Exhibit 10.17
$60,000,000
CREDIT AGREEMENT
Dated as of
March 12, 1998
Among
THE YORK GROUP, INC., AS BORROWER
ABN AMRO BANK N.V., HOUSTON AGENCY, AS AGENT AND LENDER,
AND
CERTAIN FINANCIAL INSTITUTIONS, AS LENDERS
TABLE OF CONTENTS PAGE
SECTION 1. DEFINITIONS; INTERPRETATION.........................................................1
Section 1.1. Definitions...............................................................1
Section 1.2. Interpretation...........................................................13
SECTION 2. THE CREDIT FACILITIES..............................................................13
Section 2.1. Revolving Loans..........................................................13
Section 2.2. Letters of Credit........................................................14
Section 2.3. Types of Loans and Minimum Borrowing Amounts.............................16
Section 2.4. Manner of Borrowing......................................................17
Section 2.5. Interest Periods.........................................................19
Section 2.6. Payments.................................................................19
Section 2.7. Default Rates............................................................20
Section 2.8. Optional Prepayments.....................................................21
Section 2.9. Mandatory Prepayments of Loans...........................................21
Section 2.10. The Revolving Notes......................................................21
Section 2.11. Breakage Fees............................................................22
Section 2.12. Commitment Terminations..................................................22
SECTION 3. FEES AND PAYMENTS..................................................................23
Section 3.1. Fees.....................................................................23
Section 3.2. Place and Application of Payments........................................24
Section 3.3. Withholding Taxes........................................................24
SECTION 4. CONDITIONS PRECEDENT...............................................................26
Section 4.1. Conditions Precedent to Initial Borrowing................................26
Section 4.2. Conditions Precedent to Borrowing for Acquisition of Colonial Guild......27
Section 4.3. Conditions Precedent to all Borrowings...................................29
SECTION 5. REPRESENTATIONS AND WARRANTIES.....................................................30
Section 5.1. Corporate Organization...................................................30
Section 5.2. Corporate Power and Authority; Validity..................................30
Section 5.3. No Violation.............................................................31
Section 5.4. Litigation...............................................................31
Section 5.5. Use of Proceeds; Margin Regulations......................................31
Section 5.6. Investment Company Act...................................................31
Section 5.7. Public Utility Holding Company Act.......................................31
Section 5.8. True and Complete Disclosure.............................................31
Section 5.9. Financial Statements.....................................................32
Section 5.10. No Material Adverse Change...............................................32
Section 5.11. Labor Controversies......................................................32
Section 5.12. Taxes....................................................................32
Section 5.13. ERISA....................................................................32
Section 5.14. Consents.................................................................33
Section 5.15. Capitalization...........................................................33
Section 5.16. Ownership of Property....................................................33
Section 5.17. Compliance with Statutes.................................................33
Section 5.18. Environmental Matters....................................................33
Section 5.19. Dividend Restrictions....................................................34
SECTION 6. COVENANTS..........................................................................34
Section 6.1. Corporate Existence......................................................34
Section 6.2. Maintenance..............................................................34
Section 6.3. Taxes....................................................................34
Section 6.4. ERISA....................................................................34
Section 6.5. Burdensome Restrictions, Etc.............................................35
Section 6.6. Insurance................................................................35
Section 6.7. Financial Reports and Other Information..................................35
Section 6.8. Lenders' Inspection Rights...............................................37
Section 6.9. Conduct of Business......................................................37
Section 6.10. New Subsidiaries.........................................................38
Section 6.11. Restrictions on Redemption; Dividends....................................38
Section 6.12. Restrictions on Fundamental Changes......................................38
Section 6.13. Environmental Laws.......................................................39
Section 6.14. Liens....................................................................39
Section 6.15. Debt.....................................................................41
Section 6.16. Loans, Advances and Investments..........................................41
Section 6.17. Transfer of Assets.......................................................42
Section 6.18. Transactions with Affiliates.............................................43
Section 6.19. Compliance with Laws.....................................................43
Section 6.20. Negative Pledges.........................................................43
Section 6.21. Maximum Capital Expenditures.............................................43
Section 6.22. Maximum Total Debt to EBITDA Ratio.......................................43
Section 6.23. Maximum Total Debt to Total Capital Ratio................................43
Section 6.24. Minimum Fixed Charge Coverage Ratio......................................43
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.....................................................43
Section 7.1. Events of Default........................................................43
Section 7.2. Non-Bankruptcy Defaults..................................................45
Section 7.3. Bankruptcy Defaults......................................................46
Section 7.4. Collateral for Undrawn Letters of Credit.................................46
Section 7.5. Notice of Default........................................................47
Section 7.6. Expenses.................................................................47
SECTION 8. CHANGE IN CIRCUMSTANCES............................................................47
Section 8.1. Change of Law............................................................47
Section 8.2. Unavailability of Deposits or Inability to Ascertain LIBOR Rate..........47
Section 8.3. Increased Cost and Reduced Return........................................48
Section 8.4. Lending Offices..........................................................49
Section 8.5. Discretion of Lender as to Manner of Funding.............................49
Section 8.6. Limitation on Charges; Substitute Lenders; Non-Discrimination............49
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SECTION 9. THE AGENT..........................................................................50
Section 9.1. Appointment and Authorization of Agent...................................50
Section 9.2. Rights and Powers........................................................50
Section 9.3. Action by Agent..........................................................50
Section 9.4. Consultation with Experts................................................51
Section 9.5. Indemnification Provisions; Credit Decision..............................51
Section 9.6. Indemnity................................................................52
Section 9.7. Resignation of Agent and Successor Agent.................................52
SECTION 10. MISCELLANEOUS.....................................................................52
Section 10.1. No Waiver................................................................52
Section 10.2. Non-Business Day.........................................................52
Section 10.3. Documentary Taxes........................................................53
Section 10.4. Survival of Representations..............................................53
Section 10.5. Survival of Indemnities..................................................53
Section 10.6. Setoff...................................................................53
Section 10.7. Notices..................................................................54
Section 10.8. Counterparts.............................................................54
Section 10.9. Successors and Assigns...................................................54
Section 10.10.Sales and Transfers of Borrowings and Notes; Participations in
Borrowings and Notes.....................................................54
Section 10.11.Amendments, Waivers and Consents.........................................57
Section 10.12.Headings.................................................................57
Section 10.13.Legal Fees, Other Costs and Indemnification..............................57
Section 10.14.Governing Law; Submission to Jurisdiction; Waiver of Jury Trial..........58
Section 10.15.Confidentiality..........................................................59
Section 10.16.Effectiveness............................................................59
Section 10.17.Severability.............................................................59
Section 10.18.Change in Accounting Principles or Tax Laws..............................60
Section 10.19.Entire Agreement.........................................................60
EXHIBITS
Exhibit 2.2A - Form of Borrowing Request
Exhibit 2.2B - Form of Application
Exhibit 2.10 - Form of Revolving Note
Exhibit 4.1A - Form of Subsidiary Guaranty
Exhibit 4.1B - Form of Subordination Agreement
Exhibit 6.7 - Form of Compliance Certificate
Exhibit 10.10 - Form of Assignment Agreement
SCHEDULES
Schedule 5.1 - List of Subsidiaries
Schedule 5.4 - List of Litigation
Schedule 5.18 - List of Environmental Claims
Schedule 6.16 - List of Existing Investments
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CREDIT AGREEMENT, dated as of March 12, 1998, between The York Group,
Inc., a Delaware corporation (the "BORROWER"), ABN AMRO Bank N.V., a Netherlands
chartered bank acting through its Houston agency ("ABN AMRO"), and the other
lenders from time to time parties hereto (each a "LENDER" and collectively, the
"LENDERS"), and ABN AMRO, as administrative agent for the Lenders (in such
capacity, the "AGENT").
WITNESSETH:
WHEREAS, the Borrower desires to obtain commitments from the Lenders to
make loans to the Borrower and to participate in letters of credit for the
account of the Borrower; and
WHEREAS, the Lenders are willing to extend such commitments to the
Borrower on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
Section 1.1 Unless otherwise defined herein, the following terms shall have
the following meanings:
"ACQUISITION" means a direct or indirect purchase by the Borrower or any
of its Subsidiaries after the date hereof for cash, stock or other securities or
other property, whether in one or more related transactions, of all or
substantially all of the assets or voting securities or other equity interests
of a Person or a business unit, division or group of a Person.
"ADJUSTED LIBOR RATE" means, for any Borrowing of Eurodollar Loans, a
rate per annum determined in accordance with the following formula:
Adjusted LIBOR Rate = LIBOR RATE
----------
1.00 - Eurodollar Reserve Percentage
"AFFILIATE" means, for any Person, (i) any other Person that directly or
indirectly through one or more intermediaries controls, or is under common
control with, or is controlled by, such Person, and (ii) any other Person owning
beneficially or controlling ten percent (10%) or more of the equity interests in
such Person. As used in this definition, "CONTROL" means the power, directly or
indirectly, to direct or cause the direction of management or policies of a
Person (through ownership of voting securities or other equity interests, by
contract or otherwise).
"AGENT" means ABN AMRO acting in its capacity as agent for the Lenders,
and any successor agent appointed hereunder pursuant to Section 9.7.
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"AGREEMENT" means this Credit Agreement, as amended, restated or
supplemented from time to time.
"APPLICABLE MARGIN" means, for Eurodollar Loans and the commitment fee
with respect to Letters of Credit and for any applicable period, at such times
as the relevant Total Debt to EBITDA Ratio is in one of the following ranges,
the percentage per annum set forth opposite such Total Debt to EBITDA Ratio:
Total Debt to EBITDA
RATIO EURODOLLAR LOANS
------------ ----------------
Less than 1.0 to 1.0 0.875%
Equal to or greater than 1.0 to 1.0
but less than or equal to 1.5 to 1.0 1.000%
Greater than 1.5 to 1.0 but less than
or equal to 2.0 to 1.0 1.125%
Greater than 2.0 to 1.0 but less than
or equal to 2.5 to 1.0 1.250%
Greater than 2.5 to 1.0 1.375%
For the period from the Effective Date through the earlier of (i) the date the
Borrower is to provide the Agent with the financial statements for the fiscal
quarter ended March 31, 1998, as required by Section 6.7(a)(i) or, if earlier,
the date such financial statements are provided to the Agent, or (ii) the date
of any Material Acquisition other than the Acquisition of Colonial Guild, the
Applicable Margin shall be 1.250% per annum. Thereafter, the Applicable Margin
shall be reset by the Agent either (i) upon its receipt of the applicable
financial statements and Compliance Certificate as required by Section 6.7(a)(i)
or (ii) and Section 6.7(b) from the Borrower to be effective as of the date one
(1) Business Day after the earlier of the date such financial statements are
required to be provided or the date such financial statements are provided to
the Agent, or (ii) based upon the pro forma Total Debt to EBITDA Ratio as of the
date of consummation of any Material Acquisition after giving effect to any
Borrowings hereunder and any other Debt incurred in connection with such
Material Acquisition to be effective as of the date one (1) Business Date after
the date of the consummation of such Material Acquisition.
"APPLICATION" means an application for a Letter of Credit as defined in
Section 2.2(b).
"ASSIGNMENT AGREEMENT" means an agreement in substantially the form of
Exhibit 10.10 whereby a Lender conveys part or all of its Revolving Credit
Commitments, Loans and participations in Letters of Credit to another Person
that is, or thereupon becomes, a Lender, or increases its Revolving Credit
Commitments, outstanding Loans and outstanding participations in Letters of
Credit pursuant to Section 10.10.
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"AUTHORIZED OFFICER" means any officer or other employee of the Borrower
or the Guarantor, as applicable, authorized from time to time to execute and
deliver a Credit Document under this Agreement.
"BASE RATE" means, for any day, the greater of:
(i) the fluctuating commercial loan rate announced by the Lender
which is the Agent from time to time at its Chicago, Illinois office (or other
corresponding office, in the case of any successor Agent) as its base rate for
Dollar loans in the United States of America in effect on such day (which base
rate may not be the lowest rate charged by the Agent on loans to any of its
customers), with any change in the Base Rate resulting from a change in such
announced rate to be effective on the date of the relevant change; and
(ii) the sum of (x) the rate per annum (rounded upwards, if
necessary, to the nearest 1/16th of 1%) equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the next Business Day, PROVIDED THAT (A)
if such day is not a Business Day, the rate on such transactions on the
immediately preceding Business Day as so published on the next Business Day
shall apply, and (B) if no such rate is published on such next Business Day, the
rate for such day shall be the average of the offered rates quoted to the Agent
by two (2) federal funds brokers of recognized standing on such day for such
transactions as selected by the Agent, plus (y) one-half of one percent (0.50%)
per annum.
"BASE RATE LOAN" means a Loan bearing interest prior to maturity at the
Base Rate.
"BORROWER" means The York Group, Inc., a Delaware corporation.
"BORROWING" means any extension of credit made by the Lenders by way of
Loans or Letters of Credit, including any Borrowings advanced, continued or
converted. A Borrowing is "advanced" on the day the Lenders advance funds
comprising such Borrowing to the Borrower or a Letter of Credit is issued, is
"CONTINUED" (in the case of Eurodollar Loans) on the date a new Interest Period
commences for such Borrowing and is "CONVERTED" when such Borrowing is changed
from one type of Loan to the other, all as requested by the Borrower pursuant to
Section 2.4(a).
"BORROWING REQUEST" means a request for a Borrowing as defined in
Section 2.2(b).
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banks are authorized or required to close in Houston, Texas or New
York, New York, and, if the applicable Business Day relates to the advance or
continuation of, conversion into or payment on a Eurodollar Loan, on which banks
are dealing in Dollar deposits in the interbank eurocurrency market in London,
England.
"CAPITAL EXPENDITURES" means, for any period, the sum, without
duplication, of (i) all expenditures of the Borrower and its Subsidiaries for
fixed or capital assets made during
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such period which, in accordance with GAAP, would be classified as capital
expenditures, and (ii) all Capitalized Lease Obligations incurred during such
period.
"CAPITALIZED LEASE OBLIGATIONS" means, for any period, the amount of the
Borrower's and its Subsidiaries' liabilities under all leases (or similar
arrangements) of real or personal property (or any interest therein) which in
accordance with GAAP would be classified as capitalized leases on the balance
sheet of the Borrower and its Subsidiaries.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve (12) months
from the date of acquisition; (ii) U.S. Dollar denominated time deposits and
certificates of deposit maturing within one (1) year from the date of
acquisition thereof with any Lender, or any other financial institution whose
short-term senior unsecured debt rating is at least A-2 from S&P or P-2 from
Moody's; (iii) LIBOR denominated time deposits and certificates of deposit
maturing within six (6) months from the date of acquisition thereof with any
Lender, or any other financial institution whose short-term senior unsecured
debt rating is at least A-1 from S&P or P-1 from Moody's; (iv) commercial paper
or Eurocommercial paper with a rating of at least A-1 from S&P or P-1 from
Moody's, with maturities of not more than twelve (12) months from the date of
acquisition; (v) repurchase obligations entered into with any Lender or any
other financial institution whose short-term senior unsecured debt rating is at
least A-1 from S&P or P-1 from Moody's, which are secured by a fully perfected
security interest in any obligation of the type described in (i) above and has a
market value of the time such repurchase is entered into of not less than 100%
of the repurchase obligation of such Lender or such other Person thereunder;
(vi) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof or providing for the resetting of the interest rate
applicable thereto not less often than annually and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or Moody's; and
(vii) money market funds which have at least $1,000,000,000 in assets and which
invest primarily in securities of the types described in clauses (i) through
(vi) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL ACCOUNT" means the cash collateral account for outstanding
undrawn Letters of Credit as defined in Section 7.4(b).
"COLONIAL GUILD" means Colonial Guild, Ltd., a West Virginia company.
"COLONIAL MERGER AGREEMENT" means that certain Agreement and Plan of
Merger among the Borrower, Colonial Acquisition Corp., Colonial Guild and
certain shareholders of Colonial Guild dated as of February 17, 1998.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit 6.7.
4
"CONSOLIDATED CASH INTEREST EXPENSE" means, as of any date of
determination, the aggregate of all cash Consolidated Interest Expense,
including, without limitation, all net amounts payable (or receivable) under
Interest Rate Protection Agreements and all imputed interest in respect of
Capitalized Lease Obligations; PROVIDED, HOWEVER, Consolidated Cash Interest
Expense shall not include interest expense attributable to amortization of debt
discount.
"CONSOLIDATED EARNINGS BEFORE INTEREST, LEASES AND TAXES" means, as of
any date of determination, with respect to the Borrower and its Subsidiaries,
the sum of (i) Consolidated Net Income, plus (ii) to the extent that any of the
items referred to in any of clauses (a), (b) or (c) below were deducted in
calculating Consolidated Net Income: (a) provisions for taxes on income or
revenues, (b) Consolidated Cash Interest Expense, and (c) Lease Expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total
interest expense of the Borrower and its Subsidiaries on a consolidated basis
for such period in connection with Debt, determined in accordance with GAAP.
"CONSOLIDATED INTEREST INCOME" means, for any period, the total interest
income of the Borrower and its Subsidiaries on a consolidated basis for such
period in connection with Debt, determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss), after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period, determined in accordance with GAAP.
"CONSOLIDATED NET TANGIBLE ASSETS" means as of any date of
determination, the total amount of assets of the Borrower and its Subsidiaries
on a consolidated basis for such period, less, without duplication, (i) current
liabilities, (ii) all reserves for depreciation and other asset valuation
reserves (but excluding reserves for deferred federal, state and other income
taxes), (iii) all assets properly classified as intangible assets, and (iv)
appropriate adjustments on account of minority interests of third parties
holding common stock in any Subsidiary of the Company; in each instance as
determined in accordance with GAAP.
"CONSOLIDATED NET WORTH" means, as of any date of determination, the
Borrower's consolidated stockholders' equity determined in accordance with GAAP.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Debt, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), in any manner, whether direct or indirect,
including, without limitation, any obligations of such Person, whether or not
contingent, (i) to purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect security therefor,
or (ii) to advance or provide funds (x) for the purchase, payment or discharge
of any such primary obligation, or (y) to maintain working capital or equity
capital of the primary obligor or
5
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (iii) to lease
property or to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum anticipated liability in respect
thereof.
"CONSOLIDATED OPERATING INCOME" means, as of any date of determination,
the sum of (i) Consolidated Earnings Before Interest, Leases and Taxes, plus
(ii) depreciation and amortization expenses of the Borrower and its Subsidiaries
on a consolidated basis determined in accordance with GAAP.
"CREDIT DOCUMENTS" means this Agreement, the Revolving Notes, the
Subsidiary Guaranties, the Subordination Agreements, the Borrowing Requests, the
Applications and any other documents or instruments executed by the Borrower or
any of the Guarantors in connection with this Agreement.
"DEBT" means for any Person (without duplication): (i) all advances and
indebtedness, whether or not represented by bonds, debentures, notes, securities
or other evidences of indebtedness, for the repayment of money borrowed, (ii)
all indebtedness representing deferred payment of the purchase price of property
or assets, (iii) all Capitalized Lease Obligations and leases of property or
assets made as a part of any sale and lease-back transaction whether or not
required to be capitalized on a balance sheet, (iv) all Contingent Obligations,
including, without limitation, all indebtedness under guaranties, endorsements,
assumptions or other contractual obligations, including any letters of credit,
unsecured performance guarantees given in the normal course of business of the
Borrower or a Subsidiary under contractual obligations and any standby letters
of credit issued by a banking institution as security therefore; PROVIDED,
HOWEVER, that letters of credit issued by the Borrower or any Subsidiary as
security for insurance premiums, workman's compensation insurance, environmental
bonds and other such similar purposes shall be excluded from the amount of Debt
to the extent of an aggregate amount of $5,000,000, (v) all indebtedness secured
by a Lien existing on property owned, subject to such Lien, whether or not the
indebtedness secured thereby shall have been assumed by the owner thereof, (vi)
Interest Rate Protection Agreements (without duplication for the hedged
obligation), (g) all amendments, renewals, extensions, modifications and
refundings of any indebtedness or obligations referred to above in (i), (ii),
(iii), (iv), (v) or (vi); PROVIDED, HOWEVER, that "Debt" shall not include (i)
trade accounts payable arising in the ordinary course of business or (ii) casket
repurchase obligations under any repurchase agreements in an amount not to
exceed $5,000,000 in the aggregate during the term of this Agreement. The amount
of Debt attributable to original issue discount notes or bonds shall be equal to
the net book amount of consolidated debt recorded in accordance with GAAP. The
calculation of Debt shall include all Debt of the Borrower, plus all Debt of
other Persons, other than Subsidiaries, which has been
6
guaranteed by the Borrower or any Subsidiary. Debt shall also include the
redemption amount with respect to any stock of the Borrower required to be
redeemed within twelve (12) months following the date of determination.
"DEFAULT" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"DOLLAR" and "U.S. DOLLAR" and the sign "$" means lawful money of the
United States of America.
"EBITDA" means, as of any date of determination, the sum of (i)
Consolidated Net Income before (a) Consolidated Interest Expense, (b)
Consolidated Interest Income, (c) provisions for taxes based on income or
revenues, and (d) any extraordinary, unusual or nonrecurring gains or losses;
plus (ii) the amount of all depreciation, amortization expense and other
non-cash charges (excluding the effects of any accruals made in the ordinary
course of business) deducted in determining Consolidated Net Income, all
calculated on a consolidated basis for the Borrower and its Subsidiaries and as
determined in accordance with GAAP. Upon the consummation of any Acquisition,
EBITDA shall be adjusted to include the historical financial results of the
acquired business (on a historic four fiscal quarter pro forma basis).
"EFFECTIVE DATE" means the date this Agreement shall become effective as
defined in Section 10.16.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violations, investigations or proceedings relating to any
Environmental Law ("CLAIMS") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to health
or safety in relation to the environment.
"ENVIRONMENTAL LAW" means any federal, state or local statute, law,
rule, regulation, ordinance, code, written policy or rule of common law now or
hereafter in effect, including any judicial or administrative order, consent,
decree or judgment relating to (i) the environment, (ii) health or safety in
relation to the environment or (iii) Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EURODOLLAR LOAN" means a Loan bearing interest prior to maturity at the
Adjusted LIBOR Rate plus the Applicable Margin.
7
"EURODOLLAR RESERVE PERCENTAGE" means, with respect to each Interest
Period for a Eurodollar Loan, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentages in effect on each
day of such Interest Period, if any, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor thereto), for determining the
maximum reserve requirements (including, without limitation, any supplemental,
marginal and emergency reserves) applicable to "Eurocurrency Liabilities"
pursuant to Regulation D of the Board of Governors of the Federal Reserve System
or any other then applicable regulation of the Board of Governors which
prescribes reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
"EVENT OF DEFAULT" means any of the events or circumstances specified in
Section 7.1.
"FIXED CHARGE COVERAGE RATIO" means, as of any date of determination,
the ratio of (i) Consolidated Earnings Before Interest, Leases and Taxes to (ii)
the sum of (a) Consolidated Cash Interest Expense plus (b) Lease Expense.
"FEE LETTER" means that certain letter agreement between the Borrower
and the Agent dated March 9, 1998, as amended by the parties thereto from time
to time.
"GAAP" means generally accepted accounting principles from time to time
in effect as set forth in the opinions and pronouncements of the Accounting
Principles Board and the statements and pronouncements of the Financial
Accounting Standards Board or in such other statements, opinions and
pronouncements by such other entity as may be approved by a significant segment
of the U.S. accounting profession.
"GUARANTOR" means each of Elder Davis, Inc., an Indiana corporation, The
Doody Group, Inc., a Delaware corporation, West Point Casket Co., Inc., a
Delaware corporation, Dixie Vault Company, Inc., an Alabama corporation, York
Agency, Inc., a Delaware corporation, York Acquisition Corp., a Delaware
corporation, and any other Material Subsidiary of the Borrower required to
become a Guarantor pursuant to Section 6.10.
"HAZARDOUS MATERIAL" shall have the meaning assigned to that term in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Acts of 1986, and shall
include any substance defined as "HAZARDOUS" or "TOXIC" or words used in place
thereof under any Environmental Law applicable to the Borrower or any of its
Subsidiaries.
"HIGHEST LAWFUL RATE" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Loans or the Reimbursement Obligations, or
under laws applicable to the Lenders, which are presently in effect or, to the
extent allowed by applicable law, under such laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow. Determination of the rate of interest for the purpose
of determining whether the Loans or the Reimbursement Obligations represented
hereby are usurious under all applicable laws shall be made by amortizing or
spreading using the actuarial method during the stated term of the Loans or the
Reimbursement Obligations,
8
all interest at any time contracted for, taken, reserved, charged or received
from the Borrower in connection with the Loans or the Reimbursement Obligations,
as applicable.
"INITIAL BORROWING DATE" means the date on which all conditions
precedent set forth herein to the initial Borrowings are satisfied or waived in
writing and the initial Borrowing hereunder occurs.
