall be accelerated or shall become due or payable
prior to its stated maturity (except with respect to voluntary
prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Company or any of its
Subsidiaries securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any such Financing Debt shall exercise any right
of rescission with respect to the issuance thereof or put or repurchase
rights against any Obligor with respect to such Financing Debt (other
than any such rights that may be satisfied with "payment in kind" notes
or other similar securities).
8.1.6. Ownership; Liquidation; Etc. Except as permitted by Section
6.11:
(a) the Company shall cease to own, directly or indirectly, all the
capital stock of its Subsidiaries other than director qualifying shares
required by Legal Requirements and, in the case of Foreign Subsidiaries,
shares required by Legal Requirements to be owned by foreign nationals;
or
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(b) any Person (other than members of the Xxxxxx Xxxxx Group and
the Management Group), together with "affiliates" and "associates" of
such Person within the meaning of Rule 12b-2 of the Exchange Act, or any
"group" including such Person under sections 13(d) and 14(d) of the
Exchange Act, shall acquire after the date hereof beneficial ownership
within the meaning of Rule 13d-3 of the Exchange Act of 50% or more of
the voting stock of the Company; or
(c) the Company or any of its Subsidiaries or any other Obligor
shall initiate any action to dissolve, liquidate or otherwise terminate
its existence.
8.1.7. Enforceability, etc. Any Credit Document shall cease for any
reason (other than the scheduled termination thereof in accordance with
its terms) to be enforceable in accordance with its terms or in full
force and effect; or any party to any Credit Document shall so assert in
a judicial or similar proceeding; or the security interests created by
this Agreement or any other Credit Documents shall cease to be
enforceable and of the same effect and priority purported to be created
hereby.
8.1.8. Judgments. A final judgment (a) which, with other
outstanding final judgments against the Company and its Subsidiaries,
exceeds an aggregate of $500,000 in excess of applicable insurance
coverage after the application of Designated Affiliate Equity Proceeds
made within 10 days after actual knowledge of such final judgment by a
Financial Officer shall be rendered against the Company or any of its
Subsidiaries, or (b) which grants injunctive relief that results, or
creates a material risk of resulting, in a Material Adverse Change and in
either case if, (i) within 60 days after entry thereof, such judgment
shall not have been discharged or execution thereof stayed pending appeal
or (ii) within 60 days after the expiration of any such stay, such
judgment shall not have been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section 4043 of
ERISA) shall have occurred that reasonably could be expected to result in
termination of a Plan or the appointment by the appropriate United States
District Court of a trustee to administer any Plan or the imposition of a
Lien covering an amount in excess of $500,000 in favor of a Plan; or any
ERISA Group Person shall fail to pay when due amounts aggregating in
excess of $500,000 which it shall have become liable to pay to the PBGC
or to a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan shall be filed under Title IV of
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ERISA by any ERISA Group Person or administrator; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Plan or a proceeding shall be
instituted by a fiduciary of any Plan against any ERISA Group Person to
enforce section 515 or 4219(c)(5) of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated.
8.1.10. Bankruptcy. etc. The Company, any of its Subsidiaries or
any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an involuntary
case under the Bankruptcy Code that shall not have been dismissed within
60 days after the date on which such petition is filed, or (ii) file an
answer or other pleading within such 60-day period admitting or failing
to deny the material allegations of such a petition or seeking,
consenting to or acquiescing in the relief therein provided, or (iii)
have entered against it an order for relief in any involuntary case
commenced under the Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other than
the Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any
modification or alteration of the rights of its creditors or (iii)
assuming custody of, or appointing a receiver or other custodian for, all
or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors or appoint, or consent to the appointment
of, or suffer to exist a receiver or other custodian for, all or a
substantial portion of its property.
8.2. Certain Actions Following an Event of Default. If any one or more
Events of Default shall occur, then in each and every such case:
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8.2.1. Terminate Obligation to Extend Credit. The Agent on behalf
of the Lenders may (and upon written request of the Required Lenders the
Agent shall) terminate the obligations of the Lenders to make any further
extensions of credit under the Credit Documents by furnishing notice of
such termination to the Company.
8.2.2. Specific Performance: Exercise of Rights. The Agent on
behalf of the Lenders may (and upon written request of the Required
Lenders the Agent shall) proceed to protect and enforce the Lenders'
rights by suit in equity, action at law and/or other appropriate
proceeding, either for specific performance of any covenant or condition
contained in this Agreement or any other Credit Document or in any
instrument or assignment delivered to the Lenders pursuant to this
Agreement or any other Credit Document, or in aid of the exercise of any
power granted in this Agreement or any other Credit Document or any such
instrument or assignment.
8.2.3. Acceleration. The Agent on behalf of the Lenders may (and
upon written request of the Required Lenders the Agent shall) by notice
in writing to the Borrower (a) declare all or any part of the unpaid
balance of the Credit Obligations then outstanding to be immediately due
and payable, and (b) require the Borrower immediately to deposit with the
Agent in cash an amount equal to the then Letter of Credit Exposure
(which cash shall be held and applied as provided in Section 4.5), and
thereupon such unpaid balance or part thereof and such amount equal to
the Letter of Credit Exposure shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of
which are hereby expressly waived; provided, however, that if a
Bankruptcy Default shall have occurred, the unpaid balance of the Credit
Obligations shall automatically become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. The Agent
on behalf of the Lenders may (and upon written request of the Required
Lenders the Agent shall) proceed to enforce payment of the Credit
Obligations in such manner as it may elect, to cancel, or instruct other
Letter of Credit Issuers to cancel, any outstanding Letters of Credit
which permit the cancellation thereof and to realize upon any and all
rights in the Credit Security. The Lenders may offset and apply toward
the payment of the Credit Obligations (and/or toward the curing of any
Event of Default) any Indebtedness from the Lenders to the respective
Obligors, including any Indebtedness represented by deposits in any
account maintained with
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the Lenders, regardless of the adequacy of any security for the Credit
Obligations. The Lenders shall have no duty to determine the adequacy of
any such security in connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
applicable law which cannot be waived, all of the Lenders' rights
hereunder and under each other Credit Document shall be cumulative.
8.3 Annulment of Defaults. Once an Event of Default has occurred, such
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents until cured by the Company and its Subsidiaries, the
Required Lenders or the Agent (with the consent of the Required Lenders) shall
have waived such Event of Default in writing, stated in writing that the same
has been cured to such Lenders' reasonable satisfaction or entered into an
amendment to this Agreement which by its express terms cures such Event of
Default, at which time such Event of Default shall no longer be deemed to exist
or to have continued. No such action by the Lenders or the Agent shall extend
to or affect any subsequent Event of Default or impair any rights of the
Lenders upon the occurrence thereof. The making of any extension of credit
during the existence of any Default or Event of Default shall not constitute a
waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
provisions of applicable law that cannot be waived, each of the Company and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of any
Lender in the enforcement of its rights under this Agreement, the Notes
or any other Credit Document;
(c) any and all notices of every kind and description which may be
required to be given by any statute or rule of law; and
(d) any defense (other than payment in full) which it may now or
hereafter have with respect to its liability under this Agreement, the
Notes or any other Credit Document or with respect to the Credit
Obligations.
9. Expenses; Indemnity.
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9.1. Expenses. Whether or not the transactions contemplated hereby shall
be consummated the Borrower will pay:
(a) all reasonable expenses of the Agent (including the
out-of-pocket expenses related to forming the initial group of Lenders
and reasonable fees and disbursements of the counsel to the Agent) in
connection with the preparation and duplication of this Agreement and
each other Credit Document, examinations by, and reports of, the Agent's
commercial financial examiners and amendments, waivers, consents and
other operations hereunder and thereunder;
(b) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this Agreement,
any other Credit Document, any Credit Security or the incurrence of the
Credit Obligations; and
(c) all other reasonable expenses incurred by the Lenders or the
holder of any Credit Obligation in connection with the enforcement of any
rights hereunder or under any other Credit Document, including costs of
collection and reasonable attorneys' fees (including a reasonable
allowance for the hourly cost of attorneys employed by the Lenders on a
salaried basis) and expenses.
9.2. General Indemnity. The Borrower shall indemnify the Lenders and the
Agent and hold them harmless from any liability, loss or damage resulting from
the violation by the Borrower of Section 2.4. In addition, the Borrower shall
indemnify each Lender, the Agent, each of the Lenders' or the Agent's
directors, officers and employees, and each Person, if any, who controls any
Lender or the Agent (each Lender, the Agent and each of such directors,
officers, employees and control Persons is referred to as an "Indemnified
Party") and hold each of them harmless from and against any and all claims,
damages, liabilities and reasonable expenses (including reasonable fees and
disbursements of counsel with whom any Indemnified Party may consult in
connection therewith and all reasonable expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted
against any Indemnified Party in connection with (a) the Indemnified Party's
compliance with or contest of any subpoena or other process issued against it
in any proceeding involving the Company or any of its Subsidiaries or their
Affiliates, (b) any litigation or investigation involving the Company, any of
its Subsidiaries or their Affiliates, or any officer, director or employee
thereof, (c) the existence or exercise of any security rights with respect to
the Credit Security in accordance with the Credit Documents, or (d) this
Agreement, any other Credit Document or any transaction contemplated hereby or
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thereby; provided, however, that the foregoing indemnity shall not apply to
litigation commenced by the Borrower against the Lenders or the Agent which
seeks enforcement of any of the rights of the Borrower hereunder or under any
other Credit Document and is determined adversely to the Lenders or the Agent
in a final nonappealable judgment or to the extent such claims, damages,
liabilities and expenses result from a Lender's or the Agent's gross negligence
or willful misconduct.
9.3. Indemnity With Respect to Letters of Credit. The Borrower shall
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable expenses (including reasonable attorneys fees) arising from or
in connection with any Letter of Credit, including any such claim, loss,
liability, damage or expense arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, xxxx of lading, warehouse receipt or
other document at any time held by the Agent any other Letter of Credit Issuer
or held for their respective accounts by any of their correspondents in
connection with any Letter of Credit, except to the extent such claims, losses,
liabilities damages and expenses result from gross negligence or willful
misconduct on the part of the Agent or any other Letter of Credit Issuer.
10. Operations; Agent.
10.1. Interests in Credits. The Percentage Interest of each Lender in the
Loan and Letters of Credit, and the related Commitments, shall be computed
based on the maximum principal amount for each Lender as set forth in the
Register, as from time to time in effect. The current Percentage Interests are
set forth in Exhibit 10.1, which may be updated by the Agent from time to time
to conform to the Register.
10.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
authorizes BankBoston to act for the Lenders as the Lenders' Agent in
connection with the transactions contemplated by this Agreement and the other
Credit Documents on the terms set forth herein. In acting hereunder, the Agent
is acting for the account of BankBoston to the extent of its Percentage
Interest and for the account of each other Lender to the extent of the Lenders'
respective Percentage Interests, and all action in connection with the
enforcement of, or the exercise of any remedies (other than the Lenders' rights
of set-off as provided in Section 8.2.4 or in any Credit Document) in respect
of the Credit Obligations and Credit Documents shall be taken by the Agent.