"INTEREST PAYMENT DATE" means (i) for a Base Rate Loan, the last
Business Day of each calendar quarter such Loan is outstanding commencing June
30, 1998, and (ii) for a Eurodollar Loan, the last Business Day of each Interest
Period for such Loan and, during any Interest Period of six (6) months or more,
the Business Day occurring three (3) months after the commencement of such
Interest Period.
"INTEREST PERIOD" means the period commencing on the date that a
Borrowing of Eurodollar Loans is advanced, continued or created by conversion
and, subject to Section 2.5, ending on the date one (1), two (2), three (3), six
(6) or (subject to availability to all of the Lenders) twelve (12) months
thereafter as selected by the Borrower pursuant to the terms of this Agreement,
or with respect to the initial Borrowing hereunder as otherwise agreed by the
Borrower and all Lenders.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate swap,
interest rate cap, interest rate collar, or other interest rate hedging
agreement or arrangement designed to protect against fluctuations in interest
rates.
"L/C DOCUMENTS" means this Agreement, the Letters of Credit and any
Applications with respect thereto and any draft or other document presented in
connection with a drawing thereunder.
"L/C OBLIGATIONS" means the undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations with respect to
Letters of Credit.
"LEASE" means any lease, sublease or other instrument (other than a
Capitalized Lease Obligation) pursuant to which a Person is entitled to use any
property of another Person for an original term, such original term to include
any period for which such lease, sublease or other instrument may be renewed at
the option of the lessor or lessee thereunder.
"LEASE EXPENSE" means, as of any date of determination, for any period
for which the amount thereof is to be determined, (i) all amounts payable by the
Borrower and its Subsidiaries, on a consolidated basis in accordance with GAAP,
as a lessee or a sublessee under any Lease, minus (ii) any amounts required to
be paid by the Borrower or any of its Subsidiaries on account of maintenance,
repairs, insurance, taxes and similar charges (whether or not such are
designated as rents or additional rents) for such period.
"LENDERS" is defined in the preamble.
9
"LENDING OFFICE" means the branch, office or affiliate of a Lender
specified on the appropriate signature page hereof or designated pursuant to
Sections 8.4 or 10.10.
"LETTER OF CREDIT" means any of the letters of credit issued by the
Lenders for the account of the Borrower pursuant to Section 2.2(a).
"LIBOR RATE" means, relative to any Interest Period for each Eurodollar
Loan comprising part of the same Borrowing, a rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/16 of 1%),
equal to the arithmetic mean of the "LIBOR" rates of interest per annum
appearing on Telerate Page 3750 (or any successor publication) for the
applicable currency two (2) Business Days before the commencement of such
Interest Period for delivery on the first day of such Interest Period, at or
about 11:00 a.m. (London, England time) for a period approximately equal to such
Interest Period. If the foregoing Telerate rate is unavailable for any reason,
then such rate shall be determined by the Agent from the Reuters Screen LIBOR
page, or if such rate is also unavailable on such service, on any other interest
rate reporting service of recognized standing selected by the Agent after
consultation with the Borrower.
"LIEN" means any interest in any property or asset in favor of a Person
other than the owner of the property or asset and securing an obligation owed to
such Person, whether such interest is based on the common law, statute or
contract, including, but not limited to, the security interest lien arising from
a mortgage, encumbrance, pledge, conditional sale, security agreement or trust
receipt, or a lease, consignment or bailment for security purposes.
"LOAN" means a Base Rate Loan or a Eurodollar Loan, each of which is a
"TYPE" of Loan hereunder.
"MAJORITY LENDERS" means, at any time, Lenders then holding in the
aggregate at least sixty-six and two/thirds percent (66 2/3%) of the Revolving
Credit Commitments, or if the Revolving Credit Commitments have terminated, the
aggregate Obligations. The percentage set forth opposite each Lender's name on
the signature page hereto reflects the initial voting percentage of each Lender
hereunder.
"MATERIAL ADVERSE EFFECT" means an effect that results in a material
adverse change (i) since December 31, 1997 (other than as disclosed in the
Borrower's financial projections dated March 3, 1998, provided to the Agent), in
(a) before the time the Acquisition of Colonial Guild and its Subsidiaries is
consummated, the business, properties, assets, financial condition or prospects
of the Borrower and its Subsidiaries taken as a whole, or Colonial Guild and its
Subsidiaries taken as a whole, or (b) on and after the time the Acquisition of
Colonial Guild and its Subsidiaries is consummated, the business, properties,
assets, financial condition or prospects of the Borrower and its Subsidiaries
taken as a whole, (ii) in the ability of the Borrower or any of the Guarantors
to perform its Obligations under the Credit Documents to which it is a party, or
(iii) in the rights and remedies of the Lenders or the Agent in any material
adverse respect under the Credit Documents.
10
"MATERIAL ACQUISITION" means any Acquisition for which the cash purchase
price paid and Debt incurred by the Borrower or any of its Subsidiaries
(excluding any part of the purchase price paid with the cash proceeds from an
equity offering) equals or exceeds $15,000,000.
"MATERIAL SUBSIDIARY" means (i) each of Elder Davis, Inc., The Doody
Group, Inc., West Point Casket Co., Inc., Dixie Vault Company, Inc., York
Agency, Inc. and York Acquisition Corp., and (ii) each Subsidiary formed or
acquired after the Effective Date which is required to execute a Guaranty
pursuant to Section 6.10.
"MATURITY DATE" means March 11, 2003.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"OBLIGATIONS" means all obligations of the Borrower and the Guarantors
to pay fees, costs and expenses hereunder, to pay principal or interest on
Loans, to pay Reimbursement Obligations and to pay any other obligations to the
Agent and Lenders arising under or in relation to any Credit Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERCENTAGE" means, for each Lender, the percentage of the Revolving
Credit Commitments represented by such Lender's Revolving Credit Commitment;
PROVIDED, THAT, if the Revolving Credit Commitments are terminated, each
Lender's Percentage shall be calculated based on its Revolving Credit Commitment
in effect immediately before such termination, subject to any assignments by
such Lender of Obligations pursuant to Section 10.10.
"PERMITTED BUSINESS" means any business described in Section 6.9.
"PERMITTED LIENS" means the Liens described in Section 6.14.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or any agency or political
subdivision thereof.
"PLAN" means an employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that is either (i) maintained by the Borrower or any of its Subsidiaries, or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any of its Subsidiaries is then making or accruing an obligation
to make contributions or has within the preceding five (5) plan years made or
had an obligation to make contributions.
11
"PRIVATE PLACEMENT" means the Borrower's Senior Note Purchase Agreement
with respect to its 7.87% Senior Notes due June 30, 2004.
"PURCHASING LENDER" has the meaning given such term in Section 10.10(b).
"REIMBURSEMENT OBLIGATION" means the obligations of the Borrower to
reimburse the Agent and the Lenders for each drawing under a Letter of Credit as
described in Section 2.2(c).
"REUTERS SCREEN" means, when used in connection with any designated page
and the "LIBOR" rate, the display page so designated on the Reuter Money 2000
Service (or such other page as may replace that page on that service or on any
replacement Reuter Service for the purpose of displaying rates comparable to the
"LIBOR" rate).
"REVOLVING CREDIT" means the credit facility for making Revolving Loans
and issuing Letters of Credit described in Sections 2.1 and 2.2.
"REVOLVING CREDIT COMMITMENT" means, relative to any Lender, such
Lender's obligations to make Revolving Loans and participate in Letters of
Credit pursuant to Sections 2.1 and 2.2 in the percentages set forth opposite
its signature hereto or pursuant to Section 10.10, as such commitments may be
reduced from time to time pursuant to this Agreement.
"REVOLVING CREDIT COMMITMENT AMOUNT" means (i) for the period from the
Effective Date through March 11, 2001, $60,000,000, (ii) for the period from
March 12, 2001, through March 11, 2002, $50,000,000, and (iii) for the period
from March 12, 2002 through the Maturity Date, $40,000,000, as such amounts may
be reduced from time to time pursuant to the terms of this Agreement.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" means the earliest of (i)
March 11, 2003; (ii) the date on which the Revolving Credit Commitments are
terminated in full or reduced to zero pursuant to Section 2.12; or (iii) the
occurrence of any Event of Default described in Section 7.1(f) or (g) with
respect to the Borrower or the occurrence and continuance of any other Event of
Default and either (x) the declaration of the Revolving Loans to be due and
payable pursuant to Section 7.2, or (y) in the absence of such declaration, the
giving of written notice by the Agent to the Borrower pursuant to Section 7.2
that the Revolving Credit Commitments have been terminated.
"REVOLVING LOANS" shall have the meaning ascribed to such term in
Section 2.1(a).
"REVOLVING NOTES" means certain promissory notes of the Borrower as
defined in Section 2.10.
"SEC" means the Securities and Exchange Commission.
"S&P" means Standard & Poor's Ratings Group or any successor thereto.
12
"SPECIAL PURPOSE SUBSIDIARIES" means each of T.Y.G. Company, T.Y.G.
Trade Company and any other Subsidiaries of the Borrower as defined in Section
6.9.
"SUBORDINATION AGREEMENT" means each Subordination Agreement of T.Y.G.
Company, T.Y.G. Trade Company and any other Special Purpose Subsidiary formed
after the Effective Date in substantially the form of Exhibit 4.1B.
"SUBSIDIARY" means, for any Person, any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or comparable
equity interests having ordinary voting power for the election of the board of
directors of such corporation, any managers of such limited liability company or
similar governing body (irrespective of whether or not, at the time, stock or
other equity interests of any other class or classes of such corporation or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by such Person, as
applicable, or by one or more of its Subsidiaries.
"SUBSIDIARY GUARANTY" means each Guaranty of the Material Subsidiaries
in substantially the form of Exhibit 4.1A.
"T.Y.G. COMPANY" means T.Y.G. Company, Inc., a Delaware corporation.
"T.Y.G. TRADE COMPANY" means T.Y.G. Trade Company, Inc., a Delaware
corporation.
"TAXES" shall have the meaning ascribed to such term in Section 5.12.
"TELERATE" means, when used in connection with any designated page and
the "LIBOR" rate, the display page so designated on the Dow Jones Telerate
Service (or such other page as may replace that page on that service or on any
replacement Dow Jones Service for the purpose of displaying rates comparable to
the "LIBOR" rate).
"TOTAL CAPITAL" means, as of any date of determination, the sum of Total
Debt plus Consolidated Net Worth as of such date.
"TOTAL DEBT" means, as of any date of determination, the aggregate
amount of all Debt of the Borrower and its Subsidiaries outstanding on such date
determined on a consolidated basis in accordance with GAAP.
"TOTAL DEBT TO EBITDA RATIO" means, as of any date of determination, the
ratio of Total Debt to EBITDA, calculated using Total Debt at the date of
determination and EBITDA on a historic four fiscal quarter rolling basis.
"TOTAL DEBT TO TOTAL CAPITAL RATIO" means, as of any date of
determination, the ratio of Total Debt to Total Capital.
"TRANSFER" means a sale, transfer, conveyance, assignment or other
disposition (or a series of related dispositions), including, without
limitation, any transfer pursuant to an
13
option to purchase, any sale or assignment (with or without recourse) of any
accounts receivable and any sale and leaseback of assets, of an asset, but
excluding any involuntary transfer by operation of law and any transfers of an
asset pursuant to any casualty or theft with respect to such asset.
"UNFUNDED VESTED LIABILITIES" means, for any Plan at any time, the
amount by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Borrower or any of its Subsidiaries to the PBGC or such Plan.
. The foregoing definitions shall be equally applicable to the singular
and plural forms of the terms defined. All references to times of day in this
Agreement shall be references to Chicago, Illinois time unless otherwise
specifically provided.
SECTION 2. THE CREDIT FACILITIES
Section 2.1. REVOLVING LOANS. Subject to the terms and conditions
hereof, each Lender severally and not jointly agrees to make one or more loans
(each, a "REVOLVING LOAN") to the Borrower from time to time before the
Revolving Credit Commitment Termination Date on a revolving basis in an
aggregate amount not to exceed at any time outstanding an amount equal to its
Percentage of the Revolving Credit Commitment Amount then in effect (for each
Lender its "REVOLVING CREDIT COMMITMENT"), subject to any reductions thereof
pursuant to the terms of this Agreement. The Revolving Loans shall be made
ratably from the Lenders in proportion to their respective Percentages. No
Lender shall be required to make any Revolving Loan if, after giving effect
thereto, the aggregate principal amount of (i) all Revolving Loans of all
Lenders and the L/C Obligations outstanding of the Borrower would thereby exceed
the Revolving Credit Commitment Amount then in effect or (ii) all Revolving
Loans of such Lender and its participating interest in all Letters of Credit
would thereby exceed the Percentage of such Lender of the Revolving Credit
Commitment Amount then in effect. Revolving Loans may be repaid, in whole or in
part, and all or any portion of the principal amount thereof reborrowed, before
the Revolving Credit Commitment Termination Date, subject to the terms and
conditions hereof.
Section 2.2 LETTERS OF CREDIT (a) ISSUANCE OF LETTERS OF CREDIT. Subject
to the terms and conditions hereof, the Agent agrees to issue, from time to time
prior to the Revolving Credit Commitment Termination Date, at the request of the
Borrower and on behalf of the Lenders and in reliance on their obligations under
this Section 2.2, one or more letters of credit (each a "LETTER OF CREDIT") for
the Borrower's account, all such Letters of Credit to be in an aggregate undrawn
face amounts at any time outstanding not to exceed $10,000,000; PROVIDED THAT
the Agent shall not issue a Letter of Credit, and the Lenders shall have no
obligation to purchase a participation interest in a Letter of Credit pursuant
to Section 2.2(d), if after giving effect thereto, the aggregate principal
amount of the Revolving Loans and the L/C Obligations outstanding of the
Borrower would thereby
14
exceed the Revolving Credit Commitment Amount then in effect; and PROVIDED
FURTHER THAT the Agent shall have no obligation to issue and the Lenders shall
have no obligation to purchase a participation interest in a Letter of Credit if
the issuance of such Letter of Credit would violate any legal or regulatory
restriction then applicable to the Agent or such Lender as notified by such
Lender to the Agent before the date of issuance of such Letter of Credit.
(b) ISSUANCE PROCEDURE. To request that the Agent issue a Letter of
Credit, the Borrower shall deliver to the Agent a duly executed Borrowing
Request from an Authorized Officer in substantially the form of Exhibit 2.2A
(each, a "BORROWING REQUEST"), together with a duly executed application for the
relevant Letter of Credit substantially in the form of Exhibit 2.2B (each, an
"APPLICATION"), or such other computerized issuance or application procedure,
instituted from time to time by the Agent and agreed to by the Borrower,
completed to the reasonable satisfaction of the Agent, and such other
documentation and information as the Agent may reasonably request. In the event
of any irreconcilable difference or inconsistency between this Agreement and an
Application, the provisions of this Agreement shall govern. Upon receipt of a
properly completed and executed Borrowing Request and Application and any other
reasonably requested documents or information at least three (3) Business Days
prior to any requested issuance date, the Agent will process such Borrowing
Request and Application in accordance with its customary procedures and issue
the requested Letter of Credit on the requested issuance date. The Borrower may
cancel any requested issuance of a Letter of Credit prior to the issuance
thereof. The Agent will notify each Lender of the amount and expiration date of
each Letter of Credit it issues promptly upon issuance thereof. Each Letter of
Credit shall have an expiration date no later than one (1) year after the
Maturity Date. Any Letter of Credit that shall have an expiration date after the
Maturity Date shall be pre-funded pursuant to the provisions of Section 7.4. If
the Agent issues any Letters of Credit with expiration dates that automatically
extend unless the Agent gives notice that the expiration date will not so
extend, the Agent will give such notice of non-renewal before the time necessary
to prevent such automatic extension if before such required notice date (i) the
expiration date of such Letter of Credit if so extended would be later than one
(1) year after the Maturity Date, (ii) the Revolving Credit Commitment
Termination Date shall have occurred, (iii) a Default or an Event of Default
exists and the Majority Lenders have given the Agent instructions not to so
permit the expiration date of such Letter of Credit to be extended, or (iv) the
Agent is so directed by the Borrower. The Agent agrees to issue amendments to
any Letter of Credit increasing its amount, or extending its expiration date, at
the request of the Borrower subject to the conditions precedent for all Loans of
Section 4.2 and the other terms and conditions of this Section 2.2.
(c) THE BORROWER'S REIMBURSEMENT OBLIGATIONS.
(i) The Borrower hereby irrevocably and unconditionally agrees to
reimburse the Agent, for the ratable benefit of the Lenders, for each payment or
disbursement made by the Agent to settle its obligations under any draft drawn
under a Letter of Credit (each, a "REIMBURSEMENT OBLIGATION") within two (2)
Business Days from when such draft is paid with either funds not borrowed
hereunder or with a Borrowing subject to Section 2.4 and the other terms and
conditions contained in this Agreement.
15
The Reimbursement Obligation shall bear interest (which the Borrower hereby
promises to pay) from and after the date such draft is paid until (but excluding
the date) the Reimbursement Obligation is paid at the lesser of the Highest
Lawful Rate or the Base Rate so long as the Reimbursement Obligation shall not
be past due, and thereafter at the default rate per annum as set forth in
Section 2.7. If any such payment or disbursement is reimbursed to the Agent
after 1:30 p.m. on the date such payment or disbursement is made by the Agent,
interest shall be paid on the reimbursable amount for one (1) day. The Agent
shall give the Borrower notice of any drawing on a Letter of Credit within one
(1) Business Day after receipt of any draft drawn under a Letter of Credit.
(ii) The Borrower agrees for the benefit of the Agent and each
Lender that, notwithstanding any provision of any Application, the obligations
of the Borrower under this Section 2.2(c) and each applicable Application shall
be absolute, unconditional and irrevocable (subject to Section 2.2(b)) and shall
be performed strictly in accordance with the terms of this Agreement and each
applicable Application under all circumstances whatsoever INCLUDING, BUT NOT
LIMITED TO, ANY DEFENSE BASED UPON THE AGENT'S OR ANY LENDER'S OWN SIMPLE OR
CONTRIBUTORY NEGLIGENCE (other than the defense of payment in accordance with
this Agreement or a defense based on the gross negligence or willful misconduct
of the Agent or any Lender), including, without limitation, the following
circumstances:
(1) any lack of validity or enforceability of any of the
L/C Documents;
(2) the existence of any claim, setoff, defense or other
right the Borrower or any Subsidiary may have at any time against
a beneficiary of a Letter of Credit (or any Person for whom a
beneficiary may be acting), the Agent, any Lender or any other
Person, whether in connection with this Agreement, another L/C
Document or any unrelated transaction;
(3) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect, PROVIDED THAT the Agent's
determination that documents presented under the Letter of Credit
comply with the terms thereof did not constitute gross negligence
or willful misconduct of the Agent;
(4) payment by the Agent under a Letter of Credit against
presentation to the Agent of a draft or certificate that does not
comply with the terms of the Letter of Credit, PROVIDED THAT the
Agent's determination that documents presented under the Letter
of Credit comply with the terms thereof did not constitute gross
negligence or willful misconduct of the Agent; or
(5) any other act or omission to act or delay of any kind
by the Agent, any Lender or any other Person or any other event
or circumstance whatsoever that might, but for the provisions of
this Section 2.2(c), constitute
16
a legal or equitable discharge of the Borrower's obligations
hereunder or under any L/C Document, PROVIDED THAT such act or
omission of the Agent or any Lender did not constitute gross
negligence or willful misconduct of the Agent or any Lender.
(d) THE PARTICIPATING INTERESTS. Each Lender severally and not jointly
agrees to purchase from the Agent, and the Agent hereby agrees to sell to each
Lender, an undivided percentage participating interest, to the extent of its
Percentage, in each Letter of Credit issued by, and Reimbursement Obligation
owed to, the Agent in connection with a Letter of Credit. Upon any failure by
the Borrower to pay any Reimbursement Obligation in connection with a Letter of
Credit at the time required in Sections 2.2(c) and 2.4(c), or if the Agent is
required at any time to return to the Borrower or to a trustee, receiver,
liquidator, custodian or other Person any portion of any payment by the Borrower
of any Reimbursement Obligation in connection with a Letter of Credit, the Agent
shall promptly give notice of same to each Lender, and the Agent shall have the
right to require each Lender to fund its participation in such Reimbursement
Obligation. Each Lender (except the Agent to the extent it is also a Lender)
shall pay to the Agent an amount equal to such Lender's Percentage of such
unpaid or recaptured Reimbursement Obligation not later than the Business Day it
receives notice from the Agent to such effect, if such notice is received before
1:00 p.m., or not later than the following Business Day if such notice is
received after such time. If a Lender fails to pay timely such amount to the
Agent, it shall also pay to the Agent interest on such amount accrued from the
date payment of such amount was made by the Agent to the date of such payment by
the Lender at a rate per annum equal to the Base Rate in effect for each such
day and only after such payment shall such Lender be entitled to receive its
Percentage of each payment received on the relevant Reimbursement Obligation and
of interest paid thereon. The several obligations of the Lenders to the Agent
under this Section 2.2(d) shall be absolute, irrevocable and unconditional under
any and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment any Lender may have or have had against the
Borrower, the Agent, any other Lender or any other Person whatsoever including,
but not limited to, any defense based on the failure of the demand for payment
under the Letter of Credit to conform to the terms of such Letter of Credit or
the legality, validity, regularity or enforceability of such Letter of Credit
and INCLUDING, BUT NOT LIMITED TO, THOSE RESULTING FROM THE AGENT'S OWN SIMPLE
OR CONTRIBUTORY NEGLIGENCE. Without limiting the generality of the foregoing,
such obligations shall not be affected by any Default or Event of Default or by
any subsequent reduction or termination of any Revolving Credit Commitment of a
Lender, and each payment by a Lender under Section 2.2 shall be made without any
offset, abatement, withholding or reduction whatsoever.
Section 2.3 TYPES OF LOANS AND MINIMUM BORROWING AMOUNTS. Borrowings of
Loans may be outstanding as either Base Rate Loans or Eurodollar Loans, as
selected by the Borrower pursuant to Section 2.4. All Borrowings advanced on the
Initial Borrowing Date shall be advanced as Base Rate Loans unless the requisite
notice for a Eurodollar Loan has been given pursuant to Section 2.4(a) and
indemnification is given by the Borrower to the Agent and the Lenders
satisfactory to the Agent and the Lenders for any breakage fees incurred. Each
Borrowing of Base Rate Loans and Eurodollar Loans shall be in an amount of not
less than $1,000,000.
17
Section 2.4. MANNER OF BORROWING
(a) NOTICE TO THE AGENT. The Borrower shall give notice to the Agent by
no later than 12:00 noon (i) at least three (3) Business Days before the date on
which the Borrower requests the Lenders to advance a Borrowing of Eurodollar
Loans, and (ii) on the date the Borrower requests the Lenders to advance a
Borrowing of Base Rate Loans pursuant to a duly executed Borrowing Request from
an Authorized Officer, PROVIDED THAT the Borrower may give telephonic notice of
such request so long as a duly executed Borrowing Request is promptly thereafter
delivered or telecopied to the Agent. The Loans included in each Borrowing shall
bear interest initially at the type of rate specified in the Borrowing Request
with respect to such Borrowing. Thereafter, the Borrower may from time to time
elect to change or continue the type of interest rate borne by each Borrowing
or, subject to Section 2.3's minimum amount requirement for each outstanding
Borrowing, a portion thereof, as follows: (i) if such Borrowing is of Eurodollar
Loans, the Borrower may continue part or all of such Borrowing as Eurodollar
Loans for an Interest Period specified by the Borrower or convert part or all of
such Borrowing into Base Rate Loans on the last day of the Interest Period
applicable thereto, or the Borrower may earlier convert part or all of such
Borrowing into Base Rate Loans so long as it pays the breakage fees and funding
losses provided in Section 2.11; and (ii) if such Borrowing is of Base Rate
Loans, the Borrower may convert all or part of such Borrowing into Eurodollar
Loans for an Interest Period specified by the Borrower on any Business Day. The
Borrower may select multiple Interest Periods for the Revolving Loans
constituting any particular Borrowing, PROVIDED THAT at no time shall the number
of different Interest Periods for outstanding Eurodollar Loans exceed ten (10)
(it being understood for such purposes that (x) Interest Periods of the same
duration, but commencing on different dates, shall be counted as different
Interest Periods and (y) all Interest Periods commencing on the same date and of
the same duration shall be counted as one Interest Period regardless of the
number of Borrowings or Loans involved). Notices of the continuation of a
Borrowing of Eurodollar Loans for an additional Interest Period or of the
conversion of part or all of a Borrowing of Eurodollar Loans into Base Rate
Loans or of Base Rate Loans into Eurodollar Loans must be given by no later than
12:00 noon at least three (3) Business Days with respect to continued or new
Eurodollar Loans before the date of the requested continuation or conversion.