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10.3. Borrower to Pay Agent, etc. The Borrower and each Guarantor shall
be fully protected in making all payments in respect of the Credit Obligations
to the Agent, in relying upon consents, modifications and amendments executed
by the Agent purportedly on the Lenders' behalf, and in dealing with the Agent
as herein provided. The Agent may charge the accounts of the Borrower, on the
dates when the amounts thereof become due and payable, with the amounts of the
principal of and interest on the Loan, any amounts paid by the Letter of Credit
Issuers to third parties under Letters of Credit or drafts presented
thereunder, commitment fees, Letter of Credit fees and all other fees and
amounts owing under any Credit Document.
10.4. Lender Operations for Advances, Letters of Credit, etc.
10.4.1. Advances. On each Closing Date, each Lender shall advance
to the Agent in immediately available funds such Lender's Percentage
Interest in the portion of the Loan advanced on such Closing Date prior
to 12:00 noon (Boston time). If such funds are not received at such
time, but all applicable conditions set forth in Section 5 have been
satisfied, each Lender authorizes and requests the Agent to advance for
the Lender's account pursuant to the terms hereof, the Lender's
respective Percentage Interest in such portion of the Loan and agrees to
reimburse the Agent in immediately available funds for the amount thereof
prior to 2:00 p.m. (Boston time) on the day any portion of the Loan is
advanced hereunder; provided, however, that the Agent is not authorized
to make any such advance for the account of any Lender who has previously
notified the Agent in writing that such Lender will not be performing its
obligations to make further advances hereunder; and provided, further,
that the Agent shall be under no obligation to make any such advance.
10.4.2. Letters of Credit. Each of the Lenders authorizes and
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.3 and to grant each Lender a participation in
each of such Letters of Credit in an amount equal to its Percentage
Interest in the amount of each such Letter of Credit. Promptly upon the
request of the Letter of Credit Issuer, each Lender shall reimburse the
Letter of Credit Issuer in immediately available funds for such Lender's
Percentage Interest in the amount of all obligations to third parties
incurred by the Letter of Credit Issuer in respect of each Letter of
Credit and each draft accepted under a Letter of Credit to the extent not
reimbursed by the Company. The Letter of Credit Issuer will notify each
Lender of the issuance of any Letter of Credit, the amount and date of
payment of any draft drawn or accepted under a Letter of Credit and
whether in connection with the payment of any
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such draft the amount thereof was added to the Revolving Loan or was
reimbursed by the Company.
10.4.3. Agent to Allocate Payments, etc. All payments of principal
and interest in respect of the extensions of credit made pursuant to this
Agreement, reimbursement of amounts paid by any Letter of Credit Issuer
to third parties under Letters of Credit or drafts presented thereunder,
commitment fees, Letter of Credit fees and other fees under this
Agreement shall, as a matter of convenience, be made by the Borrower and
the Guarantors to the Agent in immediately available funds. The share of
each Lender shall be credited to such Lender by the Agent in immediately
available funds in such manner that the principal amount of the Credit
Obligations to be paid shall be paid proportionately in accordance with
the Lenders' respective Percentage Interests in such Credit Obligations,
except as otherwise provided in this Agreement. Under no circumstances
shall any Lender be required to produce or present its Notes as evidence
of its interests in the Credit Obligations in any action or proceeding
relating to the Credit Obligations.
10.4.4. Delinquent Lenders; Nonperforming Lenders. In the event
that any Lender fails to reimburse the Agent pursuant to Section 10.4.1
for the Percentage Interest of such lender (a "Delinquent Lender") in any
credit advanced by the Agent pursuant hereto, overdue amounts (the
"Delinquent Payment") due from the Delinquent Lender to the Agent shall
bear interest, payable by the Delinquent Lender on demand, at a per annum
rate equal to (a) the Federal Funds Rate for the first three days overdue
and (b) the sum of 2% plus the Federal Funds Rate for any longer period.
Such interest shall be payable to the Agent for its own account for the
period commencing on the date of the Delinquent Payment and ending on the
date the Delinquent Lender reimburses the Agent on account of the
Delinquent Payment (to the extent not paid by the Borrower or any
Guarantor as provided below) and the accrued interest thereon (the
''Delinquency Period"), whether pursuant to the assignments referred to
below or otherwise. Upon one Banking Day's notice by the Agent, the
Borrower will pay to the Agent the principal (but not the interest)
portion of the Delinquent Payment. During the Delinquency Period, in
order to make reimbursements for the Delinquent Payment and accrued
interest thereon, the Delinquent Lender shall be deemed to have assigned
to the Agent all interest, commitment fees and other payments made by the
Borrower under Section 3 that would have thereafter otherwise been
payable under the Credit Documents to the Delinquent Lender. During any
other period in which any Lender is not performing its obligations to
extend credit under
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Section 2 (a "Nonperforming Lender"), the Nonperforming Lender shall be
deemed to have assigned to each Lender that is not a Nonperforming Lender
(a "Performing Lender") all principal and other payments made by the
Borrower under Section 4 that would have thereafter otherwise been
payable under the Credit Documents to the Nonperforming Lender. The
Agent shall credit a portion of such payments to each Performing Lender
in an amount equal to the Percentage Interest of such Performing Lender
in an amount equal to the Percentage Interest of such Performing Lender
divided by one minus the Percentage Interest of the Nonperforming Lender
until the respective portions of the Loan owed to all the Lenders are the
same as the Percentage Interests of the Lenders immediately prior to the
failure of the Nonperforming Lender to perform its obligations under
Section 2. The foregoing provisions shall be in addition to any other
remedies the Agent, the Performing Lenders or the Borrower may have under
law or equity against the Delinquent Lender as a result of the Delinquent
Payment or against the Nonperforming Lender as a result of its failure to
perform its obligations under Section 2.