The Borrower shall give such notices concerning the advance, continuation, or
conversion of a Borrowing by telephone or facsimile (which notice shall be
irrevocable once given and, if by telephone, shall be promptly confirmed in
writing) pursuant to a Borrowing Request which shall specify the date of the
requested advance, continuation or conversion (which shall be a Business Day),
the amount of the requested Borrowing, the type of Loans to comprise such new,
continued or converted Borrowing and, if such Borrowing is to be comprised of
Eurodollar Loans, the Interest Period applicable thereto. The Borrower agrees
that the Agent may rely on any such telephonic or facsimile notice given by any
person it in good faith believes is an Authorized Officer without the necessity
of independent investigation and that, if any such notice by telephone conflicts
with any written confirmation, such telephonic notice shall govern if the Agent
has acted in reliance thereon.
(b) NOTICE TO THE LENDERS. The Agent shall give prompt telephonic, telex
18
or facsimile notice to each Lender of any notice received pursuant to Section
2.4(a) relating to a Borrowing. The Agent shall give notice to the Borrower and
each Lender by like means of the interest rate applicable to each Borrowing of
Eurodollar Loans (but, if such notice is given by telephone, the Agent shall
confirm such rate in writing) promptly after the Agent has made such
determination.
(c) BORROWER'S FAILURE TO NOTIFY. If the Borrower fails to give notice
pursuant to Section 2.4(a) of (i) the continuation or conversion of any
outstanding principal amount of a Borrowing by way of Eurodollar Loans or of
(ii) a Borrowing by way of Loans to pay outstanding Reimbursement Obligations,
and has not notified the Agent by 12:00 noon at least three (3) Business Days
before the last day of the Interest Period for any Borrowing of Eurodollar Loans
or by the day such Reimbursement Obligation becomes due, that it intends to
repay such Borrowing or such Reimbursement Obligation with funds not borrowed
hereunder, the Borrower shall be deemed to have requested, as applicable, (x)
the continuation of such Borrowing as a Base Rate Loan or (y) the advance of a
new Borrowing of Base Rate Loans under the Revolving Credit on such day in the
amount of the Reimbursement Obligation then due, which Borrowing pursuant to
this sub-clause (y) shall be deemed to have been funded on such date by the
Lenders in accordance with Section 2.1(a) and to have been applied on such day
to pay the Reimbursement Obligation then due, in each case so long as no Default
or Event of Default shall have occurred and be continuing or would occur as a
result of such Borrowing but otherwise disregarding the conditions to Borrowings
set forth in Section 4.2. Upon the occurrence and during the continuance of any
Default or Event of Default, (i) each Eurodollar Loan will automatically, on the
last day of the then existing Interest Period therefor, convert into a Base Rate
Loan and (ii) the obligation of the Lenders to make, continue or convert Loans
into, Eurodollar Loans shall be suspended.
(d) DISBURSEMENT OF LOANS. Not later than 1:00 p.m. on the date of any
requested advance of a new Borrowing of Loans, each Lender, subject to all other
provisions hereof, shall make available its Loan comprising its ratable share of
such Borrowing in funds immediately available in Chicago, Illinois for the
benefit of the Agent and according to the disbursement instructions of the
Agent. The Agent shall make the proceeds of each such Borrowing available in
immediately available funds to the Borrower (or as directed in writing by
Borrower) on such date. In the event that any Lender does not make such amounts
available to the Agent by the time prescribed above, but such amount is received
later that day, such amount may be credited to the Borrower in the manner
described in the preceding sentence on the next Business Day (with interest on
such amount to begin accruing hereunder on such next Business Day), PROVIDED
THAT acceptance by the Borrower of any such late amount shall not be deemed a
waiver by the Borrower of any rights it may have against such Lender. No Lender
shall be responsible to the Borrower for any failure by another Lender to fund
its portion of a Borrowing, and no such failure by a Lender shall relieve any
other Lender from its obligation, if any, to fund its portion of a Borrowing.
(e) AGENT RELIANCE ON LENDER FUNDING. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be effective
upon receipt) that
19
such Lender does not intend to make such payment, the Agent may assume that such
Lender has made such payment when due and in reliance upon such assumption may
(but shall not be required to) make available to the Borrower the proceeds of
the Loan to be made by such Lender and, if any Lender has not in fact made such
payment to the Agent, such Lender shall, on demand, pay to the Agent the amount
made available to the Borrower attributable to such Lender together with
interest thereon for each day during the period commencing on the date such
amount was made available to the Borrower and ending on (but excluding) the date
such Lender pays such amount to the Agent at a rate per annum equal to the
Agent's cost of funds. If such amount is not received from such Lender by the
Agent immediately upon demand, the Borrower will, on demand, repay to the Agent
the proceeds of the Loan attributable to such Lender with interest thereon at a
rate per annum equal to the interest rate applicable to the relevant Loan.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to fund its Revolving Credit Commitments hereunder or to prejudice
any rights which the Borrower may have against any Lender as a result of any
default by such Lender hereunder.
Section 2.5. INTEREST PERIODS. As provided in Section 2.4(a), at the
time of each request for the advance or continuation of, or conversion into, a
Borrowing of Eurodollar Loans, the Borrower shall select an Interest Period
applicable to such Eurodollar Loans from among the available options subject to
the limitations in Section 2.4(a); PROVIDED, HOWEVER:
(i) the Borrower may not select an Interest Period for a
Borrowing of Eurodollar Loans that extends beyond the Maturity Date;
(ii) whenever the last day of any Interest Period would otherwise
be a day that is not a Business Day, the last day of such Interest Period shall
be extended to the next succeeding Business Day or reduced to the immediately
preceding Business Day if the next succeeding Business Day is in the next
calendar month; and
(iii) for purposes of determining an Interest Period, a month
means a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month; PROVIDED, HOWEVER,
that if there is no such numerically corresponding day in the month in which an
Interest Period is to end or if such Interest Period begins on the last Business
Day of a calendar month, then such Interest Period shall end on the last
Business Day of the calendar month in which such Interest Period is to end.
Section 2.6. PAYMENTS
(a) INTEREST ON BASE RATE LOANS. Each Base Rate Loan shall bear interest
(computed on the basis of a 365/366-day year and actual days elapsed, excluding
the date of repayment) on the unpaid principal amount thereof from the date such
Loan is made until maturity (whether by acceleration or otherwise) or conversion
to a Eurodollar Loan in accordance with Section 2.4(a) hereof, at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate, or (ii) the Base Rate
from time to time in effect, payable in arrears on each Interest Payment Date
for such Loan and at maturity (whether by
20
acceleration or otherwise) or conversion to a Eurodollar Loan in accordance with
Section 2.4(a).
(b) INTEREST ON EURODOLLAR LOANS. Each Eurodollar Loan shall bear
interest (computed on the basis of a 360-day year and actual days elapsed,
excluding the date of repayment) on the unpaid principal amount thereof from the
date such Loan is made until maturity (whether by acceleration or otherwise) or
conversion to a Base Rate Loan in accordance with Section 2.4(a) hereof, at a
rate per annum equal to the lesser of (i) the Highest Lawful Rate, or (ii) the
sum of the Adjusted LIBOR Rate plus the Applicable Margin, payable in arrears on
each Interest Payment Date for such Loan and at maturity (whether by
acceleration or otherwise) or conversion to a Base Rate Loan in accordance with
Section 2.4(a).
(c) INTEREST RATE DETERMINATIONS. The Agent shall determine each
interest rate applicable to the Loans and Reimbursement Obligations hereunder
and such determination shall be conclusive and binding except in the case of the
Agent's manifest error or willful misconduct. The Agent shall give prompt
telephonic, telex or facsimile notice to the Borrower and each Lender of the
interest rate applicable to each Loan or Reimbursement Obligation (but, if such
notice is given by telephone, the Agent shall confirm such rate in writing)
promptly after the Agent has made such determination.
(d) PRINCIPAL PAYMENTS. All outstanding principal of the Loan, together
with all accrued and unpaid interest thereon and all other Obligations, shall be
and payable on the Maturity Date.
Section 2.7 DEFAULT RATES. If any payment of principal, interest or fees
is not paid when due after the expiration of the grace period therefor provided
in Section 7.1 (whether by acceleration or otherwise), such amount shall bear
interest (computed on the basis of a year of 360 days for Eurodollar Loans or
interest thereon and 365 or 366 days for unpaid fees, Base Rate Loans or
interest thereon and actual days elapsed) from the date such payment was due
until such amount then due is paid in full, payable on demand, at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate, or (ii) the sum of two
percent (2%) per annum plus the Base Rate from time to time in effect (but not
less than the Base Rate in effect at maturity). It is the intention of the Agent
and the Lenders to conform strictly to usury laws applicable to them.
Accordingly, if the transactions contemplated hereby or the Loans would be
usurious as to any of the Lenders under laws applicable to it (including the
laws of the United States of America and the State of Texas or any other
jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement, the Revolving Notes or
any other Credit Document), then, in that event, notwithstanding anything to the
contrary in this Agreement, the Revolving Notes or any other Credit Document, it
is agreed as follows: (i) the aggregate of all consideration which constitutes
interest under laws applicable to such Lender that is contracted for, taken,
reserved, charged or received by such Lender under this Agreement, the Revolving
Notes or any other Credit Document or otherwise shall under no circumstances
exceed the Highest Lawful Rate, and any excess shall be credited by such Lender
on the principal amount of the Revolving Notes or to the Reimbursement
Obligations (or, if the principal amount of the Revolving Notes and all
Reimbursement
21
Obligations shall have been paid in full, refunded by such Lender to the
Borrower); (ii) in the event that the maturity of the Revolving Notes is
accelerated by reason of an election of the holder or holders thereof resulting
from any Event of Default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under laws applicable to such Lender may never include more than the
Highest Lawful Rate, and excess interest, if any, provided for in this
Agreement, the Revolving Notes, any other Credit Document or otherwise shall be
automatically canceled by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Revolving Notes or to the Reimbursement Obligations (or
if the principal amount of the Revolving Notes and all Reimbursement Obligations
shall have been paid in full, refunded by such Lender to the Borrower); and
(iii) if at any time the interest provided under the Revolving Notes or the
Credit Agreement, together with any other fees payable pursuant to the Revolving
Notes, the Credit Agreement or any other Credit Document and deemed interest
under applicable law, exceeds the amount that would have accrued at the Highest
Lawful Rate, the amount of interest and any such fees to accrue to such Lender
hereunder and thereunder shall be limited to the amount which would have accrued
at the Highest Lawful Rate, but any subsequent reductions shall not reduce the
interest to accrue to such Lender hereunder and thereunder below the Highest
Lawful Rate until the total amount of interest accrued pursuant hereto and
thereto and such fees deemed to be interest equals the amount of interest which
would have accrued to such Lender if a varying rate per annum equal to the
interest hereunder had at all times been in effect plus the amount of fees which
would have been received but for the effect hereof; and in each case, to the
extent permitted by applicable law, such Lender shall not be subject to any of
the penalties provided by law for contracting for, taking, reserving, charging
or receiving interest in excess of the Highest Lawful Rate. The Agent and the
Lenders hereby elect to determine the applicable rate ceiling under Section
303.201 of the Texas Finance Code Ann. (Vernon 1998) by the weekly rate ceiling
from time to time in effect, subject to the Agent and the Lenders' right
subsequently to change such method in accordance with applicable law. The
provisions of Chapter 346 of Tex. Finance Code Ann. (Vernon 1998), regulating
certain revolving credit accounts shall not apply to this Agreement or any of
the Revolving Notes.
Section 2.8 OPTIONAL PREPAYMENTS. The Borrower shall have the privilege
of prepaying the Loans without premium or penalty in whole or in part at any
time, PROVIDED THAT any prepayment of Base Rate Loans or Eurodollar Loans shall
be in increments of $500,000 or, if less, the total outstanding principal amount
of such Loans. If the Borrower is prepaying Eurodollar Loans, it shall give to
the Agent notice of such prepayment no later than 12:00 noon at least three (3)
Business Days before the proposed prepayment date. All prepayments of Eurodollar
Loans shall be accompanied by accrued interest thereon, together with any
applicable breakage fees and funding losses pursuant to Section 2.11. The
Borrower may direct the application of any optional prepayment hereunder to the
Base Rate Loans or Eurodollar Loans outstanding.
Section 2.9 MANDATORY PREPAYMENTS OF LOANS. If the aggregate principal
amount of outstanding Revolving Loans and L/C Obligations shall at any time for
any reason exceed the Revolving Credit Commitment Amount then in effect, the
Borrower shall,
22
immediately and without notice or demand, pay the amount of such excess to the
Agent for the ratable benefit of the Lenders as a prepayment of the Revolving
Loans and, if all Revolving Loans have been paid, a pre-funding of Letters of
Credit pursuant to the provisions of Section 7.4. Any mandatory prepayment of
Loans pursuant hereto shall not be limited by the notice provision for
prepayments set forth in Section 2.8, but immediately upon determining the need
to make any such prepayment, the Borrower shall notify the Lenders of such
required prepayment. Each such prepayment shall be accompanied by a payment of
all accrued and unpaid interest on the Loans prepaid and any applicable breakage
fees and funding losses pursuant to Section 2.11.
Section 2.10. THE REVOLVING NOTES. The Revolving Loans outstanding to
the Borrower from the Lenders shall be evidenced by promissory notes of the
Borrower payable to each Lender in the form of Exhibit 2.10 (each such
promissory note, together with any replacements thereof, a "REVOLVING NOTE").
Each holder of the Revolving Notes shall record on its books and records or on a
schedule to the Revolving Notes the amount of each Loan outstanding from it to
the Borrower, all payments of principal and interest and the principal balance
from time to time outstanding thereon, the type of such Loan and, if a
Eurodollar Loan, the Interest Period and interest rate applicable thereto. Such
record, whether shown on the books and records of a holder of a Revolving Note
or on a schedule to its Revolving Note, shall be PRIMA FACIE evidence as to all
such matters; PROVIDED, HOWEVER, that the failure of any holder to record any of
the foregoing or any error in any such record shall not limit or otherwise
affect the obligation of the Borrower to repay all Loans outstanding to it
hereunder, together with accrued interest thereon.
Section 2.11. BREAKAGE FEES. If any Lender incurs any loss, cost or
expense (including, without limitation, any loss of profit and loss, cost,
expense or premium reasonably incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Lender to fund or
maintain any Eurodollar Loan or the relending or reinvesting of such deposits or
amounts paid or prepaid to the Lenders) as a result of any of the following
events other than any such occurrence as a result of a change of circumstance
described in Sections 8.1 or 8.2:
(i) any payment, prepayment or conversion of a Eurodollar Loan on
a date other than the last day of its Interest Period (whether by acceleration,
prepayment or otherwise);
(ii) any failure to make a principal payment of a Eurodollar Loan
on the due date therefor; or
(iii) any failure by the Borrower to borrow, continue, prepay or
convert to a Eurodollar Loan on the date specified in a notice given pursuant to
Section 2.4(a),
then the Borrower shall pay to such Lender such amount as will reimburse such
Lender for such loss, cost or expense. If any Lender makes such a claim for
compensation, it shall provide to the Borrower a certificate executed by an
officer of such Lender setting forth the amount of such loss, cost or expense in
reasonable detail (including an explanation of the basis for and the computation
of such loss, cost or expense), and the amounts shown on
23
such certificate shall be conclusive and binding absent manifest error. Within
ten (10) days of receipt of such certificate, the Borrower shall pay to such
Lender the amount for such loss, cost or expense as documented in such
certificate.
Section 1.12. COMMITMENT TERMINATIONS The Borrower shall have the right
at any time and from time to time, upon three (3) Business Days' prior and
irrevocable written notice to the Agent, to terminate or reduce the Revolving
Credit Commitments without premium or penalty, in whole or in part, any partial
termination to be (i) in an amount not less than $5,000,000, and (ii) allocated
ratably among the Lenders in proportion to their respective Revolving Credit
Commitments; PROVIDED, THAT the Revolving Credit Commitment Amount may not be
reduced to an amount less than the sum of the aggregate principal amount of
outstanding Revolving Loans plus the aggregate undrawn face amount of
outstanding Letters of Credit plus any unpaid Reimbursement Obligations with
respect to Letters of Credit. The Agent shall give prompt notice to each Lender
of any such termination or reduction of the Revolving Credit Commitments. Any
termination of Revolving Credit Commitments pursuant to this Section 2.12 is
permanent and may not be reinstated.
24
SECTION 3. FEES AND PAYMENTS
Section 3.1. FEES (a) COMMITMENT FEES. For the period from the Effective
Date to and including the Revolving Credit Commitment Termination Date, the
Borrower shall pay to the Agent, for the ratable account of the Lenders, a
commitment fee per annum (computed on a basis of a 360-day year and actual days
elapsed) on an amount equal to the average daily difference between the
Revolving Credit Commitment Amount and the aggregate outstanding principal
amount of Revolving Loans and L/C Obligations, such commitment fees to be
calculated, for any day, at such times as the relevant Total Debt to EBITDA
Ratio is in one of the following ranges, based upon the percentage per annum set
forth opposite such Total Debt to EBITDA Ratio set forth below times such sum:
Total Debt to EBITDA
RATIO EURODOLLAR LOANS
------------ ----------------
Less than 1.0 to 1.0 0.25%
Equal to or greater than 1.0 to 1.0
but less than or equal to 1.5 to 1.0 0.25%
Greater than 1.5 to 1.0 but less than
or equal to 2.0 to 1.0 0.25%
Greater than 2.0 to 1.0 but less than
or equal to 2.5 to 1.0 0.25%
Greater than 2.5 to 1.0 0.30%
Such fee shall be payable in arrears commencing on June 30, 1998, and on the
last Business Day of each calendar quarter thereafter and on the Maturity Date,
unless the Revolving Credit Commitment is terminated in whole on an earlier
date, in which event the commitment fee for the period to but not including the
date of termination shall be paid in whole on the date of such termination. For
the period from the Effective Date through the earlier of (i) the date the
Borrower is to provide the Agent with the financial statements for the fiscal
quarter ended March 31, 1998, as required by Section 6.7(a)(i) or, if earlier,
the date such financial statements are provided to the Agent, or (ii) the date
of any Material Acquisition other than the Acquisition of Colonial Guild, the
commitment fee shall be 0.25% per annum. Thereafter, any change to the
commitment fee as a result of a change in the Total Debt to EBITDA Ratio shall
be determined in the manner and be effective at the dates provided in the
definition of Applicable Margin.
(b) LETTER OF CREDIT FEES. Commencing upon the date of issuance or
extension of any Letter of Credit and on the first Business Day of each calendar
quarter thereafter, the Borrower shall pay to the Agent, for the ratable benefit
of the Lenders, quarterly in arrears (pro rated, if necessary for any portion of
such quarter), a non-refundable fee equal to the face amount of such Letter of
Credit times the Applicable Margin, calculated in each case on the basis of a
360-day year and actual days in the period and based on the then scheduled
expiry date of the Letter of Credit; PROVIDED THAT the minimum fee for
25
any Letter of Credit shall be $500. Thereafter, such fees shall be payable by
the Borrower in arrears on the last Business Day of each calendar quarter of
each year commencing with the next succeeding calendar quarter, with the last
such payment on the date any such Letter of Credit expires. In addition, the
Borrower shall pay to the Agent, solely for the Agent's account, reasonable
administrative and amendment fees and expenses for Letters of Credit established
by the Agent from time to time in accordance with its customary practices and as
agreed between the Agent and the Borrower and the fronting fee described in the
Fee Letter.
(c) AGENT FEES. The Borrower shall pay to the Agent the fees agreed to
in the Fee Letter and any other fees from time to time agreed to by the Borrower
and the Agent.
Section 3.2. PLACE AND APPLICATION OF PAYMENTS. All payments of
principal of and interest on the Loans and the Reimbursement Obligations and all
other amounts payable by the Borrower under the Credit Documents shall be made
by the Borrower to the Agent by no later than 1:30 p.m. on the due date thereof
at the office of the Agent in Chicago, Illinois (or such other location as the
Agent may designate to the Borrower for the benefit of the Lenders). Any
payments received by the Agent from the Borrower after 1:30 p.m. shall be deemed
to have been received on the next Business Day. The Agent will, on the same day
each payment is received or deemed to have been received in accordance with this
Section 3.2, cause to be distributed like funds in like currency to each Lender
owed an Obligation for which such payment was received, PRO RATA based on the
respective amounts of such type of Obligation then owing to each Lender. In
calculating the amount of Obligations owing each Lender other than for principal
and interest on Loans and Reimbursement Obligations and fees under Section 3.1,
the Agent shall only be required to include such other Obligations that Lenders
have certified to the Agent in writing are due to such Lenders.
Section 3.3. WITHHOLDING TAXES. (a) PAYMENTS FREE OF WITHHOLDING. Except
as otherwise required by law and subject to Section 3.3(b), each payment by the
Borrower or any Guarantor to the Agent or any Lender under this Agreement or any
other Credit Document shall be made without withholding for or on account of any
present or future taxes (other than overall net income taxes on the recipient)
imposed by or within the jurisdiction in which the Borrower or such Guarantor is
domiciled, any jurisdiction from which the Borrower or such Guarantor makes any
payment, or (in each case) any political subdivision or taxing authority thereof
or therein, excluding, in the case of each Lender and the Agent, taxes,
assessments or other governmental charges
(i) imposed on, based upon, or measured by its income, and branch
profits, franchise and similar taxes imposed on it, by any jurisdiction
in which the Agent or such Lender, as the case may be, is incorporated
or maintains its principal place of business or Lending Office or which
subjects the Agent or such Lender to tax by reason of a connection
between the taxing jurisdiction and the Agent or such Lender (other than
a connection resulting from the transactions contemplated by this
Agreement);
(ii) imposed as a result of a connection between the taxing jurisdiction
and the
26
Agent or such Lender, as the case may be, other than a connection
resulting from the transactions contemplated by this Agreement;
(iii) imposed as a result of the transfer by such Lender of its interest
in this Agreement or any other Credit Document or a designation by such
Lender of a new Lending Office (other than taxes imposed as a result of
any change in treaty, law or regulation after such transfer of the
Lender's interest in this Agreement or any Credit Document or
designation of a new Lending Office);
(iv) imposed by the United States of America upon a Lender organized
under the laws of a jurisdiction outside of the United States, except to
the extent that such tax is imposed or increased as a result of any
change in applicable law, regulation or treaty (other than any addition
of or change in any "anti-treaty shopping," "limitation of benefits," or
similar provision applicable to a treaty) after the date hereof, in the
case of each Lender originally a party hereto or, in the case of any
Purchasing Lender (as defined in Section 10.10), after the date on which
it becomes a Lender; and
(v) which would not have been imposed but for (a) the failure of the
Agent or any Lender, as the case may be, to provide (x) an Internal
Revenue Service Form 1001 or 4224, as the case may be, or any substitute
or successor form prescribed by the Internal Revenue Service pursuant to
Section 3.3(b) below, or (y) any other certification, documentation or
proof which could reasonably be requested by the Borrower, or (b) a
determination by a taxing authority or a court of competent jurisdiction
that a certification, documentation or other proof provided by such
Lender or the Agent to establish an exemption from such tax, assessment
or other governmental charge is false
(all such non-excluded taxes, assessments or other governmental charges and
liabilities being hereinafter referred to as "INDEMNIFIED TAXES"). If any such
withholding is so required, the Borrower or such Guarantor, as applicable, shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by the Agent and each Lender is free and clear of such
Indemnified Taxes (including Indemnified Taxes on such additional amount) and is
equal to the amount that the Agent or such Lender (as the case may be) would
have received had such withholding not been made. If the Agent or any Lender
pays any amount in respect of any Indemnified Taxes, penalties or interest, the
Borrower or such Guarantor, as applicable, shall reimburse the Agent or that
Lender for the payment on demand in the currency in which such payment was made.
If the Borrower or any Guarantor pays any Indemnified Taxes, penalties or
interest, it shall deliver official tax receipts evidencing the payment or
certified copies thereof, or other satisfactory evidence of payment if such tax
receipts have not yet been received by the Borrower or such Guarantor (with such
tax receipts to be promptly delivered when actually received), to the Agent or
the Lender on whose account such withholding was made (with a copy to the Agent
if not the recipient of the original) within ten (10) days of such payment.
27
(b) U.S. WITHHOLDING TAX EXEMPTIONS. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the Effective Date, two duly
completed and signed copies of either Form 1001 (entitling such Lender to a
complete exemption from withholding under the Code on all amounts to be received
by such Lender, including fees, pursuant to the Credit Documents) or Form 4224
(relating to all amounts to be received by such Lender, including fees, pursuant
to the Credit Documents) of the Internal Revenue Service. Thereafter and from
time to time, each Lender shall submit to the Borrower and the Agent such
additional duly completed and signed copies of one or the other of such forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) notified by the Borrower,
directly or through the Agent, to such Lender, and (ii) required under
then-current United States law or regulations to avoid United States withholding
taxes on payments in respect of all amounts to be received by such Lender,
including fees, pursuant to the Credit Documents. Upon the request of the
Borrower, each Lender that is a United States person shall submit to the
Borrower a certificate to the effect that it is such a United States person.