10.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall
continue for more than 10 days, the Lender receiving such proportionately
greater payment shall purchase participations in the Percentage Interests in
the Loan and Letter of Credit Exposure held by the other Lenders, and such
other adjustments shall be made from time to time (including rescission of such
purchases Of participations in the event the unequal payment originally
received is recovered from such Lender through bankruptcy proceedings or
otherwise), as may be required so that all such Payments of principal and
interest with respect to the Loan and Letter of Credit exposure held by the
Lenders shall be shared by the Lenders pro rata in accordance with their
respective Percentage Interests; provided, however, that this Section 10.5
shall not impair the right of any Lender to exercise any right of set-off or
counterclaim it may otherwise have and to apply the amount subject to such
exercise to the payment of Indebtedness of any Obligor other than such
Obligor's Indebtedness with respect to the Loan and Letter of Credit Exposure.
Each Lender that grants a participation in the Credit Obligations to a Credit
Participant shall require as a condition to the granting of such participation
that such Credit Participant agree to share payments received in respect of the
Credit Obligations as provided in this Section 10.5. The provisions of this
Section are for
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the sole and exclusive benefit of the Lenders and no failure of any Lender to
comply with the terms hereof shall be available to any Obligor as a defense to
the payment of the Credit Obligations.
10.6. Amendments, Consents, Waivers, etc. Except as otherwise set forth
herein, the Agent may (and upon the written request of the Required Lenders the
Agent shall) take or refrain from taking any action under this Agreement or any
other Credit Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Credit Document (other than an
Interest Rate Protection Agreement) or any Default or Event of Default, all of
which actions shall be binding upon all of the Lenders; provided, however,
that:
(a) Except as provided below, without the written consent of the
Lenders owning at least a majority of the Percentage Interests (other
than Delinquent Lenders during the existence of a Delinquency Period so
long as such Delinquent Lender is treated the same as the other Lenders
with respect to any actions enumerated below), no written modification
of, amendment to, consent with respect to, waiver of compliance with or
waiver of a Default under, any of the Credit Documents (other than an
Interest Rate Protection Agreement) shall be made.
(b) Except as provided below, without the written consent of such
Lenders as own 100% of the Percentage Interests (other than Delinquent
Lenders during the existence of a Delinquency Period so long as such
Delinquent Lender is treated the same as the other Lenders with respect
to any actions enumerated below):
(i) No reduction shall be made in (A) the amount of
principal of the Loan or reimbursement obligations for payments
made under Letters of Credit, (B) the interest rate on the Loan
(other than amendments and waivers that modify defined terms used
in calculating the Applicable Margin or that waive an increase in
the Applicable Rate as a result of an Event of Default) or (C) the
Letter of Credit fees or commitment fees with respect to the
credit facility provided herein.
(ii) No change shall be made in the stated, scheduled time of
payment of all or any portion of the Loan (other than amendments
and waivers that modify defined terms used in calculating
Consolidated Excess Cash Flow) or interest thereon or
reimbursement of payments made under Letters of Credit or fees
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relating to any of the foregoing payable to all of the Lenders and
no waiver shall be made of any Default under Section 8.1.1.
(iii) No increase shall be made in the amount, or extension
of the term, of the stated Commitments beyond that provided for
under Section 2.
(iv) No alteration shall be made of the Lenders' rights of
set-off contained in Section 8.2.4.
(v) No release of any Credit Security or of any Guarantor
shall be made (except that the Agent may release particular items
of Credit Security or particular Guarantors in dispositions
permitted by Section 6.11 and may release all Credit Security
pursuant to Section 16 upon payment in full of the Credit
Obligations and termination of the Commitments without the written
consent of the Lenders).
(vi) No amendment to or modification of this Section 10.6(b)
shall be made.
(c) Without the written consent of such Lenders owning at least a
majority of the Percentage Interests in a particular Tranche (other than
Delinquent Lenders during the existence of a Delinquency Period so long
as such Delinquent Lender is treated the same as the other Lenders with
respect to any actions enumerated below) voting as a separate class, no
change may be made in the allocation of mandatory prepayments under
Section 4.3 between the Term Loan and the Revolving Loan.
10.7. Agent's Resignation. The Agent may resign at any time by giving at
least 60 days' prior written notice of its intention to do so to each other of
the Lenders and the Company and upon the appointment by the Required Lenders of
a successor Agent satisfactory to the Company. If no successor Agent shall
have been so appointed and shall have accepted such appointment within 45 days
after the retiring Agent's giving of such notice of resignation, then the
retiring Agent may with the consent of the Company, which shall not be
unreasonably withheld, appoint Successor Agent which shall be a bank or a trust
company organized under the laws of the United States of America or any state
thereof and having a combined capital, surplus and undivided profit of at least
$100,000,000; provided, however, that any successor Agent appointed under this
sentence may be removed upon the written request of the Required Lenders, which
request shall also appoint a successor Agent satisfactory to the Company. Upon
the appointment of a new
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Agent hereunder, the term "Agent" shall for all purposes of this Agreement
thereafter mean such successor. After any retiring Agent's resignation
hereunder as Agent, or the removal hereunder of any successor Agent, the
provisions of this Agreement shall continue to inure to the benefit of such
Agent as to any actions taken or omitted to be taken by it while it was Agent
under his Agreement.
10.8. Concerning the Agent.
10.8.1. Action in Good Faith, etc. The Agent and its officers,
directors, employees and agents shall be under no liability to any of the
Lenders or to any future holder of any interest in the Credit Obligations
for any action or failure to act taken or suffered in good faith, and any
action or failure to act in accordance with an opinion of its counsel
shall conclusively be deemed to be in good faith. The Agent shall in all
cases be entitled to rely, and shall be fully protected in relying, on
instructions given to the Agent by the required holders of Credit
Obligations as provided in this Agreement.
10.8.3. Validity, etc. The Agent shall not be responsible to any
Lender or any future holder of any interest in the Credit Obligations (a)
for the legality, validity, enforceability or effectiveness of this
Agreement or any other Credit Document, (b) for any recitals, reports,
representations, warranties or statements contained in or made in
connection with this Agreement or any other Credit Document, (c) for the
existence or value of any assets included in any security for the Credit
Obligations, (d) for the effectiveness of any Lien purported to be
included in the Credit Security, (e) for the specification or failure to
specify any particular assets to be included in the Credit Security, or
(f) unless the Agent shall have failed to comply with Section 10.8.1, for
the perfection of the security interests in the Credit Security.
10.8.4. Compliance. The Agent shall not be obligated to ascertain
or inquire as to the performance or observance of any of the terms of
this Agreement or any other Credit Document; and in connection with any
extension of credit under this Agreement or any other Credit Document,
the Agent shall be fully protected in relying on a certificate of the
Company as to the fulfillment by the Company of any conditions to such
extension of credit.
10.8.5. Employment of Agents and Counsel. The Agent may execute any
of its duties as Agent under this Agreement or any other Credit Document
by or through employees, agents and attorneys-in-fact and shall
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not be responsible to any of the Lenders, the Company or any other
Obligor for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent acting in good faith. The Agent
shall be entitled to advice of counsel concerning all matters pertaining
to the agency hereby created and its duties hereunder or under any other
Credit Document.
10.8.6. Reliance on Documents and Counsel. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument letter, notice,
order, document, statement, telecopy, telegram, telex or teletype message
or writing reasonably believed in good faith by the Agent to be genuine
and correct and to have been signed, sent or made by the Person in
question, including any telephonic or oral statement made by such Person,
and, with respect to legal matters, upon an opinion or the advice of
counsel selected by the Agent.
10.8.7. Agent's Reimbursement. Each of the Lenders severally agrees
to reimburse the Agent, in the amount of such Lender's Percentage
Interest, for any reasonable expenses not reimbursed by the Borrower or
the Guarantors (without limiting the obligation of the Borrower or the
Guarantors to make such reimbursement): (a) for which the Agent is
entitled to reimbursement by the Borrower or the Guarantors under this
Agreement or any other Credit Document, and (b) after the occurrence of a
Default, for any other reasonable expenses incurred by the Agent on the
Lenders' behalf in connection with the enforcement of the Lenders' rights
under this Agreement or any other Credit Document; provided, however,
that the Agent shall not be reimbursed for any such expenses arising as a
result of its gross negligence or willful misconduct.
10.9. Rights as a Lender. With respect to any credit extended by it
hereunder, BankBoston shall have the same rights, obligations and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not the Agent, and unless the context otherwise specifies, BankBoston
shall be treated in its individual capacity as though it were not the Agent
hereunder. Without limiting the generality of the foregoing, the Percentage
Interest of BankBoston shall be included in any computations of Percentage
Interests. BankBoston and its Affiliates may accept deposits from, lend money
to, act as trustee for and generally engage in any kind of banking or trust
business with the Company, any of its Subsidiaries or any Affiliate of any of
them and any Person who may do business with or own an equity interest in the
Company, any of its Subsidiaries or any Affiliate of any of them, all as if
BankBoston were not the Agent and without any duty to account therefor to the
other Lenders.
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10.10. Independent Credit Decision. Each of the Lenders acknowledges that
it has independently and without reliance upon the Agent, based on the
financial statements and other documents referred to in Section 7.2, on the
other representations and warranties contained herein and on such other
information with respect to the Company and its Subsidiaries as such Lender
deemed appropriate, made such Lender's own credit analysis and decision to
enter into this Agreement and to make the extensions of credit provided for
hereunder. Each Lender represents to the Agent that such Lender will continue
to make its own independent credit and other decisions in taking or not taking
action under this Agreement or any other Credit Document. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents attorneys-in-fact or Affiliates has made any
representations or warranties to such Lender, and no act by the Agent taken
under this Agreement or any other Credit Document, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Agent. Except for notices, reports and other
documents expressly required to be furnished to each Lender by the Agent under
this Agreement or any other Credit Document, the Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition, financial or
otherwise, or creditworthiness of the Company or any Subsidiary which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
10.11. Indemnification. The holders of the Credit Obligations shall
indemnify the Agent and its officers, directors, employees and agents (to the
extent not reimbursed by the Obligors and without limiting the obligation of
any of the Obligors to do so), pro rata in accordance with their respective
Percentage Interests, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against the Agent or such Persons relating to or
arising out of this Agreement, any other Credit Document, the transactions
contemplated hereby or thereby, or any action taken or omitted by the Agent in
connection with any of the foregoing; provided, however, that the foregoing
shall not extend to actions or omissions which are taken by the Agent with
gross negligence or willful misconduct.
11. Successors and Assigns: Lender Assignments and Participations. Any
reference in this Agreement or any other Credit Document to any of the parties
hereto shall be deemed to include the successors and assigns of such party, and
all covenants and agreements by or on behalf of the Borrower, the Guarantors,
the Agent or the Lenders that are contained in this Agreement or any other
Credit
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Document shall bind and inure to the benefit of their respective successors and
assigns; provided, however, that (a) the Company and its Subsidiaries may not
assign their rights or obligations under this Agreement or any other Credit
Document except for mergers or liquidations permitted by Section 6.11, and (b)
the Lenders shall be not entitled to assign their respective Percentage
Interests in the credits extended hereunder or their Commitments except as set
forth below in this Section 11.