(c) REFUND OF TAXES. If any Lender or the Agent receives a refund of any
Indemnified Tax or any tax referred to in Section 10.3 with respect to which the
Borrower or any Guarantor has paid any amount pursuant to this Section 3.3 or
Section 10.3, such Lender or the Agent shall pay the amount of such refund
(including any interest received with respect thereto) to the Borrower or such
Guarantor.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1. CONDITIONS PRECEDENT TO INITIAL BORROWING.The obligations
of the Lenders to advance any Loans hereunder on the Initial Borrowing Date, of
the Agent to issue any Letter of Credit on the Initial Borrowing Date and of the
Lenders to participate in any Letter of Credit on the Initial Borrowing Date are
subject to the following conditions precedent, all in form and substance
satisfactory to the Agent and the Lenders, in sufficient number of signed
counterparts, where applicable, to provide one for each Lender (except for the
Revolving Notes, of which only one original shall be signed for each Lender) and
executed, to the extent applicable, by an Authorized Officer of the Borrower or
the Guarantors:
(a) The Agent shall have received:
(i) REVOLVING NOTES. The duly executed Revolving Notes of the
Borrower;
(ii) GUARANTIES. The duly executed Guaranties of each of the
Guarantors in substantially the form of Exhibit 4.1A;
(iii) SUBORDINATION AGREEMENTS. The duly executed Subordinated
Agreements from each of T.Y.G. Company and T.Y.G. Trade in substantially the
form of Exhibit 4.1B;
28
(iv) CERTIFICATE OF OFFICERS OF BORROWER AND GUARANTORS. A
certificate of the Secretary or Assistant Secretary and the President or Vice
President of each of the Borrower and the Guarantors containing specimen
signatures of the persons authorized to execute Credit Documents on such
Person's behalf or any other documents provided for herein, together with (x)
copies of resolutions of the Board of Directors of such Person authorizing the
execution and delivery of the Credit Documents and of all other legal documents
or proceedings taken by such Person in connection with the execution and
delivery of the Credit Documents, (y) copies of such Person's Certificate or
Articles of Incorporation, certified by the Secretary of State of such Person's
jurisdiction of organization, and Bylaws and (z) a certificate of existence and
good standing from the appropriate governing agency of such Person's
jurisdiction of organization and, to the extent applicable, a certificate of
qualification as a foreign corporation and of good standing from the state(s)
where such Person conducts business;
(v) FEES. Payment of the fees and all other expenses reasonably
incurred through the date hereof then due and owing to the Agent and the Lenders
pursuant to the terms of this Agreement;
(vi) INSURANCE CERTIFICATE. An insurance certificate describing
in reasonable detail the insurance maintained by the Borrower and its
Subsidiaries as required by the Credit Documents;
(vii) CERTIFICATE OF FINANCIAL CONDITION. A certificate of the
Chief Financial Officer of the Borrower documenting the solvency of the Borrower
and its Subsidiaries on a consolidated basis, after giving effect to the
Borrowings on the Initial Borrowing Date hereunder;
(viii) LIEN SEARCHES. The results of recent lien searches and
Uniform Commercial Code searches showing no Liens on any of the property or
assets of any of the Borrower or its Subsidiaries other than Permitted Liens, or
evidence that any such Liens other than Permitted Liens have been terminated or
will be terminated concurrently with the Initial Borrowing Date;
(ix) CONSENTS. Certified copies of all documents evidencing any
necessary consents and governmental approvals taken or obtained by the Borrower
and the Guarantors with respect to the Credit Documents;
(x) OPINION OF COUNSEL. The opinion of Liddell, Sapp, Zivley,
Hill & LaBoon, L.L.P., legal counsel to the Borrower and the Guarantors covering
such matters as the Agent may reasonably require; and
(xi) OTHER DOCUMENTS. Such other documents as the Agent may
reasonably request.
(b) All legal matters incident to the execution and delivery of the
Credit Documents shall be reasonably satisfactory to the Agent.
29
Section 4.2. CONDITIONS PRECEDENT TO BORROWING FOR ACQUISITION OF
COLONIAL GUILD.The obligations of the Lenders to advance any Loans hereunder for
the Acquisition of Colonial Guild and its Subsidiaries is subject to the
following conditions precedent, all in form and substance satisfactory to the
Agent and the Lenders:
(a) ACQUISITION CONDITIONS. All of the conditions to such Acquisition
contained in the Colonial Merger Agreement shall have been satisfied in full,
without amendment or waiver of, or other forbearance to exercise any rights with
respect to, any of the terms and provisions thereof relating to (i) the purchase
price for the Stock (as defined therein) or the number of shares of Stock to be
acquired thereunder, (ii) the consummation of the Merger contemplated therein,
(iii) the material terms of the treatment of dissenting shareholders thereunder,
(iv) the material terms of the indemnification by the shareholders thereunder,
(v) the representations and warranties of Colonial Guild contained in Sections
2.2(a), (b) or (c), 2.3, 2.4, 2.5, 2.11, 2.18 or 2.21, in each case in any
material respect, or (vi) the conditions precedent contained in Sections 5.4,
5.5, 5.7, 5.8, 5.15, or 5.16 thereof;
(b) NO RESTRAINT. No judgment, order, injunction or other similar
restraint prohibiting or imposing adverse conditions upon the purchase of all of
the shares of Colonial Guild by the Borrower shall be outstanding, and no
actions, suits or proceedings shall be pending or threatened with respect to the
Borrower or Colonial Guild or their respective Subsidiaries which could
reasonably be expected to have an adverse effect on the consummation of the
merger contemplated by the Colonial Merger Agreement or the closing to occur
thereunder;
(c) SHARES OF COLONIAL GUILD. All of the shares of stock of Colonial
Guild to be purchased in such Acquisition will be purchased free and clear of
all restrictions to purchase imposed by applicable laws or regulations and any
voting trusts, proxies or similar arrangements or applicable laws or regulations
that would restrict the Borrower's right to exercise the voting rights
attributable to such shares;
(d) REGULATORY FILINGS. All actions and proceedings required by
applicable laws or regulations to have been taken prior to or on the date of
such Acquisition in order for the Borrower to be able to lawfully consummate
such Acquisition shall have been taken, all waiting periods thereunder and
therefore shall have expired or terminated without any action being taken by any
competent authority which restrains, prevents or imposes adverse conditions upon
the consummation of such Acquisition, and all consents, waivers and approvals
(including, without limitation, those of any governmental authority or
regulatory body) necessary to have been given or obtained prior to or on the
date of such Acquisition in order for the Borrower to be able to lawfully
consummate such Acquisition shall have been given or obtained and remain in full
force and effect, including, without limitation, compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
(e) COLONIAL GUILD AS GUARANTOR. Colonial Guild and its Subsidiaries
shall each deliver to the Agent Guaranties substantially in the form of Exhibit
4.1A (in sufficient number of signed counterparts to provide one for each
Lender) executed by an Authorized Officer of each such entity;
30
(f) CERTIFICATE OF FINANCIAL CONDITION. A certificate of the Chief
Financial Officer of the Borrower documenting the solvency of the Borrower and
its Subsidiaries on a consolidated basis, after giving effect to the Borrowings
for such Acquisition;
(g) LIEN SEARCHES. The results of recent lien searches and Uniform
Commercial Code searches showing no Liens on any of the property or assets of
any of Colonial Guild or its Subsidiaries other than Permitted Liens, or
evidence that any such Liens other than Permitted Liens have been terminated or
will be terminated concurrently with the Borrowing for such Acquisition;
(h) CERTIFICATE OF ADDITIONAL GUARANTORS. A certificate of the Secretary
or Assistant Secretary and the President or Vice President of each of Colonial
Guild and its Subsidiaries containing specimen signatures of the persons
authorized to execute Credit Documents on such Person's behalf or any other
documents provided for herein, together with (x) copies of resolutions of the
Board of Directors of such Person authorizing the execution and delivery of the
Credit Documents and of all other legal documents or proceedings taken by such
Person in connection with the execution and delivery of the Credit Documents,
(y) copies of such Person's Certificate or Articles of Incorporation, certified
by the Secretary of State of such Person's jurisdiction of organization, and
Bylaws and (z) a certificate of existence and good standing from the appropriate
governing agency of such Person's jurisdiction of organization and, to the
extent applicable, a certificate of qualification as a foreign corporation and
of good standing from the state(s) where such Person conducts business; and
(i) REPRESENTATION AND WARRANTIES TRUE AND CORRECT. Each of the
representations and warranties of the Borrower and its Subsidiaries set forth
herein and in the other Credit Documents, in each case as though Colonial Guild
and its Subsidiaries were then Subsidiaries of the Borrower, shall be true and
correct in all material respects as of the time of such Borrowing, except as a
result of the transactions expressly permitted hereunder or thereunder and
except to the extent that any such representation or warranty relates solely to
an earlier date, in which case it shall have been true and correct in all
material respects as of such earlier date.
Section 4.3. CONDITIONS PRECEDENT TO ALL BORROWINGS.In the case of each
advance of a Borrowing hereunder (including the issuance of, increase in the
amount of, or extension of the expiry date of, a Letter of Credit and including
the initial Borrowing and any Borrowing for the Acquisition of Colonial Guild
hereunder):
(a) NOTICES. In the case of a Borrowing, the Agent shall have received
the Borrowing Request required by Section 2.4, and in the case of the issuance,
extension or increase of Letter of Credit, the Agent shall have received a duly
completed Borrowing Request and Application for such Letter of Credit meeting
the requirements of Section 2.2;
(b) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. Each of the
representations and warranties of the Borrower and its Subsidiaries set forth
herein and in the other Credit Documents shall be true and correct in all
material respects as of the time
31
of such new Borrowing, except as a result of the transactions expressly
permitted hereunder or thereunder and except to the extent that any such
representation or warranty relates solely to an earlier date, in which case it
shall have been true and correct in all material respects as of such earlier
date;
(c) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing or would occur as a result of such Borrowing;
(d) NEW LITIGATION AND CHANGES IN PENDING LITIGATION. Since the
Effective Date, no new litigation (including, without limitation, derivative or
injunctive actions), arbitration proceedings or governmental proceedings shall
be pending or known to be threatened against the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect; and no material development (whether or not disclosed) shall have
occurred in any litigation (including, without limitation, derivative or
injunctive actions), arbitration proceedings or governmental proceedings
previously disclosed, which could reasonably be expected to have a Material
Adverse Effect;
(e) REGULATION U; OTHER LAWS. The Borrowings to be made by the Borrower
shall not result in either the Borrower or the Lenders being in non-compliance
with or in violation of Regulation U of the Board of Governors of the Federal
Reserve System and shall not be prohibited by any other legal requirement
(including Regulations G, T and X of the Board of Governors of the Federal
Reserve System) imposed by the banking laws of the United States of America, and
shall not otherwise subject the Lenders to a penalty or other onerous conditions
under or pursuant to any legal requirement; and
(f) MATERIAL ADVERSE EFFECT. There has occurred no event or effect that
has had or could reasonably be expected to have a Material Adverse Effect.
Each request for the advance of a Borrowing and each request for the issuance
of, increase in the amount of, or extension of the expiry date of, a Letter of
Credit shall be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing, or issuance of, increase in the amount of, or
extension of the expiry date of, such Letter of Credit that all conditions
precedent to such Borrowing have been satisfied or fulfilled unless the Borrower
gives to the Lenders written notice to the contrary, in which case the Lenders
shall not be required to fund such advances and the Lenders shall not be
required to issue, increase the amount of or extend the expiry date of such
Letter of Credit unless the Lenders shall have previously waived in writing such
non-compliance. In the event that any of the conditions specified in Section
4.3(c) are not satisfied, the Borrower may not convert any Base Rate Loan into a
Eurodollar Loan or continue any Eurodollar Loan and may only convert or continue
any Eurodollar Loan into or as a Base Rate Loan in accordance with Section
2.4(a) hereof and subject to the applicability of the provisions of Section 2.7
regarding default rates of interest. Further, in such case, any Eurodollar Loan
which has not been accelerated pursuant to the terms hereof shall automatically
convert into a Base Rate Loan at the end of the applicable Interest Period
unless prior to such time, the conditions specified in Section 4.3(c) shall have
been satisfied or waived pursuant to the terms hereof.
32
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders and the Agent as follows:
Section 5.1. CORPORATE ORGANIZATION (a) The Borrower and each of its
Subsidiaries (i) is a duly incorporated and existing corporation (or other
Person) in good standing under the laws of the jurisdiction of its organization,
(ii) has all necessary corporate power (or comparable power, in the case of a
Subsidiary that is not a corporation) to own the property and assets it uses in
its business and otherwise to carry on its business, and (iii) is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business transacted by it or the nature of the property owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified could not reasonably be expected to have a Material
Adverse Effect.
(b) As of the date hereof, the Borrower and Colonial Guild have no
Subsidiaries and own no interest in any joint venture or other entity other than
as listed in Schedule 5.1.
Section 5.2. CORPORATE POWER AND AUTHORITY; VALIDITY. Each of the
Borrower and the Guarantors has the corporate power and authority to execute,
deliver and carry out the terms and provisions of the Credit Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. Each of the Borrower and the Guarantors has duly executed and delivered
each such Credit Document and each such Credit Document constitutes the legal,
valid and binding obligation of such Person enforceable in accordance with its
terms, subject as to enforcement only to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether in a
proceeding in equity or at law.
Section 5.3. NO VIOLATION Neither the execution, delivery nor
performance by the Borrower or any of the Guarantors of the Credit Documents to
which it is a party nor compliance by any of such Persons with the terms and
provisions thereof, nor the consummation by it of the transactions contemplated
herein or therein, will (i) contravene any applicable provision of any law,
statute, rule or regulation, or any applicable order, writ, injunction or decree
of any court or governmental instrumentality, (ii) conflict with or result in
any breach of any term, covenant, condition or other provision of, or constitute
a default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien other than any Permitted Lien upon any of the
property or assets of the Borrower or any of its Subsidiaries under the terms of
any contractual obligation to which the Borrower or any of its Subsidiaries is a
party or by which it or any of its properties or assets are bound or to which it
may be subject, or (iii) violate or conflict with any provision of the
Certificate or Articles of Incorporation or Bylaws of such Person.
Section 5.4. LITIGATION There are no lawsuits (including, without
limitation, derivative or injunctive actions), arbitration proceedings or
governmental proceedings pending or, to the best knowledge of the Borrower,
threatened, involving the Borrower or any of its Subsidiaries except as
disclosed in Schedule 5.4 and except for such lawsuits of
33
other proceedings which are not reasonably expected to have a Material Adverse
Effect.
Section 5.5. USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the
Revolving Loans may only be used to provide working capital and for general
corporate purposes (including the issuance of Letters of Credit), to refinance
existing Debt of the Borrower or its Subsidiaries and for Acquisitions. Neither
the Borrower nor any of its Subsidiaries are engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock. No
proceeds of any Loan will be used to purchase or carry any "MARGIN STOCK" (as
defined in Regulation U of the Board of Governors of the Federal Reserve
System), to extend credit for the purpose of purchasing or carrying any "MARGIN
STOCK," or for a purpose which violates Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
Section 5.6. INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is an "INVESTMENT COMPANY" or a company "CONTROLLED" by an
"INVESTMENT COMPANY," within the meaning of the Investment Company Act of 1940,
as amended.
Section 5.7. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of its Subsidiaries is a "HOLDING COMPANY," or a "SUBSIDIARY COMPANY" of
a "HOLDING COMPANY," or an "AFFILIATE" of a "HOLDING COMPANY" or of a
"SUBSIDIARY COMPANY" of a "HOLDING COMPANY," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.8. TRUE AND COMPLETE DISCLOSURE. All factual information
heretofore or contemporaneously furnished by the Borrower or any of its
Subsidiaries in writing to the Agent or any of the Lenders in connection with
any Credit Document or any transaction contemplated therein is, and all other
such factual information hereafter furnished by any such Persons in writing to
the Lenders in connection herewith, any of the other Credit Documents or the
Loans will be, true and accurate in all material respects, taken as a whole, on
the date of such information and not incomplete by omitting to state any
material fact necessary to make the information therein not misleading at such
time in light of the circumstances under which such information was provided.
Section 5.9. FINANCIAL STATEMENTS. The financial statements heretofore
delivered to the Lenders for each of the Borrower's and Colonial Guild's fiscal
years ended December 31, 1996, and December 31, 1997, and for each of the
Borrower's and Colonial Guild's fiscal quarters ended March 31, June 30 and
September 30, 1997, have been prepared in accordance with GAAP, applied on a
basis consistent, except as otherwise noted therein, with the Borrower's or
Colonial Guild's, as the case may be, financial statements for the previous
fiscal year. Each of such annual and quarterly financial statements fairly
presents on a consolidated basis the financial position of the Borrower or
Colonial Guild, as the case may be, as of the dates thereof, and the results of
operations for the periods covered thereby, subject in the case of interim
financial statements, to normal year-end adjustments and omission of certain
footnotes as permitted by the SEC. As of the Effective Date, the Borrower and
its Subsidiaries, considered as a whole, and Colonial Guild and its
Subsidiaries, considered as a whole, have no material contingent liabilities or
material Debt required under GAAP to be disclosed in a consolidated balance
34
sheet of the Borrower or Colonial Guild, as the case may be, that were not
disclosed in the financial statements referred to in this Section 5.9 or in the
notes thereto or disclosed in writing to the Agent. The pro forma financial
statements heretofore delivered to the Lenders for the Borrower as of the
anticipated date of the Acquisition of Colonial Guild and its Subsidiaries have
been prepared on a basis consistent, except as otherwise noted therein, with the
Borrower's financial statements for the fiscal year ending December 31, 1997.
Section 5.10. NO MATERIAL ADVERSE CHANGE There has occurred no event or
effect since December 31, 1997, other than as disclosed in the Borrower's
financial projections dated March 3, 1998, provided to the Agent, that has had,
or to the best knowledge of the Borrower could reasonably be expected to have, a
Material Adverse Effect.
Section 5.11. LABOR CONTROVERSIES There are no labor strikes, lock-outs,
slow downs, work stoppages or similar events pending or, to the best knowledge
of the Borrower, threatened against the Borrower or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.
Section 5.12. TAXES. The Borrower and its Subsidiaries have filed all
federal tax returns and all other material tax returns required to be filed, and
have paid all governmental taxes, rates, assessments, fees, charges and levies
(collectively, "TAXES") except such Taxes, if any, as are being contested in
good faith and for which reserves have been provided in accordance with GAAP. No
tax liens have been filed and no claims are being asserted for Taxes except to
the extent that such liens or claims, in the aggregate, could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Borrower and its Subsidiaries for Taxes and other
governmental charges have been determined in accordance with GAAP.
Section 5.13. ERISA. With respect to each Plan, the Borrower and its
Subsidiaries have fulfilled their obligations under the minimum funding
standards of, and are in compliance in all material respects with, ERISA and
with the Code to the extent applicable to it, and have not incurred any
liability under Title IV of ERISA to the PBGC or a Plan other than a liability
to the PBGC for premiums under Section 4007 of ERISA, except where such
liability could not reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has any contingent liability
with respect to any post-retirement benefits under a welfare plan as defined in
ERISA other than liability for continuation coverage described in Part 6 of
Title I of ERISA, except where such liability could not reasonably be expected
to have a Material Adverse Effect.
Section 5.14. CONSENTS. All consents and approvals of, and filings and
registrations with, and all other actions of, all governmental agencies,
authorities or instrumentalities required to consummate the Borrowings
hereunder, on the date of each such Borrowing, have been obtained or made and
are or will be in full force and effect.
Section 5.15. CAPITALIZATION. All outstanding shares of the Borrower and
its Subsidiaries have been duly and validly issued, and are fully paid and
nonassessable.
35
Section 5.16. OWENERSHIP OF PROPERTY. The Borrower and its Subsidiaries
have good and marketable title to or a valid leasehold interest in all of their
respective property except to the extent, in the aggregate, no Material Adverse
Effect could reasonably be expected to result from the failure to have such
title or interest, free and clear of any Liens except Permitted Liens. The
Borrower and its Subsidiaries own or hold valid licenses to use all the material
patents, trademarks, permits, service marks and trade names, free of any
burdensome restrictions, that are necessary to the operation of the business of
the Borrower and its Subsidiaries as presently conducted, except where the
failure to own or hold such licenses could not reasonably be expected to have a
Material Adverse Effect.
Section 5.17. COMPLIANCE WITH STATUTES. The Borrower and its
Subsidiaries are in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies
and have all necessary permits, licenses and other necessary authorizations with
respect to the conduct of their businesses and the ownership and operation of
their properties except where the failure to so comply or hold such permits,
licenses or other authorizations, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
Section 5.18. ENVIRONMENTAL MATTERS
(a) The Borrower and its Subsidiaries are in compliance with, and on the
date of each Borrowing will be in compliance with, all applicable Environmental
Laws and the requirements of any permits issued under such Environmental Laws
except for such non-compliance which could not reasonably be expected to have a
Material Adverse Effect and as set forth on Schedule 5.18. To the best knowledge
of the Borrower, there are no pending, past or threatened Environmental Claims
against the Borrower or any of its Subsidiaries or any property owned or
operated by the Borrower or any of its Subsidiaries except for such
Environmental Claims which could not reasonably be expected to have a Material
Adverse Effect and as set forth on Schedule 5.18. To the best knowledge of the
Borrower, there are no conditions or occurrences on any property owned or
operated by the Borrower or any of its Subsidiaries or on any property adjoining
or in the vicinity of any such property that could reasonably be expected (i) to
form the basis of an Environmental Claim against the Borrower or any of its
Subsidiaries or any property owned or operated by the Borrower or any of its
Subsidiaries, or (ii) to cause any property owned or operated by the Borrower or
any of its Subsidiaries to be subject to any material restrictions on the
ownership, occupancy, use or transferability of such property by the Borrower or
any of its Subsidiaries under any applicable Environmental Law except for any
such condition or occurrence described in clauses (i) or (ii) which could not
reasonably be expected to have a Material Adverse Effect.
(b) To the best knowledge of the Borrower (i) Hazardous Materials have
not at any time been generated, used, treated or stored on, or transported to or
from, any property owned or operated by the Borrower or any of its Subsidiaries
in a manner that has violated or could reasonably be expected to violate any
Environmental Law, except for such violation which could not reasonably be
expected to have a Material Adverse Effect, and (ii) Hazardous Materials have
not at any time been released on or from any property owned or operated by the
Borrower or any of its Subsidiaries in a matter that has violated
36
or could reasonably be expected to violate any Environmental Law, except for
such violation which could not reasonably be expected to have a Material Adverse
Effect.
Section 5.19. DIVIDEND RESTRICTIONS. None of the Subsidiaries of the
Borrower is party to or subject to any agreement or understanding restricting or
limiting the payment of any dividends or other distributions on its capital
stock by any such Subsidiary.
SECTION 6. COVENANTS
The Borrower covenants and agrees that, so long as any Revolving Note,
Letter of Credit, Reimbursement Obligation or any other Obligation is
outstanding or any Revolving Credit Commitment is outstanding hereunder:
Section 6.1. CORPORATE EXISTENCE. The Borrower and its Subsidiaries will
preserve and maintain their existence except (i) for the dissolution of any
Subsidiaries whose assets are transferred to the Borrower or any of its
Subsidiaries, and (ii) as otherwise expressly permitted herein.
Section 6.2. MAINTENANCE. The Borrower and its Subsidiaries will
maintain, preserve and keep their material plants, properties and equipment
necessary to the proper conduct of their businesses in reasonably good repair,
working order and condition (normal wear and tear excepted) and will from time
to time make all reasonably necessary repairs, renewals, replacements, additions
and betterments thereto so that at all times such plants, properties and
equipment are reasonably preserved and maintained; PROVIDED, HOWEVER, that
nothing in this Section 6.2 shall prevent the Borrower or any of its
Subsidiaries from discontinuing the operation or maintenance of any such plants,
properties or equipment if such discontinuance is, in the judgment of the
Borrower or any such Subsidiary, as applicable, desirable in the conduct of its
business and not materially disadvantageous to the Lenders.
Section 6.3. TAXES. The Borrower and its Subsidiaries will duly pay and
discharge all Taxes upon or against them or their properties before payment is
delinquent and before penalties accrue thereon, unless and to the extent that
the same is being contested in good faith and by appropriate proceedings and
reserves have been established in conformity with GAAP.
Section 6.4. ERISA. Each of the Borrower and its Subsidiaries will
promptly pay and discharge all obligations and liabilities arising under ERISA
or otherwise with respect to each Plan of a character which if unpaid or
unperformed might result in the imposition of a material Lien against any
properties or assets of the Borrower and its Subsidiaries and will promptly
notify the Agent of (i) the occurrence of any reportable event (as defined in
ERISA) relating to a Plan (other than a multi-employer plan, as defined in
ERISA, so long as the event thereunder cannot reasonably be foreseen to have a
Material Adverse Effect on any of the Borrower or its Subsidiaries), other than
any such event with respect to which the PBGC has waived notice by regulation;
(ii) receipt of any notice from PBGC of its intention to seek termination of any
Plan or appointment of a trustee therefor; (iii) the Borrower's or any of its
Subsidiaries' intention to terminate or withdraw from any Plan; and
37
(iv) the occurrence of any event that could result in the incurrence of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Borrower or any Subsidiary, in connection with any
post-retirement benefit under a welfare plan benefit (as defined in ERISA).