11.1. Assignments by Lenders.
11.1.1. Assignees and Assignment Procedures. Each Lender may (a)
without the consent of the Agent or the Company if the proposed assignee
is already a Lender hereunder or a Wholly Owned Subsidiary of the same
corporate parent of which the assigning Lender is a Subsidiary, or (b)
otherwise with the consents of the Agent and (so long as no Event of
Default exists) the Company (which consents will not be unreasonably
withheld), in compliance with applicable laws in connection with such
assignment, assign to one or more commercial banks or other financial
institutions (each, an "Assignee") all or a portion of its interests,
rights and obligations under this Agreement and the other Credit
Documents, including all or a portion, which need not be pro rata between
the Loan and the Letter of Credit Exposure, of its Commitment, the
portion of the Loan and Letter of Credit Exposure at the time owing to it
and the Notes held by it, but excluding its rights and obligations as a
Letter of Credit Issuer; provided, however, that:
(i) the aggregate amount of the Commitment of the assigning
Lender subject to each such assignment to any Assignee other than
another Lender (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the
Agent) shall be not less than $5,000,000; and
(ii) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance (the "Assignment
and Acceptance") substantially in the form of Exhibit 11.1.1,
together with the Note subject to such assignment and a processing
and recordation fee of $3,500 payable to the Agent by the
assigning Lender or the Assignee.
Upon acceptance and recording pursuant to Section 11.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
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effective date shall be at least five Banking Days after the execution
thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement
and
(B) the assigning Lender shall, to the extent
provided in such assignment, be released from its obligations
under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an
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
3.2.4, 3.5 and 9, as well as to any fees accrued for its
account hereunder and not yet paid).
11.1.2. Terms of Assignment and Acceptance. By executing and
delivering an Assignment and Acceptance, the assigning Lender and
Assignee shall be deemed to confirm to and agree with each other and the
other parties hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Credit
Document or any other instrument or document furnished pursuant hereto;
(b) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or the performance or observance by the
Company or any of its Subsidiaries of any of its obligations under this
Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other documents
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and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such Assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance with
the terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
11.1.3. Register. The Agent shall maintain at the Boston Office a
register (the "Register") for the recordation of (a) the names and
addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 11.1.1, (b) the
Percentage Interest of each such Lender as set forth in Exhibit 10.1 and
(c) the amount of the Loan and Letter of Credit Exposure owing to each
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is registered therein
for all purposes as a party to this Agreement. The Register shall be
available for inspection by the Company or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
11.1.4. Acceptance of Assignment and Assumption. Upon its receipt
of a completed Assignment and Acceptance executed by an assigning Lender
and an Assignee together with the Note subject to such assignment, and
the processing and recordation fee referred to in Section 11.1.1, the
Agent shall (a) accept such Assignment and Acceptance, (b) record the
information contained therein in the Register and (c) give prompt notice
thereof to the Borrower. Within five Banking Days after receipt of
notice, the Borrower, at its own expense, shall execute and deliver to
the Agent, in exchange for the surrendered Note, a new Note to the order
of such Assignee in a principal amount equal to the applicable Commitment
and Loan assumed by it pursuant to such Assignment and
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Acceptance and, if the assigning Lender has retained a Commitment and
Loan, a new Note to the order of such assigning Lender in a principal
amount equal to the applicable Commitment and Loan retained by it. Such
new Note shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note, and shall be dated the date of
the surrendered Note which it replaces.
11.1.5. Federal Reserve Bank. Notwithstanding the foregoing
provisions of this Section 11, any Lender may at any time pledge or
assign all or any portion of such Lender's rights under this Agreement
and the other Credit Documents to a Federal Reserve Bank; provided,
however, that no such pledge or assignment shall release such Lender from
such Lender's obligations hereunder or under any other Credit Document.
11.1.6. Further Assurances. The Company and its Subsidiaries shall
sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the benefits
of the rights created by the Credit Documents.
11.2. Credit Participants. Each Lender may, without the consent of the
Company or the Agent, in compliance with applicable laws in connection with
such participation, sell to one or more commercial banks or other financial
institutions (each a "Credit Participant") participations in all or a portion
of its interests, rights and obligations under this Agreement and the other
Credit Documents (including all or a portion of its Commitment, the Loan and
Letter of Credit Exposure owing to it and the Note held by it); provided,
however, that:
(a) such Lender's obligations under this Agreement shall remain
unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(c) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.2.4, 3.5 and 9, but
shall not be entitled to receive any greater payment thereunder than the
selling Lender would have been entitled to receive with respect to the
interest so sold if such interest had not been sold; and
(d) the Company, the Borrower, the Agent 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, and such
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Lender shall retain the sole right as one of the Lenders to vote with
respect to the enforcement of the obligations of the Company relating to
the Loan and Letter of Credit Exposure and the approval of any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications, consents or waivers requiring the consent of
100% of the Lenders described in clause (b) of the proviso to Section
10.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that
any Credit Participant and any Lender purchasing a participation from another
Lender pursuant to Section 12.5 may exercise all rights of payment (including
the right of set-off), with respect to its participation as fully as if such
Credit Participant or such Lender were the direct creditor of the Obligors and
a Lender hereunder in the amount of such participation.
11.3. Replacement of Lender. In the event that any Lender or, to the
extent applicable, any Credit Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of the
Loan or to issue any Letter of Credit on any Closing Date when required
to do so by the terms of the Credit Documents or when excused pursuant to
Section 5.2.2(b), or fails to provide it portion of any Eurodollar
Pricing Option pursuant to Section 3.2.1 or on account of a Legal
Requirement as contemplated by Section 3.2.5;
(b) Demands payment under the provisions of Section 3.5 in an
amount the Company deems materially in excess of the amounts with respect
thereto demanded by the other Lenders;
(c) refuses to consent to a proposed extension of the Final
Maturity Date that is consented to by the other Lenders; or
(d) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Percentage Interests under Section 10.6(b) that is consented to by
Lenders owning at least two-thirds of the Percentage Interests;
then, so long as no Event of Default exists, the Company shall have the right
to seek a replacement lender which is reasonably satisfactory to the Agent (the
"Replacement Lender). The Replacement Lender shall purchase the interests of
the Affected Lender in the Loan, Letters of Credit and its Commitment and shall
assume the obligations of the Affected Lender hereunder and under the other
Credit Documents upon execution by the Replacement Lender of an Assignment
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and Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in
the Loan and Letter of Credit Exposure, or appropriate credit support for
contingent amounts included therein, and all other outstanding credit
obligations then owed to the Affected Lender). No assignment fee pursuant to
Section 11.1.1 (ii) shall be required in connection with such assignment. Such
assignment by the Affected Lender shall be deemed an early termination of any
Eurodollar Pricing Option to the extent of the Affected Lender's portion
thereof, and the Borrower will pay to the Affected Lender any resulting amounts
due under Section 3.2.4. Upon consummation of such assignment, the Replacement
Lender shall become party to this Agreement as a signatory hereto and shall
have all the rights and obligations of the Affected Lender under this Agreement
and the other Credit Documents with Percentage Interest equal to the
Percentage Interest of the Affected Lender, the Affected Lender shall be
released from its obligations hereunder and under the other Credit Documents,
and no further consent or action by any party shall be required. Upon the
consummation of such Assignment, the Borrower, the Agent and the Affected
Lender shall make appropriate arrangements so that new Notes are issued to the
Replacement Lender if it has acquired a portion of the Loan. The Borrower and
the Guarantors shall sign such documents and take such other actions reasonably
requested by the Replacement Lender to enable it to share in the benefits of
the rights created by the Credit Documents. Until the consummation of an
assignment in accordance with the foregoing provisions of this Section 11.3,
the Borrower shall continue to pay to the Affected Lender any Credit
Obligations as they become due and payable.
12. Confidentiality. Each Lender will make no disclosure of confidential
information furnished to it by the Company or any of its Subsidiaries unless
such information shall have become public, except:
(a) in connection with operations under or the enforcement of this
Agreement or any other Credit Document to Persons who have a reasonable
need to be furnished such confidential information and who agree to
comply with the restrictions contained in this Section 12 with respect to
such information;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to any
Credit Participant, proposed Credit Participant or proposed Assignee;
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provided however, that any such Person shall agree to comply with the
restrictions set forth in this Section 12 with respect to such
information;
(d) to its independent counsel, auditors and other professional
advisors with an instruction to such Person to keep such information
confidential; and
(e) with the prior written consent of the Company, to any other
Person.
13. Foreign Lenders. If any Lender is not incorporated or organized under the
laws of the United States of America or a state thereof, such Lender shall
deliver to the Company and the Agent the following:
(a) Two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor form, as the case may be,
certifying in each case that such Person is entitled to receive payments
under this Agreement, the Notes and reimbursement obligations under
Letters of Credit payable to it, without deduction or withholding of any
United States federal income taxes; and
(b) A duly completed Internal Revenue Service Form W-8 or W-9 or
successor form, as the case may be, to establish an exemption from United
States backup withholding tax.
Until such time as the Company and the Agent have received such forms
indicating that payments hereunder are not subject to deduction or withholding
of United States federal income lax, the Borrower shall withhold United States
federal income tax from such payments at the applicable statutory rate and
Section 3.5 shall not apply to such withholding.
Each such Lender that delivers to the Company and the Agent a Form 1001
or 4224 and Form W-8 or W-9 pursuant to this Section 13 further undertakes to
deliver to the Company and he Agent two further copies of Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable form, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Company and
the Agent. Such Forms 1001 or 4224 shall certify that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of
any United States federal income taxes. Until such time as the Company and the
Agent have received such forms indicating that payments hereunder are not
subject to United
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States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower shall withhold taxes from such payments at
the applicable statutory rate without regard to Section 3.5. The foregoing
documents need not be delivered in the event any change in treaty, law or
regulation or official interpretation thereof has occurred which renders all
such forms inapplicable or which would prevent such Lender from delivering any
such form with respect to it, or such Lender advises the Company that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax and, in the case of a Form W-8 or W-9, establishing
an exemption from United States backup Withholding tax. In the event of clause
(ii), the Borrower shall withhold United States federal income tax from
payments to such Lender or Credit Participant in accordance with applicable
law, and Section 3.5 shall not apply to such withholding. For purposes of the
prior sentence, if any such Lender or Credit Participant delivers two duly
completed and executed copies of Form 1001 or Successor form establishing a
reduced withholding tax rate under an applicable tax treaty, the Borrower shall
withhold United States federal income tax from such payments at the reduced
withholding tax rate established in such treaty. Notwithstanding the
foregoing, if a Lender or Credit Participant has delivered the forms required
to be delivered under clauses (i) and (ii) certifying that such Lender or
Credit Participant is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income tax and if,
subsequently any change in treaty, law or regulation or official interpretation
thereof occurs which renders such forms inapplicable or which prevents such
Lender or Credit Participant from delivering any further such forms with
respect to it, then the Borrower shall withhold United States federal income
tax form payments to such Lender or Credit Participant in accordance with
applicable law and Section 3.5 shall apply to such withholding; provided,
however, that if an applicable tax treaty provides for a reduced withholding
tax rate, Section 3.5 shall only apply if such Lender or Credit Participant
delivers two duly completed and executed copies of Form 1001 or successor form
or otherwise complies with any applicable requirements for establishing such
reduced withholding tax rate.