Section 6.5. BURDENSOME RESTRICTIONS, ETC. Promptly upon the existence
or occurrence thereof, the Borrower shall give to the Agent written notice of
the existence or occurrence of (i) any contractual obligation or the adoption of
any new requirement of law which could reasonably be expected to have a Material
Adverse Effect, and (ii) the existence or occurrence of any strike, slow down or
work stoppage which could reasonably be expected to have a Material Adverse
Effect.
Section 6.6. INSURANCE. The Borrower and its Subsidiaries will maintain
or cause to be maintained with responsible insurance companies, insurance
against any loss or damage to all material insurable property and assets owned
by them, such insurance to be of a character and in or in excess of such amounts
as are customarily maintained by well-insured companies similarly situated and
operating like property or assets. The Borrower and each of its Subsidiaries
will also insure employers' and public and product liability risks with
responsible insurance companies, all as reasonably acceptable to the Agent. The
Borrower will on the Effective Date and on or before January 31st of each
calendar year commencing January 31, 1999, and upon the request of the Agent,
furnish a certificate from the Borrower's insurance agent(s) setting forth the
nature and extent of the insurance maintained pursuant to this Section 6.6 and
providing that such agent will provide thirty (30) days' advance written notice
to the Agent prior to cancellation of any such insurance.
Section 6.7. FINANCIAL REPORTS AND OTHER INFORMATION
(a) The Borrower and its Subsidiaries will maintain a system of
accounting in such manner as will enable preparation of financial statements in
accordance with GAAP and will furnish to the Lenders and their authorized
representatives such information about the business and financial condition of
the Borrower and its Subsidiaries as the Lenders may reasonably request; and,
without any request, will furnish to the Lenders:
(i) within sixty (60) days after the end of each fiscal quarter
of each fiscal year of the Borrower (excluding the fourth fiscal quarter), the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal quarter and the related consolidated statements of income and of
cash flows for such fiscal quarter and for the portion of the fiscal year ended
with the last day of such fiscal quarter, all of which shall be in reasonable
detail or in the form filed with the SEC and certified by the Chief Financial
Officer of the Borrower that they, to the best of his or her knowledge after due
inquiry, fairly present the financial condition of the Borrower and its
Subsidiaries as of the dates indicated and the results of their operations and
changes in their cash flows for the periods indicated and that they have been
prepared in accordance with GAAP, in each case, subject to normal year-end
adjustments and the omission of any footnotes as permitted by the SEC (delivery
to the Agent of a copy of the Borrower's Form 10-Q filed with the SEC (without
exhibits) in any event will satisfy the requirements of this subsection with
respect to the required consolidated financial statements only subject to
Section
38
6.7(b));
(ii) within one-hundred twenty (120) days after the end of each
fiscal year of the Borrower, the consolidated and consolidating balance sheets
of the Borrower and its Subsidiaries as at the end of such fiscal year and the
related consolidated and consolidating (in substantially the form prepared prior
to the Effective Date) statements of income and changes in stockholders equity
and of cash flows for such fiscal year and setting forth consolidated
comparative figures as of the end of and for the preceding fiscal year, audited
by an independent nationally-recognized accounting firm (except for the
consolidating statements described herein) and in the form filed with the SEC
(delivery to the Agent of a copy of the Borrower's Form 10-K filed with the SEC
(without exhibits) in any event will satisfy the requirements of this subsection
with respect to the required consolidated financial statements only subject to
Section 6.7(b));
(iii) commencing with fiscal year 1998, to the extent actually
prepared and approved by the Borrower's board of directors and promptly after
such approval, a projection of Borrower's consolidated balance sheet and
consolidated income and cash flows for its then current fiscal year showing such
projected budget for each fiscal quarter of the Borrower ending during such
year; and
(iv) within ten (10) days after the sending or filing thereof,
copies of all financial statements, reports, notices and proxy statements that
the Borrower sends to its stockholders generally or files with the SEC that are
publicly available.
(b) Each financial statement furnished to the Lenders pursuant to
subsections (i) and (ii) of Section 6.7(a) shall be accompanied by (i) a written
certificate signed by the Borrower's Chief Financial Officer to the effect that
(x) no Default or Event of Default has occurred during the period covered by
such statements or, if any such Default or Event of Default has occurred during
such period, setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Borrower to remedy the same, and (y)
the representations and warranties contained herein are true and correct in all
material respects as though made on the date of such certificate, except to the
extent that any such representation or warranty relates solely to an earlier
date, in which case it was true and correct as of such earlier date and except
as otherwise described therein, as a result of the transactions expressly
permitted hereunder or as previously disclosed to the Lenders, and the financial
statements furnished therewith to the best of his or her knowledge after due
inquiry, fairly present the financial condition of the Borrower and its
Subsidiaries as of the dates indicated and the results of their operations and
changes in their cash flows for the periods indicated and they have been
prepared in accordance with GAAP, subject, if applicable, to normal year-end
adjustments and the omission of any footnotes as permitted by the SEC, and (ii)
a Compliance Certificate in the form of Exhibit 6.7 showing the Borrower's
compliance with the financial covenants set forth herein.
(c) Promptly after obtaining knowledge of any of the following, the
Borrower will provide the Agent with written notice in reasonable detail of: (i)
any pending or threatened Environmental Claim against the Borrower or any of its
Subsidiaries or any property owned or operated by the Borrower or any of its
Subsidiaries that if adversely determined
39
could reasonably be expected to have a Material Adverse Effect; (ii) any
condition or occurrence on any property owned or operated by the Borrower or any
of its Subsidiaries that results in noncompliance by the Borrower or any of its
Subsidiaries with any Environmental Law that could reasonably be expected to
have a Material Adverse Effect; and (iii) the taking of any material removal or
remedial action in response to the actual or alleged presence of any Hazardous
Material on any property owned or operated by the Borrower or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse
Effect.
(d) The Borrower will promptly and in any event, within five (5) days
after an officer of the Borrower has knowledge thereof, give written notice to
the Agent of: (i) any pending or threatened litigation or proceeding against the
Borrower or any of its Subsidiaries asserting any claim or claims against any of
same in excess of $5,000,000 in the aggregate or that could reasonably be
expected to have a Material Adverse Effect; (ii) the occurrence of any Default
or Event of Default; (iii) any circumstance that could reasonably be expected to
have a Material Adverse Effect; and (iv) any event which could reasonably be
expected to result in a breach of, Sections 6.22, 6.23 or 6.24.
(e) The Agent will forward promptly to the Lenders the information
provided by the Borrower pursuant to this Section 6.7.
Section 6.8. LENDERS' INSPECTION RIGHTS. Upon reasonable notice from any
of the Lenders, the Borrower will permit the Agent or any of the Lenders (and
such Persons as the Agent or any Lender may designate), during normal business
hours following reasonable notice to visit and inspect any of the properties of
the Borrower or any of its Subsidiaries, to examine all of their books and
records, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants (and by this provision, the Borrower authorizes
such accountants to discuss with the Agent and the Lenders, and such Persons as
the Agent or any Lender may designate, the affairs, finances and accounts of the
Borrower and its Subsidiaries PROVIDED THAT the Borrower has the opportunity to
be present at such discussions), all at such reasonable times and as often as
may be reasonably requested. Any such inspection shall be at the expense of the
Borrower up to one (1) time a year, and if conducted any more frequently, at the
expense of the Agent or the Lender conducting such inspection unless a Default
or Event of Default shall have occurred and be continuing, in which event such
inspection shall be at the expense of the Borrower.
Section 6.9. CONDUCT OF BUSINESS. The Borrower and its Subsidiaries
(except as provided in this Section 6.9) will not engage in any line of business
other than death care and memorial related services and products businesses and
any complimentary businesses thereto (each, a "PERMITTED BUSINESS"). T.Y.G.
Company will not engage in any line of business other than the cash and
investment management business for the Borrower and its Subsidiaries, and it
will not incur any Debt other than Debt related to tax liabilities. T.Y.G. Trade
Company will not engage in any line of business other than function as an
intellectual property holding company for the Borrower and its Subsidiaries, and
it will not incur any Debt other than Debt related to tax liabilities.
Notwithstanding the
40
foregoing, new Subsidiaries of Borrower may be formed after the Effective Date
to engage solely in lines of business the same as the lines of business
permitted for T.Y.G. Company and T.Y.G. Trade Company under this Section 6.9
(such Subsidiaries, collectively, "SPECIAL PURPOSE SUBSIDIARIES").
Section 6.10. NEW SUBSIDARIES. In addition to the requirements with
respect to Colonial Guild and its Subsidiaries contained in Section 4.2(e), the
Borrower shall also cause any other direct or indirect Subsidiary which is
formed or acquired after the Effective Date to become a Guarantor with respect
to, and jointly and severally liable with all other Guarantors for, all of the
Obligations under this Agreement and the Revolving Notes within five (5) days
following such formation or acquisition pursuant to a Guaranty substantially in
the form of Exhibit 4.1A. Notwithstanding the foregoing, Special Purpose
Subsidiaries which are formed after the Effective Date shall not be required to
execute a Guaranty pursuant to this Section 6.10, but shall be required to
execute a Subordination Agreement substantially in the form of Exhibit 4.1B
within five (5) days following the formation thereof.
Section 6.11. RESTRICTIONS ON REDEMPTION; DIVIDENDS
(a) The Borrower shall not redeem, purchase or otherwise acquire any
shares of its capital stock ("REDEMPTIONS") or declare or pay any dividends on
its capital stock or make any distribution or payment to shareholders, or set
aside funds for any such purpose ("DIVIDENDS") unless, in each instance,
immediately after giving effect thereto, (i) the sum of all Dividends and
Redemptions declared, made, set aside, paid, purchased or acquired, as the case
may be, after January 1, 1998, will not exceed the sum of (A) fifty percent
(50%) of Consolidated Net Income accumulated after January 1, 1998 (or minus one
hundred percent (100%) in the case of a deficit) up to, and including, the date
such action is to be taken,(B) net cash proceeds received by the Borrower from
the issuance or sale of capital stock of the Borrower (other than to the
Borrower or any of its Subsidiaries) or other securities that may subsequently
be converted into capital stock and (C) any net return of capital through the
sale or liquidation of any net loans or advances to, or investments in, any
Subsidiary as permitted herein; and (ii) no Default or Event of Default shall
have occurred and be continuing or would occur as a result thereof.
(b) Neither the Borrower nor any of its Subsidiaries shall, directly or
indirectly, create or otherwise permit to exist or become effective any
restriction on the ability of any Subsidiary of the Borrower to (i) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owed by the Borrower or to pay any Debt
owed to the Borrower, or (ii) make loans or advances to the Borrower or any of
its Subsidiaries, except in either case for restrictions existing under or by
reason of applicable law, this Agreement and the other Credit Documents.
Section 6.12. RESTRICTIONS ON FUNDAMENTAL CHANGES. Neither the Borrower
nor any of its Subsidiaries shall be a party to any merger into or consolidation
with, make an Acquisition or otherwise purchase or acquire all or substantially
all of the assets or stock of, any other Person, or sell all or substantially
all of its assets or stock, except:
(a) the Borrower or any of its Subsidiaries may merge into or
consolidate with,
41
make an Acquisition or otherwise purchase or acquire all or substantially all of
the assets or stock of any other Person if upon the consummation of any such
merger, consolidation, purchase or Acquisition, (i) the Borrower or such
Subsidiary is the surviving corporation to any such merger or consolidation (or
the other Person will thereby become a Subsidiary); (ii) the nature of the
business of such acquired Person is a Permitted Business; (iii) within ten (10)
Business Days prior to the consummation of a Material Acquisition other than the
Acquisition of Colonial Guild and its Subsidiaries, the Borrower shall have
delivered to the Lenders a report signed by the Chief Financial Officer of the
Borrower which shall contain calculations demonstrating the Borrower's
compliance with Sections 6.22, 6.23 and 6.24 (on a historic four fiscal quarter
pro forma basis), such calculations to use historical financial results of the
acquired business; (iv) the maximum cash purchase price paid and Debt incurred
by the Borrower or any of its Subsidiaries (excluding any part of the purchase
price paid with the cash proceeds from an equity offering) in connection with
(x) any single Acquisition shall not exceed $15,000,000 or (y) in the aggregate
for all Acquisitions during any rolling four (4) fiscal quarters shall not
exceed $30,000,000 (excluding the Acquisition of Colonial Guild and its
Subsidiaries); and (v) no Default or Event of Default shall have occurred and be
continuing or would otherwise be existing as a result of such merger,
consolidation, purchase or Acquisition;
(b) the Borrower may purchase or otherwise acquire all or substantially
all of the stock or assets of, or otherwise acquire by merger or consolidation,
any of its Subsidiaries, and any such Subsidiary may merge into, or consolidate
with, or purchase or otherwise acquire all or substantially all of the assets or
stock of or sell all or substantially all of its assets or stock to, any other
Subsidiary of the Borrower or the Borrower, in each case so long as the Borrower
shall be the surviving entity to any such merger or consolidation if the
transaction is with the Borrower;
(c) the Borrower or any of its Subsidiaries may form new Subsidiaries;
and
(d) the Borrower and its Subsidiaries may issue additional capital stock
or ownership interests so long as there is no scheduled mandatory redemption or
scheduled liquidating distribution of any such stock or interest before the
Maturity Date.
Section 6.13.ENVIRONMENTAL LAWS. The Borrower and its Subsidiaries
shall comply with all Environmental Laws (including, without limitation,
obtaining and maintaining all necessary permits, licenses and other necessary
authorizations) applicable to or affecting the properties or business operations
of the Borrower or any of its Subsidiaries except to the extent that
non-compliance could not reasonably be expected to have a Material Adverse
Effect.
Section 6.14.LEINS. The Borrower and its Subsidiaries shall not create,
incur, assume or suffer to exist any Lien of any kind on any of their properties
or assets of any kind except the following (collectively, the "PERMITTED
LIENS"):
(a) Liens arising in the ordinary course of business by operation of law
in connection with workers' compensation, unemployment insurance, old age
benefits, social security obligations, taxes, assessments, statutory obligations
or other similar charges,
42
good faith deposits, pledges or other Liens in connection with (or to obtain
letters of credit in connection with) bids, performance bonds, contracts or
leases to which the Borrower or its Subsidiaries are a party or other deposits
required to be made in the ordinary course of business; PROVIDED THAT in each
case the obligation secured is not for Debt and is not overdue or, if overdue,
is being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(b) mechanics', workmen, materialmen, landlords', carriers' or other
similar Liens arising in the ordinary course of business (or deposits to obtain
the release of such Liens) related to obligations not due or, if due, that are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(c) inchoate Liens under ERISA and Liens for Taxes not yet due or which
are being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(d) Liens arising out of judgments or awards against the Borrower or any
of its Subsidiaries, or in connection with surety or appeal bonds or the like in
connection with bonding such judgments or awards, the time for appeal from which
or petition for rehearing of which shall not have expired or for which the
Borrower or such Subsidiary shall be prosecuting on appeal or proceeding for
review and for which it shall have obtained a stay of execution or the like
pending such appeal or proceeding for review; PROVIDED THAT the aggregate amount
of uninsured or underinsured liabilities (including interest, costs, fees and
penalties, if any) of the Borrower and its Subsidiaries secured by such Liens
shall not exceed $5,000,000 at any one time outstanding and PROVIDED FURTHER
there is adequate assurance, in the reasonable opinion of the Lenders, that the
insurance proceeds, if any, attributable thereto shall be paid promptly upon the
expiry of such time period or resolution of such proceeding if necessary to
remove such Liens;
(e) rights of a common owner of any interest in property held by a
Person and such common owner as tenants in common or through other common
ownership;
(f) encumbrances (other than to secure the payment of Debt), easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way, facilities or equipment, or defects, irregularity and
deficiencies in title of any property or rights-of-way;
(g) financing statements filed by lessors of property (but only with
respect to the property so leased) and Liens under any conditional sale or title
retention agreements entered into in the ordinary course of business;
(h) rights of lessees of equipment owned by the Borrower or any of its
Subsidiaries;
43
(i) Liens securing Capitalized Lease Obligations or purchase money debt
permitted by Section 6.15(g) on any assets acquired; and
(j) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing subsections (a) through (i), PROVIDED THAT the principal amount of
Debt secured thereby does not exceed the initial principal amount secured, and
such extension, renewal or replacement is limited to the property already
subject to the Lien so extended, renewed or replaced.
Section 6.15. DEBIT. The Borrower and its Subsidiaries shall not
contract, assume or suffer to exist any Debt (including, without limitation, any
Contingent Obligations), except:
(a) Debt under the Credit Documents;
(b) unsecured intercompany loans and advances from the Borrower to any
of its Subsidiaries and unsecured intercompany loans and advances from any of
such Subsidiaries to the Borrower or any other Subsidiaries of the Borrower, in
each case which are subordinated to the Obligations of the Borrower and the
Guarantors to the Agent and the Lenders in form and substance satisfactory to
the Agent; PROVIDED THAT the Borrower may not repay any principal of any loans
or advances to any Special Purpose Subsidiary so long as any Obligations or
Revolving Credit Commitments are outstanding;
(c) Debt under any Interest Rate Protection Agreements entered into to
protect the Borrower against fluctuations in interest rates and not for
speculative purposes;
(d) Debt under the Private Placement and any subsequent extensions,
renewals or refinancings thereof so long as such Debt is not increased in
amount, the maturity date is not made earlier in time, the interest rate per
annum applicable thereto is not increased, any amortization of principal
thereunder is not shortened and the payments thereunder are not increased and
the other terms and conditions thereof are no more restrictive than the terms
and conditions of the Private Placement;
(e) Debt subordinated to the Obligations hereunder on terms and
conditions reasonably satisfactory to the Agent; PROVIDED THAT no principal
payments may be made thereon before the Maturity Date, such Debt contains
covenants no more restrictive than the covenants contained in this Agreement and
standstill provisions and no payments may be made thereon if a Default or an
Event of Default shall have occurred and be continuing or would occur as a
result of any such payment;
(f) Debt to Colonial Guild, prior to the date of the Acquisition of
Colonial Guild, not to exceed $17,000,000; and
(g) Debt not otherwise permitted by this Section 6.15 not to exceed an
amount equal to ten percent (10%) of Consolidated Net Tangible Assets in the
aggregate at any time outstanding.
Section 6.16.LOANS, ADVANCES AND INVESTMENTS. The Borrower and its
Subsidiaries shall not purchase or acquire any stock, indebtedness, obligations
or
44
securities of, or any other interest in, or make any capital contribution to,
any Person (any of the foregoing, an "INVESTMENT") or lend money or make
advances to any Person except:
(a) as permitted by Section 6.12(a), (b) or (c) or Section 6.15(b);
45
(b) Investments outstanding as of the Effective Date and listed on
Schedule 6.16 hereto;
(c) loans to employees of the Borrower or any of its Subsidiaries for
(i) short-term loans in an aggregate amount of no greater than $250,000 at any
one time outstanding and in an amount no greater than $100,000 for any Person,
and (ii) moving and travel expenses and other similar expenses; in each case
incurred in the ordinary course of business;
(d) receivables owing to the Borrower or its Subsidiaries created or
acquired in the ordinary course of business and payable on customary trade terms
of the Borrower or such Subsidiary and in compliance with the arms-length
requirements of Section 6.18;
(e) other advances or loans to, or Investments in, any Person, PROVIDED
THAT the aggregate amount of such other loans and advances outstanding and
Investments shall not exceed $500,000 at any one time outstanding;
(f) Investments in Cash Equivalents; and
(g) lease receivables in an aggregate amount not to exceed $10,000,000
at any one time outstanding in connection with merchandising rooms set up in the
ordinary course of business at third party facilities.
Section 6.17.TRANSFER OF ASSETS. The Borrower and its Subsidiaries shall
not permit any transfer of any asset of the Borrower (including, without
limitation, the capital stock of or ownership interest in any of its
Subsidiaries) or any of its Subsidiaries except:
(a) Transfers of inventory in the ordinary course of business;
(b) the retirement or replacement of assets (with assets of equal or
greater value) in the ordinary course of business or the Transfer of assets that
are obsolete, worn out or no longer useful in the business of the Borrower and
its Subsidiaries;
(c) Transfers of any assets among the Borrower and any of its
Subsidiaries;
(d) Transfers permitted by Sections 6.12;
(e) Transfers of any assets acquired in an Acquisition which are not
necessary for the operation of the business of the Borrower and its
Subsidiaries, PROVIDED THAT the net cash proceeds thereof are reinvested by the
Borrower and its Subsidiaries in the operation of a Permitted Business; and
(f) Transfers of any assets not otherwise covered by this Section 6.17
so long (i) as the aggregate book value of such assets does not exceed ten
percent (10%) of Consolidated Net Tangible Assets, and (ii) the aggregate of
such assets do not generate aggregate operating income exceeding ten percent
(10%) of Consolidated Operating Income, in each case measured at the end of the
most recently completed fiscal year;
46
PROVIDED THAT the Borrower may not transfer the capital stock of or its
ownership interest in any Guarantor.
Section 6.18.TRANSACTION WITH AFFILIATES. Except as otherwise
specifically permitted herein, the Borrower and its Subsidiaries shall not enter
into or be a party to any material transaction or arrangement or series of
related transactions or arrangements which in the aggregate would be material
with any Affiliate of such Person, including without limitation, the purchase
from, sale to or exchange of property with or the rendering of any service by or
for, any Affiliate, except pursuant to the reasonable requirements of such
entity's business and upon fair and reasonable terms no less favorable to such
entity than would be able to be obtained in a comparable arm's-length
transaction with a Person other than an Affiliate.
Section 6.19.COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries
shall conduct their businesses and otherwise be in compliance in all material
respects with all applicable laws, regulations, ordinances and orders of all
governmental, judicial and arbitral authorities applicable to them and shall
obtain and maintain all necessary permits, licenses and other authorizations
necessary to conduct their businesses and own and operate their properties
except where the failure to comply or have such permits, licenses or other
authorizations could not reasonably be expected to have a Material Adverse
Effect.
Section 6.20.NEGATIVE PLEDGES. Neither the Borrower nor any of its
Subsidiaries shall enter into any agreement creating or assuming any Lien upon
its properties, revenues or assets, whether now owned or hereafter acquired
other than as permitted hereunder. Neither the Borrower nor any of its
Subsidiaries shall enter into any agreement other than this Agreement and the
Credit Documents prohibiting the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired, or
prohibiting or restricting the ability of the Borrower or any of its
Subsidiaries to amend or otherwise modify this Agreement or any Credit Document.
Section 6.21.MAXIMUM CAPITAL EXPENDITURES. Neither the Borrower nor any
of its Subsidiaries shall make or commit to make Capital Expenditures in excess
of the aggregate of $14,000,000 during the period from January 1, 1998, through
December 31, 1998,$14,000,000 for the period from January 1, 1999, through
December 31, 1999, and $15,000,000 during each calendar year thereafter.
Section 6.22.MAXIMUM TOTAL DEBT TO EBITA RATIO. The Borrower will
maintain a Total Debt to EBITDA Ratio of not greater than 3.0 to 1.0.
Section 6.23.MAXIMUM TOTAL DEBT TO TOTAL CAPITAL RATIO. The Borrower
will maintain a Total Debt to Total Capital Ratio of not greater than 55%.
Section 6.24.MINIMUM FIXED CHARGE COVERAGE RATIO. The Borrower will
maintain a Fixed Charge Coverage Ratio of at least 2.5 to 1.0.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
47
Section 7.1.EVENTS OF DEFAULT. Any one or more of the following shall
constitute an Event of Default:
(a) default by the Borrower in the payment of the principal amount of
any Loan, any Reimbursement Obligation or any interest thereon or any fees
payable hereunder within three (3) Business Days of the date such payment is
due;
(b) default by the Borrower in the observance or performance of any
covenant set forth in Sections 6.7(d), 6.11(a), 6.12 or 6.17;
(c) default or event of default by the Borrower or any of its
Subsidiaries in the observance or performance of any provision hereof or of any
other Credit Document not mentioned in (a) or (b) above which is not remedied
within thirty (30) days after the earlier of (i) such default or event of
default first becoming known to any officer of the Borrower, or (ii) notice to
the Borrower by the Agent of the occurrence of such default or event of default;
(d) any representation or warranty or other written statement made or
deemed made herein, in any other Credit Document or in any financial or other
report or document furnished in compliance herewith or therewith by the Borrower
or any of its Subsidiaries proves untrue in any material respect as of the date
of the issuance or making, or deemed issuance or making thereof;
(e) default occurs in the payment when due (after any applicable grace
period) of Debt in an aggregate principal amount of $5,000,000 or more of the
Borrower or any of its Subsidiaries, or the occurrence of any other default
(after any applicable grace period) which would permit the holder or beneficiary
of such Debt, or a trustee therefor, to cause the acceleration of the maturity
of any such Debt or any mandatory unscheduled prepayment, purchase, or other
early funding thereof, including, without limitation, any Event of Default under
the Private Placement (without giving effect to any cure, waiver or remedy
thereof or amendment thereto after the Effective Date);
(f) the Borrower or any of its Subsidiaries (i) has entered
involuntarily against it an order for relief under the United States Bankruptcy
Code or a comparable action is taken under any bankruptcy or insolvency law of
another country or political subdivision of such country, (ii) generally does
not pay, or admits its inability generally to pay, its debts as they become due,
(iii) makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to, or acquiesces in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its property, (v) institutes any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code or any comparable
law, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fails to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) makes any
board of directors resolution in direct furtherance of any matter described in
clauses (i)-(v) above, or (vii) fails to contest in good faith any appointment
or proceeding described in this
48
Section 7.1(f);
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official is appointed for the Borrower or any of its Subsidiaries or any
substantial part of its property, or a proceeding described in Section 7.1(f)(v)
is instituted against the Borrower or any of its Subsidiaries, and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) days;
(h) the Borrower or any of its Subsidiaries fails within thirty (30)
days (or such earlier date as any steps to execute on such judgment or order
take place) to pay, bond or otherwise discharge, or to obtain an indemnity
against on terms and conditions satisfactory to the Lenders in their sole
discretion, any judgment or order for the payment of money in excess of
$5,000,000 which is uninsured or underinsured by at least such amount (PROVIDED
THAT there is adequate assurance, in the sole discretion of the Lenders, that
the insurance proceeds attributable thereto shall be paid promptly upon the
expiration of such time period or resolution of such proceeding), which is not
stayed on appeal or otherwise being appropriately contested in good faith in a
manner that stays execution;
(i) the Borrower or any of its Subsidiaries fails to pay when due an
amount aggregating in excess of $1,000,000 that it is liable to pay to the PBGC
or to a Plan under Title IV of ERISA; or a notice of intent to terminate a Plan
having Unfunded Vested Liabilities of any of the Borrower or any of its
Subsidiaries in excess of $1,000,000 (a "MATERIAL PLAN") is filed under Title IV
of ERISA in a distress termination pursuant to Section 4041(c) of ERISA; or the
PBGC institutes proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan; or a proceeding is
instituted by a fiduciary of any Material Plan against the Borrower or any of
its Subsidiaries to collect any liability under Section 515 or 4219(c)(5) of
ERISA and such proceeding is not dismissed within thirty (30) days thereafter;
or a condition exists by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
(j) the Borrower, any Guarantor, any Person acting on behalf of the
Borrower or any Guarantor or any governmental, judicial or arbitral authority
challenges the validity of any Credit Document or the Borrower's or any
Guarantor's obligations thereunder, or any Credit Document ceases to be in full
force and effect in all material respects or ceases to give to the Agent and the
Lenders the rights and powers purported to be granted in their favor thereby in
all material respects; or
(k) any Person or two or more Persons acting in concert shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing fifty percent
(50%) or more of the combined voting power of all outstanding securities of the
Borrower entitled to vote in the election of directors.
Section 7.2.NON-BANKRUPCY DEFAULTS. When any Event of Default other than
those described in subsections (f) or (g) of Section 7.1 has occurred and is
continuing with respect to the Borrower, the Agent shall, if so directed by the
Majority Lenders, by notice to the Borrower: (a) terminate the remaining
Revolving Credit Commitments and all other
49
obligations of the Lenders hereunder on the date stated in such notice (which
may be the date thereof); (b) declare the outstanding principal of and the
accrued interest on the Revolving Notes to be forthwith due and payable and
thereupon the Revolving Notes, including both principal and interest thereon,
shall be and become immediately due and payable together with all other amounts
payable under the Credit Documents without further demand, presentment, protest
or notice of any kind, including, but not limited to, notice of intent to
accelerate and notice of acceleration, each of which is expressly waived by the
Borrower; and (c) demand that the Borrower immediately pay to the Agent (to be
held by the Agent pursuant to Section 7.4) the full amount then available for
drawing under each or any outstanding Letter of Credit, and the Borrower agrees
to immediately make such payment and acknowledges and agrees that the Lenders
would not have an adequate remedy at law for failure by the Borrower to honor
any such demand and that the Agent, for the benefit of the Lenders, shall have
the right to require the Borrower to specifically perform such undertaking
whether or not any drawings or other demands for payment have been made under
any Letter of Credit. The Agent, after giving notice to the Borrower pursuant to
this Section 7.2, shall also promptly send a copy of such notice to the other
Lenders, but the failure to do so shall not impair or annul the effect of such
notice.
Section 7.3.BANKRUPCY DEFAULTS. When any Event of Default described in
subsections (f) or (g) of Section 7.1 has occurred and is continuing with
respect to the Borrower, then (i) the outstanding Revolving Notes shall
immediately become due and payable together with all other amounts payable under
the Credit Documents without presentment, demand, protest or notice of any kind,
each of which is expressly waived by the Borrower, (ii) and all obligations of
the Lenders to extend further credit pursuant to any of the terms hereof shall
immediately terminate, and (iii) the Borrower shall immediately pay to the Agent
(to be held by the Agent pursuant to Section 7.4) the full amount then available
for drawing under all outstanding Letters of Credit, the Borrower acknowledging
and agreeing that the Lenders and the Agent would not have an adequate remedy at
law for failure by the Borrower to honor this provision and that the Lenders and
the Agent shall have the right to require the Borrower to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any of the Letters of Credit.
Section 7.4. COLLATERAL FOR UNDRAWN LETTERS OF CREDIT. bhngnn(a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 2.9, 7.2 or 7.3, the Borrower shall
forthwith pay the amount required to be so prepaid, to be held by the Agent as
provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "COLLATERAL ACCOUNT") as security for,
and for application by the Agent (to the extent available) to, the reimbursement
of any drawing under any Letter of Credit then or thereafter paid by the Agent
(collectively, the "COLLATERALIZED OBLIGATIONS"). The Collateral
50
Account shall be held in the name of and subject to the exclusive dominion and
control of the Agent, for the benefit of the Agent and the Lenders, as pledgee
hereunder. If and when requested by the Borrower, the Agent shall invest and
reinvest funds held in the Collateral Account from time to time in Cash
Equivalents specified from time to time by the Borrower, PROVIDED THAT the Agent
is irrevocably authorized to sell investments held in the Collateral Account
when and as required to make payments out of the Collateral Account for
application to Collateralized Obligations due and owing from the Borrower to the
Agent or the Lenders. When and if (A) (i) the Borrower shall have made payment
of all Collateralized Obligations then due and payable, (ii) all relevant
preference or other disgorgement periods relating to the receipt of such
payments have passed, and (iii) no Letters of Credit remain outstanding and no
Reimbursement Obligations remain outstanding and due and payable hereunder, or
(B) no Default or Event of Default shall be continuing, the Agent shall repay to
the Borrower any remaining amounts and assets held in the Collateral Account.
Section 7.5. NOTICE OF DEFAULT. If an Event of Default shall have
occurred and be continuing, the Agent shall give notice to the Borrower under
Section 7.2 promptly upon being requested to do so by the Majority Lenders and
shall thereupon notify all the Lenders thereof.
Section 7.6. EXPENSES. The Borrower agrees to pay to the Agent and each
Lender all reasonable out-of-pocket expenses incurred or paid by the Agent or
such Lender, including reasonable attorneys' fees and court costs, in connection
with any Default or Event of Default by the Borrower hereunder or in connection
with the enforcement of any of the Credit Documents.
SECTION 8. CHANGE IN CIRCUMSTANCES
Section 8.1. CHANGE OF LAW. (a) Notwithstanding any other provisions of
this Agreement or any Revolving Note, if at any time after the date hereof (or,
if later, after the date the Agent or a Lender becomes the Agent or a Lender),
any change in applicable law or regulation or in the interpretation thereof
makes it unlawful for any Lender to make or continue to maintain Eurodollar
Loans, such Lender shall promptly give written notice thereof and of the basis
therefor in reasonable detail to the Borrower and such Lender's obligations to
make, continue or convert Loans into Eurodollar Loans under this Agreement shall
thereupon be suspended until it is no longer unlawful for such Lender to make or
maintain Eurodollar Loans.
(b) Upon the giving of the notice to Borrower referred to in subsection
(a) above, (i) any outstanding Eurodollar Loan of such Lender shall be
automatically converted to a Base Rate Loan in Dollars on the last day of the
Interest Period then applicable thereto or on such earlier date as required by
law, and (ii) such Lender shall make an advance as part of any requested
Borrowing of Eurodollar Loans as a Base Rate Loan, which Base Rate Loan shall,
for all other purposes, be considered part of such Borrowing.
(c) Any Lender that has given any notice pursuant to Section 8.1(a)
shall, upon determining that it would no longer be unlawful for it to make
Eurodollar Loans, give
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prompt written notice thereof to the Borrower and the Agent, and upon giving
such notice, its obligation to make, allow conversions into and maintain
Eurodollar Loans shall be reinstated.
Section 8.2. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN LIBOR
RATE. If on or before the first day of any Interest Period for any Borrowing of
Eurodollar Loans, the Agent determines in good faith (after consultation with
the other Lenders) that, due to changes in circumstances since the date hereof,
adequate and fair means do not exist for determining the Adjusted LIBOR Rate or
such rate will not accurately reflect the cost to the Majority Lenders of
funding Eurodollar Loans for such Interest Period, the Agent shall give written
notice (in reasonable detail) of such determination and of the basis therefor to
the Borrower and the Lenders, whereupon until the Agent notifies the Borrower
and Lenders that the circumstances giving rise to such suspension no longer
exist (which the Agent shall do promptly after they do not exist), (i) the
obligations of the Lenders to make, continue or convert Loans into Eurodollar
Loans, or to convert Base Rate Loans into Eurodollar Loans, shall be suspended
and (ii) each Eurodollar Loan will automatically on the last day of the then
existing Interest Period therefor, convert into a Base Rate Loan.
Section 8.3. INCREASED COST AND REDUCED RETURN. (a) If, on or after the
date hereof, the adoption of or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office), including the Agent in its capacity as the issuer of Letters of
Credit, with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency:
(i) subjects any Lender of that type (or its Lending Office) to any
tax, duty or other charge related to any Eurodollar Loan, Letter of
Credit or Reimbursement Obligation, or its participation in any thereof,
or its obligation to advance or maintain Eurodollar Loans, issue Letters
of Credit or to participate therein, or shall change the basis of
taxation of payments to any Lender (or its Lending Office) of the
principal of or interest on its Eurodollar Loans, Letters of Credit or
participations therein, or any other amounts due under this Agreement
related to its Eurodollar Loans, Letters of Credit, Reimbursement
Obligations, or participations therein, or its obligation to make
Eurodollar Loans, issue Letters of Credit or acquire participations
therein (except for changes in the rate of tax on the overall net income
of such Lender or its Lending Office imposed by the jurisdiction in
which such Lender's principal executive office or Lending Office is
located); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or
credit extended by, any Lender of that type (or its Lending Office) or
imposes on any Lender of that type (or its Lending Office) or on the
interbank market any other condition affecting its Eurodollar Loans, its
Letters of Credit, any Reimbursement Obligation owed to it, or its
participation in any thereof, or its obligation to advance or maintain
Eurodollar Loans, issue Letters of Credit or
52
to participate in any thereof;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of advancing or maintaining any Eurodollar Loan, issuing
or maintaining a Letter of Credit or participation therein or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
in connection therewith under this Agreement or its Revolving Note(s), by an
amount deemed by such Lender to be material, then, within ten (10) days after
demand in reasonable detail by such Lender (with a copy to the Agent), the
Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction.
(b) If, after the date hereof, the Agent or any Lender shall have
determined that the adoption after the date hereof of any applicable law, rule
or regulation regarding capital adequacy, or any change therein (including,
without limitation, any revision in the Final Risk-Based Capital Guidelines of
the Board of Governors of the Federal Reserve System (12 CFR Part 208, Appendix
A; 12 CFR Part 225, Appendix A) or of the Office of the Comptroller of the
Currency (12 CFR Part 3, Appendix A), or in any other applicable capital
adequacy rules heretofore adopted and issued by any governmental authority), or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Agent or any Lender (or its Lending
Office) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital, or on the capital of any corporation controlling such Lender,
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time, within
ten (10) days after demand in reasonable detail by such Lender (with a copy to
the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) The Agent and each Lender that determines to seek compensation under
this Section 8.3 shall notify the Borrower and, in the case of a Lender other
than the Agent, the Agent of the circumstances that entitle the Agent or Lender
to such compensation and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole judgment of such Lender, be otherwise disadvantageous
to it; PROVIDED THAT, the foregoing shall not in any way affect the rights of
any Lender or the obligations of the Borrower under this Section 8.3, and
PROVIDED FURTHER that no Lender shall be obligated to make its Eurodollar Loans
hereunder at any office located in the United States. A certificate of any
Lender claiming compensation under this Section 8.3 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
Section 8.4. LENDING OFFICES. The Agent and each Lender may, at its
option, elect
53
to make its Loans hereunder at the Lending Office specified on the appropriate
signature page hereof for each type of Loan available hereunder or at such other
of its branches, offices or affiliates as it may from time to time elect and
designate in a written notice to the Borrower and the Agent.
Section 8.5. DISCRETION OF LENDER AS TO MANNER OF FUNDING. Subject to
the other provisions of this Agreement, each Lender shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit. Notwithstanding any other provision of this Agreement, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Lender had
actually funded and maintained each Eurodollar Loan through the purchase of
deposits in the eurodollar interbank market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to the LIBOR Rate
for such Interest Period.
Section 8.6. LIMITATION ON CHARGES; SUBSTITUTE LENDERS;
NON-DISCRIMINATION. Anything in this Section 8 notwithstanding:
(a) the Borrower shall not be required to pay to the Agent or any Lender
reimbursement or indemnification with regard to any costs or expenses described
in this Section unless the Agent or such Lender, as the case may be, notifies
the Borrower of such costs or expenses within 120 days after the date paid or
incurred;
(b) none of the Agent or the Lenders shall be permitted to pass through
to the Borrower charges and costs under this Section on a discriminatory basis
(i.e., which are not also passed through by the Agent or such Lender, as the
case may be, to other customers of the Agent or such Lender, as the case may be,
similarly situated where such customer is subject to documents providing for
such pass through); and
(c) if any Lender elects to pass through to Borrower any material charge
or cost under this Section 8 or elects to terminate the availability of
Eurodollar Loans for any period of time in excess of sixty (60) days, the
Borrower may, within sixty (60) days after the date of such event and so long as
no Default or Event of Default shall have occurred and be continuing, elect to
terminate such Lender as a party this Agreement; PROVIDED THAT, concurrently
with such termination, the Borrower shall (i) if the Agent and each of the other
Lenders shall consent, pay such Lender all principal, interest and fees and
other amounts owed to such Lender through such date of termination, or (ii) have
arranged for another financial institution approved by the Agent (such approval
not to be unreasonably withheld or delayed) as of such date, to become a
substitute Lender for all purposes under this Agreement in the manner provided
in Section 10.10; PROVIDED FURTHER that, prior to substitution for any such
Lender, the Borrower shall have given written notice to the Agent of such
intention and the Lenders shall have the option, but no obligation, for a period
of sixty (60) days after receipt of such notice, to increase their Revolving
Credit Commitments in order to replace the affected Lender in lieu of such
substitution.
SECTION 9. THE AGENT
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Section 9.1. APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
appoints ABN AMRO as the Agent under the Credit Documents and hereby authorizes
the Agent to take such action as Agent on each of its behalf and to exercise
such powers under the Credit Documents as are delegated to the Agent, by the
terms thereof, together with such powers as are reasonably incidental thereto.
Section 9.2. RIGHTS AND POWERS. The Agent shall have the same rights and
powers under the Credit Documents as any other Lender and may exercise or
refrain from exercising such rights and powers as though it were not an Agent,
and the Agent and its respective Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Borrower or any of its
Subsidiaries or Affiliates as if it were not an Agent under the Credit
Documents. The term Lender as used in all Credit Documents, unless the context
otherwise clearly requires, includes the Agent in its individual capacity as a
Lender.
Section 9.3. ACTIONS BY AGENT. The obligations of the Agent under the
Credit Documents are only those expressly set forth therein. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action concerning any Default or Event of Default, except as expressly provided
in Sections 7.2 and 7.5. Unless and until the Majority Lenders give such
direction the Agent may, except as otherwise expressly provided herein or
therein, take or refrain from taking such actions as it deems appropriate and in
the best interest of all the Lenders. In no event, however, shall the Agent be
required to take any action in violation of applicable law or of any provision
of any Credit Document, and the Agent shall in all cases be fully justified in
failing or refusing to act hereunder or under any other Credit Document unless
it first receives any further assurances of its indemnification from the Lenders
that it may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expenses, and liabilities it
may incur in taking or continuing to take any such action. The Agent shall be
entitled to assume that no Default or Event of Default exists unless notified in
writing to the contrary by a Lender or the Borrower. In all cases in which the
Credit Documents do not require the Agent to take specific action, the Agent
shall be fully justified in using its discretion in failing to take or in taking
any action thereunder. Any instructions of the Majority Lenders, or of any other
group of Lenders called for under specific provisions of the Credit Documents,
shall be binding on all the Lenders and holders of Revolving Notes.
Section 9.4. CONSULTATION WITH EXPERTS. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
Section 9.5. INDEMIFICATION PROVISIONS; CREDIT DECISION. Neither the
Agent nor any of its directors, officers, agents, or employees shall be liable
for any action taken or not taken by them in connection with the Credit
Documents (i) with the consent or at the request of the Majority Lenders or (ii)
in the absence of their own gross negligence or willful misconduct. Neither the
Agent nor any of its directors, officers, agents
55
or employees shall be responsible for or have any duty to ascertain, inquire
into or verify (i) any statement, warranty or representation made in connection
with this Agreement, any other Credit Document or any Borrowing; (ii) the
performance or observance of any of the covenants or agreements of the Borrower
or any Subsidiary contained herein or in any other Credit Document; (iii) the
satisfaction of any condition specified in Section 4, except receipt of items
required to be delivered to the Agent; or (iv) the validity, effectiveness,
genuineness, enforceability, value, worth or collectability hereof or of any
other Credit Document or of any other documents or writing furnished in
connection with any Credit Document; and the Agent makes no representation of
any kind or character with respect to any such matters mentioned in this
sentence. The Agent may execute any of its duties under any of the Credit
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders or any other Person for the default or misconduct
of any such agents or attorneys-in-fact selected with reasonable care. The Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, other document or statement (whether written or oral) believed by
it to be genuine or to be sent by the proper party or parties. In particular and
without limiting any of the foregoing, the Agent shall have no responsibility
for confirming the accuracy of any Compliance Certificate or other document or
instrument received by any of them under the Credit Documents. The Agent may
treat the payee of any Revolving Note as the holder thereof until written notice
of transfer shall have been filed with such Agent signed by such owner in form
satisfactory to such agent. Each Lender acknowledges that it has independently
and without reliance on the Agent or any other Lender obtained such information
and made such investigations and inquiries regarding the Borrower and its
Subsidiaries as it deems appropriate, and based upon such information,
investigations and inquiries, made its own credit analysis and decision to
extend credit to the Borrower in the manner set forth in the Credit Documents.
It shall be the responsibility of each Lender to keep itself informed about the
creditworthiness and business, properties, assets, liabilities, condition
(financial or otherwise) and prospects of the Borrower and its Subsidiaries, and
the Agent shall have no liability whatsoever to any Lender for such matters. The
Agent shall have no duty to disclose to the Lenders information that is not
required by any Credit Document to be furnished by the Borrower or any
Subsidiaries to such agent at such time, but is voluntarily furnished to such
agent (either in its respective capacity as Agent or in its individual
capacity).
Section 9.6. INDEMNITY. The Lenders shall ratably, in accordance with
their Percentages, indemnify and hold the Agent and its directors, officers,
employees, agents and representatives harmless from and against any liabilities,
losses, costs or expenses suffered or incurred by it or by any security trustee
under any Credit Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The obligations of the
Lenders under this Section 9.6 shall survive termination of this Agreement.
Section 9.7. RESIGNATION OF AGENT AND SUCCESSOR AGENT. The Agent may
resign at any time upon at least thirty (30) days' prior written notice to the
Lenders and the Borrower. Upon any such resignation of the Agent, the Majority
Lenders, with the consent
56
of the Borrower, which consent shall not be unreasonably withheld, shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders and with the
consent of the Borrower, which consent shall not be unreasonably withheld or
delayed, appoint a successor Agent which shall be any Lender hereunder or any
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance of its appointment as the Agent hereunder,
such successor Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent under the Credit Documents, and the
retiring Agent shall be discharged from its duties and obligations thereunder.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 9 and all protective provisions of the other Credit Documents shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.
SECTION 10. MISCELLANEOUS
Section 10.1. NO WAIVER. No delay or failure on the part of the Agent or
any Lender, or on the part of the holder or holders of any Revolving Notes, in
the exercise of any power, right or remedy under any Credit Document shall
operate as a waiver thereof or as an acquiescence in any default, nor shall any
single or partial exercise thereof preclude any other or further exercise of any
other power, right or remedy. To the fullest extent permitted by applicable law,
the powers, rights and remedies under the Credit Documents of the Agent, the
Lenders and the holder or holders of any Revolving Notes are cumulative to, and
not exclusive of, any powers, rights or remedies any of them would otherwise
have.
Section 10.2.NON-BUSINESS DAY. Subject to Section 2.5, if any payment of
principal or interest on any Loan, any Reimbursement Obligation or of any other
Obligation shall fall due on a day which is not a Business Day, interest or fees
(as applicable) at the rate, if any, such Loan, Reimbursement Obligation or
other Obligation bears for the period prior to maturity shall continue to accrue
in the manner set forth herein on such Obligation from the stated due date
thereof to the next succeeding Business Day, on which the same shall instead be
payable.
Section 10.3.DOCUMENTARY TAXES. The Borrower agrees that it will pay any
documentary, stamp or similar taxes payable with respect to any Credit Document,
including interest and penalties, in the event any such taxes are assessed
irrespective of when such assessment is made, other than any such taxes imposed
as a result of any transfer of an interest in a Credit Document.
Section 10.4.SURVIVAL OF REPRESENTATIONS. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as the Borrower has any Obligation hereunder or any
Revolving Credit Commitment hereunder is in effect.
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Section 10.5. SURVIVAL OF INDEMNITIES. All indemnities and all
provisions relative to reimbursement to the Lenders of amounts sufficient to
protect the yield of the Lenders with respect to the Loans and the L/C
Obligations, including, but not limited to, Section 2.11, Section 3.3, Section
7.6, Section 8.3 and Section 10.13 hereof, shall survive the termination of this
Agreement and the other Credit Documents and the payment of the Loans and all
other Obligations.
Section 10.6. SETOFF. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Event of Default, each
Lender and each subsequent holder of any Revolving Note is hereby authorized by
the Borrower at any time or from time to time, without notice to the Borrower or
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, including,
but not limited to, Debt evidenced by certificates of deposit, whether matured
or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other Debt at any time owing by that Lender or that
subsequent holder to or for the credit or the account of the Borrower, whether
or not matured, against and on account of the due and unpaid obligations and
liabilities of the Borrower to that Lender or that subsequent holder under the
Credit Documents, irrespective of whether or not that Lender or that subsequent
holder shall have made any demand hereunder. Each Lender shall promptly give
notice to the Borrower of any action taken by it under this Section 10.6,
PROVIDED THAT any failure of such Lender to give such notice to the Borrower
shall not affect the validity of such setoff. Each Lender agrees with each other
Lender a party hereto that if such Lender receives and retains any payment,
whether by setoff or application of deposit balances or otherwise, on any of the
Loans or L/C Obligations in excess of its ratable share of payments on all such
Obligations then owed to the Lenders hereunder, then such Lender shall purchase
for cash at face value, but without recourse, ratably from each of the other
Lenders such amount of the Loans or L/C Obligations, or participations therein,
held by each such other Lender as shall be necessary to cause such Lender to
share such excess payment ratably with all the other Lenders; PROVIDED, HOWEVER,
that if any such purchase is made by any Lender, and if such excess payment or
part thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest.
Section 10.7.NOTICES. Except as otherwise specified herein, all notices
under the Credit Documents shall be in writing (including cable, telecopy or
telex) and shall be given to a party hereunder at its address, telecopier number
or telex number set forth on the signature pages hereof or such other address,
telecopier number or telex number as such party may hereafter specify by notice
to the Agent and the Borrower, given by courier, by United States certified or
registered mail, by telegram or by other telecommunication device capable of
creating a written record of such notice and its receipt. Each such notice,
request or other communication shall be effective (i) if given by telecopier,
when such telecopy is transmitted to the telecopier number specified herein or
pursuant to Section 10.10 and a confirmation of receipt of such telecopy has
been received by the sender, (ii) if given by telex, when such telex is
transmitted to the telex number specified
58
herein or pursuant to Section 10.10 and the answerback is received by sender,
(iii) if given by courier, when delivered, (iv) if given by U.S. mail, five (5)
days after such communication is deposited in the U.S. mail, certified or
registered with return receipt requested, or (v) if given by any other means,
when delivered at the addresses specified herein or pursuant to Section 10.10;
PROVIDED THAT any notice given pursuant to Section 2 shall be effective only
upon receipt and, provided, further, that any notice that but for this proviso
would be effective after the close of business on a Business Day or on a day
that is not a Business Day shall be effective at the opening of business on the
next Business Day.