14. Notices. Except as otherwise specified in this Agreement or any other
Credit Document, any notice required to be given pursuant to this Agreement or
any other Credit Document shall be given in writing. Any notice, consent,
approval, demand or other communication in connection with this Agreement or
any other Credit Document shall be deemed to be given if en in writing
(including telex, telecopy or similar teletransmission) addressed as provided
below (or to the addressee at such other address as the addressee shall have
specified by notice actually received by the addresser), and if either (a)
actually delivered in fully legible form to such address (evidenced in the case
of a telex by receipt of the correct answerback) or (b) in the case a letter,
unless actual receipt of the notice is
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required by any Credit Document five days shall have elapsed after the same
shall have been deposited in the United States mails, with first-class postage
prepaid and registered or certified.
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to
the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
15. Course of Dealing: Amendments and Waivers. No course of dealing between
any Lender or the Agent, on one hand, and the Borrower or any other Obligor, on
the other hand, shall operate as a waiver of any of the Lenders' or the Agent's
rights under this Agreement or any other Credit Document or with respect to the
Credit Obligations. Each of the Borrower and the Guarantors acknowledges that
if the Lenders or the Agent, without being required to do so by this Agreement
or any other Credit Document, give any notice or information to, or obtain any
consent from, the Borrower or any other Obligor, the Lenders and the Agent
shall not by implication have amended, waived or modified any provision of this
Agreement or any other Credit Document, or created any duty to give any such
notice or information or to obtain any such consent on any future occasion. No
delay or omission on the part of any Lender of the Agent in Exercising any
right under this Agreement or any other Credit Document or with respect to the
Credit Obligations shall operate as a waiver of such right or any other right
hereunder or thereunder. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right or remedy on any future occasion. No
waiver, consent or amendment with respect to this Agreement or any other Credit
Document shall be binding unless it is in writing and signed by the Agent or
the Required Lenders.
16. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Company hereunder or under any Other Credit Document, this
Agreement and the other Credit Documents shall terminate and, at he Company's
written request, accompanied by such certificates and other item as the Agent
shall reasonably deem necessary, the Credit Security shall revert to the
Obligors and the right, title and interest of the Lenders therein shall
terminate. Thereupon, on the Obligor's demand and their cost and expense, the
Agent shall execute proper instruments, acknowledging satisfaction of and
discharging this Agreement and the other Credit Documents, and shall redeliver
to the Obligors any Credit Security then in its
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possession; provided, however, that Sections 3.2.4, 3.5, 9, 10.8.7, 10.11 and
12, shall survive the termination of this Agreement.
17. Venue: Service of Process. Each of the Company and the other Obligors:
(a) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Credit Document
or the subject matter hereof or thereof.
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such proceeding brought in any of the
above-named courts, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that such proceeding is brought in an
inconvenient forum, that the venue of such proceeding is improper, or
that this Agreement or any other Credit Document, or the subject matter
hereof or thereof, may not be enforced in or by such court.
Each of the Company and the other Obligors consents to service of process in
any such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 14 is reasonably calculated to give
actual notice.
18. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENT AND THE
LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT
OBLIGATION OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS THE AGENT,
THE COMPANY OR ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH
CASE WHETHER NOW EXISTING OF HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR
OTHERWISE. Each of the Company
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and the other Obligors acknowledges that it has been informed by the Agent that
the provisions of this Section 18 constitute a material inducement upon which
each of the Lenders has relied and will rely in entering into this Agreement
and any other Credit Document, and that it has reviewed the provisions of this
Section 18 with its counsel. Any Lender, the Agent, the Company or any other
Obligor may file an original counterpart or a copy of this Section 18 with any
court as written evidence of the consent of the Company, the other Obligors,
the Agent and the Lenders to the waiver of their rights to trial by jury.
19. No Strict Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other
Credit Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
20. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by each
Lender, notwithstanding any investigation made by any Lender on its behalf, and
shall survive the execution and delivery to the Lenders hereof and thereof.
The invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof, and any invalid or
unenforceable provision shall be modified so as to be enforced to the maximum
extent of its validity or enforceability. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement and the other Credit Documents (including any
related fee agreements with the Agent or the Lenders) constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous understandings and
agreements, whether written or oral. This Agreement may be executed in any
number of counterparts which together shall constitute one instrument. This
Agreement shall be governed by and construed in accordance with the laws (other
than the conflict of laws rules) of The Commonwealth of Massachusetts.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
RACING CHAMPIONS CORPORATION
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By____________________________________
Title:
RACING CHAMPIONS, INC.
By____________________________________
Title:
BANKBOSTON, N.A.
By____________________________________
Title:
BankBoston, N.A.
Diversified Finance Division
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Telex: 940581
LASALLE NATIONAL BANK
By:____________________________________
Vice President
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Telex:
SANWA BUSINESS CREDIT CORPORATION
By:____________________________________
Vice President
Sanwa Business Credit Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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Telecopy: (000) 000-0000
Telex:
NORTHERN TRUST BANK
By:____________________________________
Vice President
Northern Trust Bank
One Oakbrook Terrace
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Telex:
102