Section 10.8.COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and by the different parties on different counterpart signature
pages, each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same Agreement.
Section 10.9.SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Borrower, each of the Lenders, the Agent and its respective successors
and assigns, and shall inure to the benefit of the Borrower, each of the
Lenders, the Agent and its respective successors and assigns, including any
subsequent holder of any Revolving Note; PROVIDED, HOWEVER, the Borrower may not
assign any of its rights or obligations under this Agreement or any other Credit
Document without the written consent of all Lenders, the Agent, and the Agent
may not assign any of their respective rights or obligations under this
Agreement or any Credit Document except in accordance with Section 9 and no
Lender may assign any of its rights or obligations under this Agreement or any
other Credit Document except in accordance with Section 10.10. Any Lender may at
any time pledge or assign all or any portion of its rights under this Agreement
and the Revolving Notes issued to it to a Federal Reserve Bank to secure
extensions of credit by such Federal Reserve Bank to such Lender; PROVIDED THAT
no such pledge or assignment shall release a Lender from any of its obligations
hereunder or substitute any such Federal Reserve Bank for such Lender as a party
hereto.
Section 10.10. SALES AND TRANSFERS OF BORROWINGS AND NOTES;
PARTICIPATIONS IN BORROWINGS AND NOTE.
(a) Any Lender may at any time sell to one or more Persons
("PARTICIPANTS") participating interests in any Borrowing owing to such Lender,
any Revolving Note held by such Lender, any Revolving Credit Commitment of such
Lender or any other interest of such Lender hereunder, PROVIDED THAT no Lender
may sell any participating interests in any such Borrowing, Revolving Note,
Revolving Credit Commitment or other interest hereunder without also selling to
such Participant the appropriate pro rata share of all its Borrowings, Revolving
Notes, Revolving Credit Commitments and other interests hereunder, and PROVIDED
FURTHER that no Lender shall transfer, grant or assign any participation under
which the Participant shall have rights to vote upon or to consent to any matter
to be decided by the Lenders or the Majority Lenders hereunder or under any
other Credit Document or to approve any amendment to or waiver of this Agreement
or any other Credit Document except to the extent such amendment or waiver would
(i) increase the amount of such Lender's Revolving Credit Commitment and such
increase
59
would affect such Participant, (ii) reduce the principal of, or interest on, any
of such Lender's Borrowings, or any fees or other amounts payable to such Lender
hereunder and such reduction would affect such Participant, (iii) postpone any
date fixed for any scheduled payment of principal of, or interest on, any of
such Lender's Borrowings, or any fees or other amounts payable to such Lender
hereunder and such postponement would affect such Participant, or (iv) release
any guaranty or other collateral security for any Obligation, except as
otherwise specifically provided in any Credit Document. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Revolving
Note for all purposes under this Agreement, the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and such Lender shall
retain the sole right to enforce the obligations of the Borrower under any
Credit Document. The Borrower agrees that if amounts outstanding under this
Agreement and the Revolving Notes shall have been declared or shall have become
due and payable in accordance with Section 7.2 or 7.3 upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Revolving Note to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement or any
Revolving Note, PROVIDED THAT such right of setoff shall be subject to the
obligation of such Participant to share with the Lenders, and the Lenders agree
to share with such Participant, as provided in Section 10.6. The Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 2.11,
3.3 and 8.3 with respect to its participation in the Revolving Credit
Commitments and the Borrowings outstanding from time to time, PROVIDED THAT no
Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred if no participation had
been transferred.
(b) Any Lender may at any time sell to (i) any other Lender or any
Affiliate thereof and, (ii) with the prior written consent of the Agent and the
Borrower (which shall not be unreasonably withheld or delayed), to one or more
Persons (any of (i) or (ii), a "PURCHASING LENDER"), all or any part of its
rights and obligations under this Agreement and the other Credit Documents,
pursuant to an Assignment Agreement in the form attached as Exhibit 10.10,
executed by such Purchasing Lender and such transferor Lender (and, in the case
of a Purchasing Lender which is not then a Lender or an Affiliate thereof, by
the Borrower and the Agent) and delivered to the Agent; PROVIDED THAT each such
sale to a Purchasing Lender shall be in an amount of $5,000,000 or more, or if
in a lesser amount or if as a result of such sale the sum of the unfunded
Revolving Credit Commitment of such Lender plus the aggregate principal amount
of such Lender's Loans and participations in Letters of Credits would be less
than $5,000,000, such sale shall be of all of such Lender's rights and
obligations under this Agreement and all of the other Credit Documents payable
to it to one Purchasing Lender. Notwithstanding the requirement of the
Borrower's consent set forth above, but subject to all of the other terms and
conditions of this Section 10.10(b), any Lender may sell to one or more
commercial banking institutions, all or any part of their rights and obligations
under this Agreement and the
60
other Credit Documents with only the consent of the Agent (which shall not be
unreasonably withheld or delayed) if an Event of Default shall have occurred and
be continuing. No Lender may sell any Loans to a Purchasing Lender without also
selling to such Purchasing Lender the appropriate pro rata share of its
Borrowings, Revolving Notes, Revolving Credit Commitments and other interests
hereunder, including participations in Letters of Credit hereunder. Upon such
execution, delivery and acceptance, from and after the effective date of the
transfer determined pursuant to such Assignment Agreement, (x) the Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Assignment Agreement, have the rights and obligations of a Lender hereunder with
a Revolving Credit Commitment as set forth herein and (y) the transferor Lender
thereunder shall, to the extent provided in such Assignment Agreement, be
released from its obligations under this Agreement (and, in the case of an
Assignment Agreement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor Lender
shall cease to be a party hereto). Such Assignment Agreement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to reflect
the addition of such Purchasing Lender and the resulting adjustment of Revolving
Credit Commitments and Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement, the Revolving Notes and the other Credit Documents.
On or prior to the effective date of the transfer determined pursuant to such
Assignment Agreement, the Borrower, at its own expense, shall execute and
deliver to the Agent in exchange for any surrendered Revolving Note, a new
Revolving Note as appropriate to the order of such Purchasing Lender in an
amount equal to the Revolving Credit Commitments assumed by it pursuant to such
Assignment Agreement, and, if the transferor Lender has retained a Revolving
Credit Commitment or Borrowing hereunder, a new Revolving Note to the order of
the transferor Lender in an amount equal to the Revolving Credit Commitments or
Borrowings retained by it hereunder. Such new Revolving Notes shall be dated the
Initial Borrowing Date and shall otherwise be in the form of the Revolving Notes
replaced thereby. The Revolving Notes surrendered by the transferor Lender shall
be returned by the Agent to the Borrower marked "renewed."
(c) Upon its receipt of an Assignment Agreement executed by a transferor
Lender, a Purchasing Lender and the Agent (and, in the case of a Purchasing
Lender that is not then a Lender or an Affiliate thereof, by the Borrower),
together with payment by the transferor Lender to the Agent hereunder of a
registration and processing fee of $3,500 the Agent shall (i) promptly accept
such Assignment Agreement, and (ii) on the effective date of the transfer
determined pursuant thereto give notice of such acceptance and recordation to
the Lenders and the Borrower. The Borrower shall not be responsible for such
registration and processing fee or any costs or expenses incurred by any Lender,
any Purchasing Lender or the Agent in connection with such assignment except as
provided above.
(d) If, pursuant to this Section 10.10 any interest in this Agreement or
any Revolving Note is transferred to a Purchasing Lender which is organized
under the laws of any jurisdiction other than the United States of America or
any State thereof, the transferor Lender shall cause such Purchasing Lender,
concurrently with the effectiveness of such
61
transfer, (i) to represent to the transferor Lender (for the benefit of the
transferor Lender, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the Borrower or
the transferor Lender with respect to any payments to be made to such transferee
in respect of the Loans or the L/C Obligations, (ii) to furnish to the
transferor Lender (and, in the case of any Purchasing Lender, the Agent and the
Borrower) two duly completed and signed copies of either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001 or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities (wherein such Purchasing Lender claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments hereunder),
and (iii) to agree (for the benefit of the transferor Lender, the Agent and the
Borrower) to provide the transferor Lender (and, in the case of any Purchasing
Lender, the Agent and the Borrower) new forms as contemplated by Section 3.3(b)
upon the expiration or obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such transferee, and to comply
from time to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
Section 10.11. AMENDMENTS, WAIVERS AND CONSENTS. Any provision of the
Credit Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Majority
Lenders, and (c) if the rights or duties of the Agent are affected thereby, the
Agent, PROVIDED THAT:
(i) no amendment or waiver shall (A) increase the Revolving
Credit Commitment Amount without the consent of all Lenders or increase the
Revolving Credit Commitment of any Lender without the consent of such Lender,
(B) postpone the Maturity Date without the consent of all Lenders or reduce the
amount of or postpone the date for any scheduled payment of any principal of or
interest on any Loan or Reimbursement Obligation or of any fee payable hereunder
without the consent of each Lender owed any such Obligation, or (C) release or
modify any collateral for any Obligation (including, without limitation, any
Subsidiary Guaranty) without the consent of all Lenders; and
(ii) no amendment or waiver shall, unless signed by each Lender,
change the provisions of this Section 10.11 or the definition of Majority
Lenders or the number of Lenders required to take any action under any other
provision of the Credit Documents.
Section 10.12. HEADINGS. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 10.13. LEGAL FEES, OTHER COSTS AND INDEMIFICATION. The Borrower,
upon demand by the Agent or any Lender, agrees to pay the reasonable fees and
disbursements of legal counsel to the Agent and any Lender in connection with
the preparation and execution of the Credit Documents, any amendment, waiver or
consent related thereto, whether or not the transactions contemplated therein
are consummated and any enforcement of any Credit Document or collection of any
Obligations. The Borrower further agrees to indemnify each Lender, the Agent and
their respective
62
directors, officers, employees and attorneys (collectively, the "INDEMNIFIED
PARTIES"), against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all reasonable
attorneys' fees and other reasonable expenses of investigating, defending
against claims, litigation or preparation therefor, whether or not such
Indemnified Party is a party thereto) which any of them may pay or incur arising
out of or relating to (i) any action, suit or proceeding by any third party or
governmental authority against such Indemnified Party and relating to any Credit
Document, the Loans, any Letter of Credit or the application or proposed
application by the Borrower of the proceeds of any Loan, REGARDLESS OF WHETHER
SUCH CLAIMS OR ACTIONS ARE FOUNDED IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE
OR CONTRIBUTORY NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR ATTORNEYS, (ii) any investigation
of any third party or any governmental authority involving any Lender or the
Agent and related to any use made or proposed to be made by the Borrower of the
proceeds of the Borrowings, or any transaction financed or to be financed in
whole or in part, directly or indirectly with the proceeds of any Borrowing, and
(iii) any investigation of any third party or any governmental authority,
litigation or proceeding involving any Lender or the Agent by virtue of the
Credit Documents and related to any environmental cleanup, audit, compliance or
other matter relating to any Environmental Law or the presence of any Hazardous
Material (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any Environmental
Law) with respect to the Borrower, regardless of whether caused by, or within
the control of, the Borrower; PROVIDED, HOWEVER, that the Borrower shall not be
obligated to indemnify any Indemnified Party for any of the foregoing arising
out of such Indemnified Party's or the Lender's or Agent's gross negligence or
willful misconduct or the gross negligence or wilful misconduct of any other
Indemnified Party with respect to the same Lender or Agent.
Section 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(A) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AND THE RIGHTS AND
DUTIES OF THE PARTIES HERETO AND THERETO, SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS.
(B) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO AGREE THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
THE LENDERS OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE
STATE OF TEXAS SITTING IN HARRIS COUNTY OR THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF TEXAS. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE BORROWER, THE LENDERS AND THE AGENT HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS
63
TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE BORROWER, THE LENDERS AND THE AGENT
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS, BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE BORROWER, THE
LENDERS AND THE AGENT HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE BORROWER, ANY LENDER AND THE AGENT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PERSON HEREBY
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS.
(C) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 10.15. CONFIDENTIALITY. The Agent and each Lender agrees it will
not disclose without the Borrower's consent (other than to its employees,
auditors, counsel or other professional advisors or to its Affiliates) any
information concerning the Borrower or any of its Subsidiaries furnished
pursuant to any of the Credit Documents; PROVIDED THAT the Agent and the Lenders
may disclose any such information (i) that has become generally available to the
public other than through the Lenders, (ii) if required in any examination or
audit or any report, statement or testimony submitted to any federal or state
regulatory body having or claiming to have jurisdiction over the Lenders, (iii)
if required in response to any summons or subpoena or in connection with any
litigation, (iv) in order to comply with any law, order, regulation or ruling
applicable to the Lenders, (v) to any prospective or actual permitted transferee
in connection with any contemplated or actual permitted transfer of any interest
in the Revolving Notes by the Lenders, and (vi) in connection with the exercise
of any remedies by the Lenders; PROVIDED THAT such actual or prospective
transferee executes an agreement with the Lenders containing provisions
64
substantially identical to those contained in this Section 10.15 prior to such
transferee's receipt of any such information.
Section 10.16. EFFECTIVENESS. This Agreement shall become effective on
the date (the "EFFECTIVE DATE") on which the Borrower, the Agent and each Lender
has signed and delivered to the Agent a counterpart signature page hereto or, in
the case of a Lender, the Agent has received telex or facsimile notice that such
a counterpart has been signed and mailed to the Agent.
Section 10.17. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.18. CHANGE IN ACCOUNTING PRINCIPLES OR TAX LAWS. If (i) any
change in accounting principles from those used in the preparation of the
financial statements of the Borrower referred to in Section 5.9 is hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) and such change materially affects the
calculation of any component of any financial covenant, standard or term found
in this Agreement, or (ii) there is a material change in federal or foreign tax
laws which materially affects the Borrower's ability to comply with the
financial covenants, standards or terms found in this Agreement, the Borrower
and the Lenders agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating any of the Borrower's and its Subsidiaries'
consolidated financial condition shall be the same after such changes as if such
changes had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
Section 10.19. ENTIRE AGREEMENT. The Credit Documents constitute the
entire understanding among the Borrower, the Lenders and the Agent and supersede
all earlier or contemporaneous agreements, whether written or oral, concerning
the subject matter of the Credit Documents. THIS WRITTEN AGREEMENT TOGETHER WITH
THE OTHER CREDIT DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
ADDRESS FOR NOTICES: BORROWER:
- -------------------- --------
9430 Old Katy Road THE YORK GROUP, INC.
65
Houston, Texas 77055
Attention: Chief Financial Officer By:
Copy to: General Counsel Name: David F. Beck
Telephone No.: 713/984-5507 Title: Vice President of Finance and
Chief Financial Officer
Fax No.: 713/984-5517
66
PERCENTAGE: 100% LENDERS:
ABN AMRO BANK N.V., HOUSTON AGENCY, AS AGENT
AND LENDER
ADDRESS FOR NOTICES:
BY:
ABN AMRO Bank N.V., NAME:
Houston Agency TITLE:
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Mr. David Orr
Telephone No.: 713/964-3323 BY:
Fax No.: 713/629-7533 NAME:
TITLE:
PAYMENT INSTRUCTIONS:
Name of Credit Bank: ABN AMRO Bank N.V., Houston Agency
City, State: Houston, Texas
ABA No.: ___________________________
Method of Payment: ___________________
For Credit To: The York Group, Inc.
Account No.: ________________________
Reference: ___________________________
Attention: ____________________________
LENDING OFFICE:
ABN AMRO Bank N.V., Houston Agency
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Mr. David Orr
Telephone No.: 713/964-3323
Fax No.: 713/629-7533
67
EXHIBIT 2.2A
FORM OF BORROWING REQUEST
BORROWING REQUEST
--------------, ----
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Mr. David Orr
Re: The York Group, Inc.
Ladies and Gentlemen:
This Borrowing Request is delivered to you pursuant to Section 2.2(b) or
2.4, as applicable, of that certain Credit Agreement dated as of March 12, 1998
(herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, called the "CREDIT AGREEMENT") by
and between The York Group, Inc. (the "BORROWER"), the various financial
institutions (collectively called the "LENDERS") as are or may from time to time
become parties thereto, and ABN AMRO Bank, N.V., as Agent for the Lenders (in
such capacity, the "AGENT"). Any term defined in the Credit Agreement and used
in this request shall have the meaning given to it in the Credit Agreement.
___ 1. REVOLVING LOANS
___ A. The Borrower hereby requests that Revolving Loans be made by the Lenders
in accordance with each Lender's Commitment pursuant to the terms and
conditions of the Credit Agreement in the aggregate principal amount for
all such Revolving Loans of $________________ on ____________, ______ as
(check as applicable) [___] [_____________________ Dollars] of such
Revolving Loans as Eurodollar Loans having an Interest Period of
_________________ month(s); and/or [___] [___________________ Dollars] of
such Revolving Loans as Base Rate Loans.
___ B. The Borrower hereby requests (check as applicable) [___] a rollover of
[____] all or [____] [______________ Dollars] of such Revolving Loans to
Eurodollar Loans having an Interest Period of ____ month(s); or [___] a
conversion of [___] all or [___] [___________________ Dollars] of such
Revolving Loans to Base Rate Loans; and/or [___] a conversion of [___]
all or [___] $_______________ of Base Rate Loans to Eurodollar Loans
having an Interest Period of _____ month(s).
___ 2. LETTERS OF CREDIT
The Borrower hereby requests that the Agent, on behalf of the
Lenders [___] issue, [___] increase the amount of, [___] extend
the expiry date of a Letter of Credit pursuant to Section 2.2 of
the Credit Agreement. Attached hereto is a duly executed
Application.
The Borrower hereby certifies to the Agent and the Lenders that all
applicable conditions precedent to the Borrowings set forth in Section 4 of the
Credit Agreement have been satisfied or fulfilled in all respects and that this
Borrowing Request constitutes a representation and warranty by the Borrower that
on the date of such Borrowing or issuance of, increase in the amount of, or
extension of the expiry date of, a Letter of Credit, all conditions precedent to
such Borrowing will be satisfied or fulfilled. The Borrower hereby agrees that
if prior to the time of the making of the Loans or the issuance of, increase in
the amount of or extension of the expiry date of a Letter of Credit, as
requested hereby, any matter certified herein by it will not be true and correct
in all respects at such time as if then made, it will immediately so notify the
Agent in writing.
Schedule 1 attached to this Borrowing Request and incorporated herein
for all purposes shows the availability of the Commitment under the Credit
Agreement. The Borrower hereby certifies that each amount thereon is correctly
stated.
Please wire transfer the proceeds of the Loans to the following accounts
of the following Persons at the financial institutions indicated respectively:
Amount to be ACCOUNT Name, Address, etc. of
TRANSFERRED NAME ACCOUNT NO. TRANSFEREE BANK
- ------------ -------------- ----------- ---------------
- ----------- ----------------- ------------
Attn:
- ----------- ----------------- ------------
Attn:
The undersigned certifies that he or she is the officer of the Borrower
as designated below, and that as such he or she is authorized to execute this
Borrowing Request on behalf of the Borrower. The undersigned further certifies,
represents and warrants on behalf of the Borrower, solely in his or her capacity
as an officer of Borrower, that it is entitled to receive the requested Loans or
the issuance of, increase in the amount of or extension of the expiry date of a
Letter of Credit as requested hereby under the terms and conditions of the
Credit Agreement.
Date:____________________, ______.
THE YORK GROUP, INC.
By:
Name:
Title:
SCHEDULE 1 TO BORROWING REQUEST
-------------------------------
1. Revolving Commitment Amount $ 60,000,000
2. Outstanding principal amount of all Revolving Loans $___________
3. Outstanding L/C Obligations $___________
4. Available Commitment (1 minus the sum of 2 plus 3) $___________
5. Principal amount of requested Revolving Loans $___________
6. Face amount of requested Letters of Credit $___________
7. Remaining available Revolving Commitment Amount after giving
effect to requested Loans and
Letters of Credit (4 minus the sum of 5 plus 6) $___________
EXHIBIT 2.2B
FORM OF APPLICATION
NONE
EXHIBIT 2.10
FORM OF REVOLVING NOTE
LOANS AND PRINCIPAL PAYMENTS
Amount of Principal
Date Amount of Loan Made Repaid Unpaid Principal Balance
- -------- -------------------------- ------------------------------------ ------------------------------------------- ------------
Base Rate Adjusted LIBOR Base Rate Adjusted LIBOR Base Rate Adjusted LIBOR Notation
Rate Rate Rate Total Made By
- --------- ---------- ----------------- ----------------- ------------------ ------------------- ----------------- ------ -----------
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EXHIBIT 4.1A
FORM OF SUBSIDIARY GUARANTY
GUARANTY
THIS GUARANTY (this "Guaranty") dated as of _____________, 199__, is
from , a ___________ corporation (the "Guarantor"), to the Lenders referred to
hereinafter and ABN AMRO Bank N.V., Houston Agency, as Agent for the Lenders (in
such capacity the "Agent").
W I T N E S S E T H:
A. The York Group, Inc. (the "Borrower"), a Delaware corporation,
the various financial institutions (collectively, the "Lenders") as are or may
from time to time become parties thereto and the Agent have entered into that
certain Credit Agreement dated as of March 12, 1998 (herein, as the same may be
amended, modified, supplemented, extended, rearranged, and/or restated from time
to time, called the "Credit Agreement"), pursuant to which, upon the terms and
conditions therein set forth, (a) the Lenders have agreed to make Loans to the
Borrower, which Loans are evidenced by Revolving Notes of the Borrower dated
March 12, 1998, in the aggregate original principal amount of $60,000,000,
payable the order of the Lenders, respectively (herein, as amended, extended,
modified, rearranged and/or supplemented, from time to time together with any
promissory notes given in extension, replacement, rearrangement, modification
and/or substitution thereof or therefor, collectively called the "Notes") and
(b) the Agent on behalf of the Lenders has agreed to issue Letters of Credit for
the account of the Borrower. Capitalized terms used herein without definition
shall have the meanings assigned in the Credit Agreement.
B. As a condition precedent to the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement, the Guarantor is
required to execute and deliver this Guaranty.
C. The Guarantor has duly authorized the execution, delivery
and performance of this Guaranty.
D. It is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower and the issuance
of Letters of Credit by the Agent pursuant to the Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to make Loans (including the initial Loans) to the Borrower and to issue or
participate in Letters of Credit pursuant to the Credit Agreement, the Guarantor
agrees, for the benefit of the Agent and each Lender, as follows:
ARTICLE I
GUARANTY
1.1 GUARANTY. For value received, and in consideration of any loan or
other financial accommodation, heretofore or hereafter at any time made or
granted to the Borrower by the Agent and the Lenders, the Guarantor hereby
unconditionally guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations of
the Borrower to the Agent and each Lender and their successors and assigns,
howsoever created, arising or evidenced, whether direct or indirect, primary or
secondary, absolute or contingent, joint or several, or now or hereafter
existing or due or to become due, including, without limitation, all such
amounts which would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss. 362(a), and
the operation of Sections 502(b) and 506(b) of such Bankruptcy Code, 11 U.S.C.
ss. 502(b) and ss. 506(b), under and in connection with the Credit Agreement,
including, without limitation under (a) the Notes, and (b) the Letters of
Credit, including any Reimbursement Obligations with respect thereto (all such
obligations being hereinafter collectively called the "Liabilities"), and the
Guarantor further agrees to pay all reasonable expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by the Agent and any Lender
in endeavoring to collect the Liabilities, or any part thereof, and in enforcing
this Guaranty. Anything herein contained to the contrary notwithstanding, the
amount of this Guaranty, however, shall not exceed the maximum amount which the
Guarantor could pay under this Guaranty without having such payment set aside as
a fraudulent transfer or conveyance or similar action under such Bankruptcy Code
or any applicable state law.
1.2. BANKRUPTCY. The Guarantor hereby agrees that, in the event of the
dissolution or insolvency of the Borrower or the Guarantor, or the inability or
failure of the Borrower or the Guarantor to pay its debts as they become due, or
an assignment by the Borrower or the Guarantor for the benefit of creditors, or
the commencement of any case or proceeding in respect of the Borrower or the
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Liabilities may not then be due and
payable, the Guarantor will pay to the Lender forthwith the full amount which
would be payable hereunder by the Guarantor as if all Liabilities were then due
and payable.
1.3. SETOFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Event of Default under the
Credit Agreement, the Agent and each Lender and each subsequent holder of any of
the Notes is hereby authorized by the Guarantor without notice to the Borrower,
the Guarantor or any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts, and in whatever currency denominated) and any other indebtedness at
any time held or owing by the Agent, that Lender or that subsequent holder to or
for the credit or the account of the Guarantor, whether or not matured, against
and on account of the obligations and liabilities of the Borrower
or the Guarantor to the Agent, such Lender or such subsequent holder under the
Credit Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with the Credit Documents irrespective
of whether or not (a) the Agent, such Lender or such subsequent holder shall
have made any demand hereunder, or (b) the principal of or the interest on the
Loans, the L/C Obligations or any other amounts due hereunder shall have become
due and payable and although said obligations and liabilities, or any of them,
may be contingent or unmatured.
1.4. GUARANTY ABSOLUTE, ETC. This Guaranty shall in all respects be a
continuing, absolute and unconditional Guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, the dissolution of the Borrower
or the Guarantor or that at any time or from time to time all Liabilities may
have been paid in full), until all Liabilities (including any renewals,
extensions and/or rearrangements of any thereof) and all interest thereon and
all reasonable expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Agent and the Lenders in endeavoring to
collect the Liabilities and in enforcing this Guaranty shall have been finally
paid in full and the Commitments have been permanently terminated.
1.5. REINSTATEMENT. The Guarantor further agrees that, if at any time
all or any part of any payment theretofore applied by the Agent or any Lender to
any of the Liabilities is or must be rescinded or returned by the Agent or any
Lender for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Borrower), such Liabilities shall, for the
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Agent or any Lender, and this Guaranty shall continue to
be effective or be reinstated, as the case may be, as to such Liabilities, all
as though such application by the Agent or any Lender had not been made.
1.6 RIGHTS OF THE AGENT AND LENDERS. The Agent or any Lender may, from
time to time, at its sole discretion and without notice to the Guarantor, take
any or all of the following actions:
(a) retain or obtain a lien upon or a security interest in any
property to secure any of the Liabilities or any obligation hereunder;
(b) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect to any
of the Liabilities;
(c) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of the Guarantor
hereunder or any obligation of any nature of any other obligor with
respect to any of the Liabilities;
(d) extend or renew for one or more periods (whether or not
longer than the original period) or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to
any such property securing any of the Liabilities; or
(e) resort to the Guarantor for payment of any of the
Liabilities, whether or not the Agent or the Lenders shall have
proceeded against any other obligor primarily or secondarily obligated
with respect to any of the Liabilities (all of the actions referred to
in this clause being hereby expressly waived by the Guarantor).
1.7. APPLICATION OF PAYMENTS. Any amounts received by the Agent or any
Lender from whatsoever source on account of the Liabilities may be applied by it
toward the payment of such of the Liabilities, and in such order of application,
as the Agent or any Lender may from time to time elect.
1.8. WAIVER. (a) The Guarantor hereby expressly waives:
(i) notice of the acceptance by the Agent or any Lender of
this Guaranty;
(ii) notice of the existence or creation or non-payment of
all or any of the Liabilities;
(iii) presentment for payment, demand, protest, notice of
intent to accelerate, notice of acceleration, notice of dishonor
and all other notices whatsoever;
(iv) all diligence in collection or protection of or
realization upon the Liabilities or any thereof, any obligation
hereunder, or any security for or guaranty of any of the
foregoing; and
(v) any rights under, or any requirements imposed by,
Chapter 34 of the Texas Business and Commerce Code, as amended,
and any rights or requirements that the Agent or any Lender first
enforce any rights or remedies against the Company or any other
guarantor or against any collateral for any of Liabilities.
(b) No delay on the part of the Agent or any Lender in the
exercise of any right or remedy shall operate as a waiver thereof, and
no single or partial exercise by the Agent or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise
of any other right or remedy; nor shall any modification or waiver of
any of the provisions of this Guaranty be binding upon the Agent or any
Lender except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent or such Lender. No action of the Agent
or any Lender permitted hereunder shall in any way affect or impair the
rights of the Agent or any Lender and the obligations of the Guarantor
under this Guaranty. The obligations of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of any
circumstance whatsoever which might constitute a legal or equitable
discharge or defense of the Guarantor. The Guarantor hereby acknowledges
that there are no conditions to the effectiveness of this Guaranty.
1.9. SUBROGATION. No payment made by or for the account of the Guarantor
pursuant to this Guaranty shall entitle the Guarantor by subrogation or
otherwise to demand or receive any payments by the Borrower or from or out of
any properties of the Borrower until the Liabilities shall have been paid in
full. The Guarantor shall not exercise any right or remedy against the Borrower
or any properties of the Borrower by reason of any performance by the Guarantor
of this Guaranty until the Liabilities shall have been paid in full.
1.10. SUBORDINATION. The Guarantor hereby subordinates its right to
payment from the Company of any obligations, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing or due or to become due (collectively, the "Guarantor Liabilities"), to
the Liabilities of the Company to the Agent and the Lenders, and no payments or
other distributions whatsoever in respect of any such Guarantor Liabilities
shall be made, nor shall any property or assets of the Company be applied to the
purchase, acquisition or retirement of any such Guarantor Liabilities; provided
that payments on such Guarantor Liabilities may be made at any time no Event of
Default (as hereinafter defined) or event, which with the passage of time or
notice, or both, may become an Event of Default shall have occurred and be
continuing. Any payments received by the Guarantor in respect of any such
Guarantor Liabilities owing to it other than as expressly provided herein shall
be held in trust for the Agent and the Lenders.
1.11. EXCESS LIABILITIES. The creation or existence from time to time of
Liabilities in excess of the amount to which the right of recovery under this
Guaranty is limited, if any, is hereby authorized, without notice to the
Guarantor, and shall in no way affect or impair the rights of the Lender and the
obligation of the Guarantor under this Guaranty.
1.12. SUCCESSORS, TRANSFEREES AND ASSIGNS. The Agent and each Lender
may, from time to time, without notice to the Guarantor, assign or transfer any
or all of the Liabilities or any interest therein in accordance with the terms
of the Credit Agreement; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of the interest of such assignee or
transferee in the Liabilities, be entitled to the benefits of this Guaranty to
the same extent as if such assignee or transferee were the transferring Lender;
provided, however, that, unless the transferring Lender shall otherwise consent
in writing, the transferring Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce this Guaranty,
for the benefit of the transferring Lender as to those of the Liabilities which
the transferring Lender has not assigned or transferred.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 INDEPENDENT MEANS OF OBTAINING INFORMATION. The Guarantor hereby
represents and warrants to the Agent and each Lender that it now has and will
continue to have independent means of obtaining information concerning the
affairs, operations,
financial condition, business and prospects of the Borrower.
2.2 AUTHORIZATION; NO CONFLICT. The Guarantor hereby further represents
and warrants to the Agent and each Lender that
(a) the execution and delivery of this Guaranty, and the
performance by the Guarantor of its obligations hereunder, are within
the Guarantor's corporate powers and have been duly authorized by all
necessary corporate action on the part of the Guarantor; and
(b) this Guaranty has been duly executed and delivered on behalf
of the Guarantor and is the legal, valid and binding obligation of the
Guarantor, enforceable in accordance with its terms subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and equitable principles relating to or limiting creditors'
rights generally, the making and performance of which do not and will
not contravene or conflict with the articles or certificate of
incorporation and by-laws or other corporate governance documents of the
Guarantor or violate or constitute a default under any law, any
presently existing requirement or restriction imposed by any judicial,
arbitral or governmental instrumentality or any agreement, instrument or
indenture by which the Guarantor is bound.
2.3 VALIDITY AND BINDING NATURE. This Guaranty shall be binding upon the
Guarantor, and upon the successors and assigns of the Guarantor, and shall
include any successor or successors, whether immediate or remote, to such
entity; provided, however, that the Guarantor may not assign any of its
obligations hereunder without the prior written consent of the Agent and the
Lenders except as may be provided in the Credit Agreement.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
This Guaranty, and the rights and duties of the parties hereto, shall be
construed in accordance with and governed by the internal laws of the State of
Texas. Each party hereto hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of Texas and of any Texas
state court sitting in Houston, Texas for purposes of all legal proceedings
arising out of or relating to this Guaranty or the transactions contemplated
hereby. Each party hereto irrevocably waives, to the fullest extent permitted by
law, any objection it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
EACH PARTY TO THIS GUARANTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
3.2. SEVERABILITY. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable laws, but if any provision of this Guaranty shall be prohibited by or
invalid under such laws, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
3.3 NOTICES. Except as otherwise specified herein, all notices under
this Guaranty shall be in writing (including cable, telecopy or telex) and shall
be given to the Guarantor at its address, telecopier number or telex number set
forth on the signature page hereof or such other address, telecopier number or
telex number as the Guarantor may hereafter specify by notice to the Agent,
given by courier, by United States certified or registered mail, by telegram or
by other telecommunication device capable of creating a written record of such
notice and its receipt. Each such notice, request or other communication shall
be effective (i) if given by telecopier, when such telecopy is transmitted to
the telecopier number specified in this Section on the signature pages hereof
and a confirmation of receipt of such telecopy has been received by the sender,
(ii) if given by telex, when such telex is transmitted to the telex number
specified on the signature pages hereof and the answerback is received by
sender, (iii) if given by courier, when delivered, (iv) if given by mail, five
(5) days after such communication is deposited in the mail, certified or
registered with return receipt requested, or (v) if given by any other means,
when delivered at the addresses specified on the signature page hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the date first above
written.
Address: By:
Name:
- ----------- Title:
- -----------
EXHIBIT 4.1B
FORM OF SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is dated as of March 12, 1998, among
___________________________, a Delaware corporation (the "SUBORDINATED
CREDITOR"), the Lenders (as hereinafter defined) and ABN AMRO Bank N.V., Houston
Agency, as Agent for the Lenders (in such capacity, the "AGENT").
WITNESSETH:
WHEREAS The York Group, Inc., a Delaware corporation (the
"BORROWER"), various financial institutions from time to time parties thereto
(collectively, the "LENDERS") and the Agent are parties to that certain Credit
Agreement dated as of March 12, 1998 (as the same may be amended, restated,
modified or otherwise supplemented from time to time, the "CREDIT AGREEMENT"),
pursuant to which the Lenders have made certain credit available to the
Borrower;
WHEREAS pursuant to the terms of the Credit Agreement, the
Borrower has agreed to cause the Subordinated Creditor to execute and deliver
this Subordination Agreement, and the Subordinated Creditor has agreed to enter
into this Subordination Agreement;
NOW THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce the Agent and the Lenders to
make Loans to and to issue or participate in Letters of Credit for the account
of the Borrower in accordance with the terms of the Credit Agreement, and (iii)
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Subordinated Creditor hereby agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.01 TERMS DEFINED ABOVE AND IN CREDIT AGREEMENT. As used in
this Subordination Agreement, the terms defined above shall have the meanings
respectively assigned to them. Unless otherwise defined herein, all terms which
are defined in the Credit Agreement shall have the meanings herein as assigned
therein, unless the context hereof requires otherwise.
Section 1.02 CERTAIN DEFINITIONS. As used in this Subordination
Agreement the following terms shall have the following meanings:
"SUBORDINATED DEBT" shall mean any and all indebtedness, liabilities and
obligations of the Borrower, whether owed individually or jointly, to the
Subordinated Creditor, absolute or contingent, direct or indirect, joint,
several or independent, now outstanding or owing or which may hereafter be
existing or incurred, arising by operation of law or otherwise, due or to become
due, or held or to be held by the Subordinated Creditor, whether created
directly or acquired by assignment, as a participation, conditionally, as
collateral security from another or otherwise, including indebtedness,
obligations and liabilities of the Borrower to the Subordinated Creditor as
member of any partnership, syndicate, association or other group, and whether
incurred by the Borrower as principal, surety, endorser, guarantor,
accommodation party or otherwise, including, without limiting the generality of
the foregoing, all indebtedness, liabilities and obligations of the Borrower to
the Subordinated Creditor arising out of the following described promissory
notes [(i) that certain promissory note in the principal amount of $6,980,000,
dated December 23, 1992, executed by the Borrower and payable to the order of
the Subordinated Creditor and (ii) that certain promissory note in the principal
amount of $31,000,000, dated January 13, 1994 (modified as of July 9, 1996),
executed by the Borrower and payable to the order of the Subordinated Creditor
(the "SUBORDINATED NOTES").]
"SUPERIOR INDEBTEDNESS" shall mean any and all indebtedness, liabilities
and obligations of the Borrower to the Agent and the Lenders now outstanding or
owing or which may hereafter be existing or incurred, arising by operation of
law or otherwise, due or to become due, or held or to be held by the Agent or
any Lender under the Credit Agreement or any Credit Document, including,
limiting the generality of the foregoing, all Obligations and all amounts due
under the Revolving Notes and the Letters of Credit, including any Reimbursement
Obligations with respect thereto.
ARTICLE II
SUBORDINATION
Section 2.01 AGREEMENT TO SUBORDINATE. The payment of any and all
Subordinated Debt is expressly subordinated to the extent and in the manner set
forth in Sections 2.02 through 2.06 hereof to Superior Indebtedness.
Section 2.02 PAYMENT SUBORDINATION UPON DEFAULT. If for any reason any
of the Superior Indebtedness is not paid when due or is not paid on or before
the maturity thereof, or if there shall occur and be continuing any event which
with the giving of notice or lapse of time or both would constitute a Default or
Event of Default under the Credit Agreement or any Credit Document, then, unless
and until such Default or Event of Default shall have been cured to the
satisfaction of the Agent and the Lenders, in their sole discretion, or unless
and until the Superior Indebtedness shall be paid in full, the Subordinated
Creditor will not ask for, sue for, take, demand, receive or accept from the
Borrower, by set-off or in any other manner, any payment or distribution on
account of the Subordinated Debt nor present any instrument evidencing the
Subordinated Debt for payment (other than such presentment as may be necessary
to prevent discharge of other liable parties on such instrument); PROVIDED THAT,
so long as no Default or Event of Default has occurred and is continuing or so
long as such payment would not result in a Default or Event of Default, the
Borrower may (i) pay interest on the Subordinated Notes on the dates specified
therein and (ii) repay the outstanding principal amount of the Subordinated Debt
so long the aggregate amount of
all such repayments do not result in the aggregate principal amount of the
Subordinated Debt being less than
$--------------.
Section 2.03 NO PAYMENTS WHICH CAUSE DEFAULTS. The Subordinated Creditor
will not ask for, demand, sue for, take, receive or accept from the Borrower by
set-off or in any other manner, any payment or distribution on account of the
Subordinated Debt, if the making of such payment would constitute, or would
result in the occurrence of, a Default or Event of Default under the Credit
Agreement or any Credit Document.
Section 2.04 PAYMENTS RECEIVED IN VIOLATION OF SUBORDINATION AGREEMENT.
In the event the Subordinated Creditor shall receive any payment or distribution
on account of the Subordinated Debt which the Subordinated Creditor is not
entitled to receive under the provisions of the foregoing Section 2.02 or
Section 2.03, the Subordinated Creditor will hold any amount so received in
trust for the Agent and the Lenders and will forthwith turn over such payment to
the Agent for the benefit of the Lenders in the form received by Subordinated
Creditor (together with any necessary endorsement) to be applied on the Superior
Indebtedness.
Section 2.05 NO LIENS. The Subordinated Creditor agrees that it will not
obtain or maintain any Liens upon the Borrower's assets to secure payment of the
Subordinated Debt.
Section 2.06 AGREEMENT NOT TO PURSUE ACTIONS.
(a) The Subordinated Creditor will not commence any action or proceeding
against the Borrower to recover all or any part of the Subordinated Debt or join
with any other creditor, unless the Agent and the Lenders shall also join, in
bringing any proceedings against the Borrower under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt, receivership,
liquidation or insolvency law or statute of the federal or any state government
unless and until all Superior Indebtedness shall have been paid in full.
(b) In the event of any receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization or arrangement with creditors,
adjustment of debt, whether or not pursuant to the federal Bankruptcy Code, the
sale of all or substantially all of the assets, dissolution, liquidation, or any
other marshaling of the assets and liabilities of the Borrower, the Subordinated
Creditor will at the Agent's request file any claim, proof of claim, proof of
interest or other instrument of similar character necessary to enforce the
obligations of the Borrower in respect of the Subordinated Debt and will hold in
trust for the Agent and the Lenders and pay over to the Agent for the benefit of
the Lenders, in the form received (together with any necessary endorsement), to
be applied on the Superior Indebtedness, any and all monies, dividends,
distributions or other assets received in any such proceedings on account of the
Subordinated Debt unless and until the Superior Indebtedness shall be paid in
full. In the event that the Subordinated Creditor shall fail to take any such
action requested by the Agent, the Agent, may, as attorney-in-fact for the
Subordinated Creditor take such action on behalf of the Subordinated Creditor,
and the Subordinated Creditor hereby appoints the Agent as attorney-in-fact for
the Subordinated Creditor to
demand, sue for, collect and receive any and all such monies, dividends,
distributions or other assets and give acquittance therefor, and to file any
claim, proof of claim, proof of interest or other instrument of similar
character and to take such other proceedings in the Agent's own name, for the
benefit of the Lenders, or in the name of the Subordinated Creditor as the Agent
may deem necessary or advisable for the enforcement of this Subordination
Agreement; and the Subordinated Creditor will execute and deliver to the Agent
such other and further powers of attorney or other instruments as the Agent may
request in order to accomplish the foregoing.
Section 2.07 RIGHTS OF THE AGENT AND THE LENDERS. The Agent and the
Lenders may, at any time, and from time to time, without the consent of or
notice to the Subordinated Creditor, without incurring responsibility to the
Subordinated Creditor, without impairing or releasing any of the Agent's or any
Lender's rights or any of the obligations of the Subordinated Creditor under
this Subordination Agreement:
(a) Change the amount, manner, place or terms of payment, or change or
extend for any period the time of payment of, or renew or otherwise alter the
Superior Indebtedness or any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for or providing for the issuance of
any of the Superior Indebtedness in any manner, or enter into or amend in any
manner any other agreement relating to the Superior Indebtedness (including
provisions restricting or further restricting payments of the Subordinated
Debt);
(b) Sell, exchange, release or otherwise deal with all or any part of
the property, if any, by whomsoever at any time pledged or mortgaged to secure
the Superior Indebtedness;
(c) Release any Person liable in any manner for payment or collection of
the Superior Indebtedness;
(d) Exercise or refrain from exercising any rights against the Borrower
or others, including the Subordinated Creditor; and
(e) Apply any sums received by the Agent or any Lender, paid by any
Person and however realized, to payment of the Superior Indebtedness in such a
manner as the Agent and the Lenders, in their sole discretion, may deem
appropriate.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 REPRESENTATIONS OF SUBORDINATED CREDITOR. The Subordinated
Creditor represents and warrants that: (a) neither the execution nor delivery of
this Subordination Agreement nor fulfillment of or compliance with the terms and
provisions hereof will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any agreement or
instrument to which it is now subject; (b) it has all requisite authority to
execute, deliver and perform its obligations under this Subordination Agreement;
and (c) the outstanding principal amount of the Subordinated Debt, as of the
date hereof, is [$---------------].
Section 3.02 COVENANTS. The Subordinated Creditor covenants that so long
as any of the Superior Indebtedness remains outstanding and until the
termination of the Commitments, the Subordinated Creditor shall: (a) cause all
Subordinated Debt to be evidenced by a note, debenture or other instrument
evidencing the Subordinated Debt; (b) at the Agent's request promptly surrender
or cause to be surrendered any such note, debenture, or instrument evidencing
the Subordinated Debt so that a statement or legend may be entered thereon to
the effect that such note, debenture, or other instrument is subordinated to the
Superior Indebtedness in favor of the Agent and the Lenders in the manner and to
the extent set forth in this Subordination Agreement; (c) mark the books of
Subordinated Creditor to show that the Subordinated Debt is subordinated to the
Superior Indebtedness in the manner and to the extent set forth in this
Subordination Agreement; (d) execute any and all other instruments necessary as
required by the Agent to subordinate the Subordinated Debt to the Superior
Indebtedness as herein provided; (e) not assign or transfer to others any claim
the Subordinated Creditor has or may have against the Borrower as long as any of
the Superior Indebtedness remains outstanding, unless such assignment or
transfer is expressly made subject to this Subordination Agreement; (f) not ask
for, sue for, take, demand, receive or accept any principal or interest on any
of the Subordinated Debt, except as set forth in Section 2.02 hereof; (g) not
amend, supplement or otherwise modify the terms of the Subordinated Debt without
the express written consent of the Agent, which consent will not be unreasonably
withheld, other than to decrease the rate of interest therefor, decrease the
amount of any installment or to extend the maturity dates therefor; (h) not ask
for, take, demand, receive or accept any property as collateral security for the
Subordinated Debt; and (i) promptly upon either receipt or delivery, forward to
the Agent a true and complete of any material notices or communications either
received or delivered with respect to the Subordinated Debt.
ARTICLE IV
MISCELLANEOUS
Section 4.01 ASSIGNMENT BY THE AGENT AND THE LENDERS. This Subordination
Agreement may be assigned by the Agent and the Lenders in connection with any
assignment or transfer of the Superior Indebtedness pursuant to the terms of the
Credit Agreement.
Section 4.02 NOTICES. Any notice required or permitted to be given under
or in connection with this Subordination Agreement shall be given as specified
in the Credit Agreement.
Section 4.03 AMENDMENTS AND WAIVERS. The Agent's or any Lender's
acceptance of partial or delinquent payments or any forbearance, failure or
delay by the Agent or any Lender in exercising any right, power or remedy
hereunder shall not be deemed a waiver of any obligation of the Borrower or the
Subordinated Creditor, or of any right, power or remedy of the Agent or any
Lender; and no partial exercise of any right, power or remedy shall preclude any
other or further exercise thereof. The Agent or any Lender may remedy any Event
of Default hereunder or in connection with the Superior Indebtedness without
waiving the Event of Default so remedied. The Subordinated Creditor hereby
agrees that if the Agent or any Lender agrees to a waiver of any provision
hereunder, or an exchange of or release of any collateral, or the
addition or release of any Person, any such action shall not constitute a waiver
of any of the Agent's or any Lender's other rights or of the Subordinated
Creditor's obligations hereunder. This Subordination Agreement may be amended
only by an instrument in writing executed jointly by the Subordinated Creditor,
the Agent and the requisite Lenders under the Credit Agreement and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 4.04 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUBORDINATION
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS SUBORDINATION AGREEMENT, THE SUBORDINATED CREDITOR HEREBY
ACCEPTS AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF THE PROPERTY OF THE
SUBORDINATED CREDITOR, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE SUBORDINATED CREDITOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH MAY NOW OR HEREAFTER BE
HAD TO BE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT
PRECLUDE THE AGENT OR ANY LENDER FROM OBTAINING JURISDICTION OVER THE
SUBORDINATED CREDITOR IN ANY COURT OTHERWISE HAVING JURISDICTION. THE
SUBORDINATED CREDITOR, THE AGENT AND THE LENDERS HEREBY WAIVE ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
SUBORDINATION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(c) Nothing herein shall affect the right of the Agent or any Lender or
any holder of a Note to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Subordinated
Creditor in any other jurisdiction.
Section 4.05 ENTIRE AGREEMENT. THIS WRITTEN SUBORDINATION AGREEMENT
EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE AGENT, THE LENDERS
AND THE SUBORDINATED CREDITOR AND SUPERSEDES ALL OTHER AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF. THIS WRITTEN SUBORDINATION AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
WITNESS THE EXECUTION HEREOF, as of the date first above written.
Address: SUBORDINATED
CREDITOR:
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- ----------------------
- ----------------------
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By:
Name:
Title:
LENDER:
ABN AMRO BANK N.V., HOUSTON AGENCY,
AS AGENT AND AS A LENDER
By:
Name:
Title:
By:
Name:
Title:
EXHIBIT 6.7
FORM OF COMPLIANCE CERTIFICATE
COMPLIANCE CERTIFICATE
The York Group, Inc. (the "Borrower"), the various financial
institutions (collectively, the "Lenders") as are or may from time to time
become parties thereto, and ABN AMRO Bank, N.V., as Agent for the Lenders,
executed and delivered that certain Credit Agreement dated as of March 12, 1998
(herein, as the same may be amended, modified, supplemented, extended,
rearranged and/or restated from time to time, the "Credit Agreement"). Any term
defined in the Credit Agreement and used in this Compliance Certificate shall
have the meaning given to it in the Credit Agreement.
The undersigned, solely in his or her capacity as Chief Financial
Officer of the Borrower hereby certifies to the Agent and the Lenders that:
A. The attached financial statements are (check one) [ ] quarterly
financial statements dated __________________, [ ] annual financial statements
dated _____________________, which satisfy in full the requirements of Section
6.7(a)(i) or (ii) of the Credit Agreement, as applicable.
B. As of the date of the attached financial statements and with respect
to the Borrower and its Subsidiaries on a consolidated basis, the following
calculations are true and correct:
1. TOTAL DEBT TO EBITDA RATIO
a. Indebtedness for borrowed
money $___________________
b. Deferred purchase price
indebtedness $___________________
c. Capitalized Lease Obligations
and sale and lease-backs $___________________
d. Contingent Obligations $___________________
e. Indebtedness secured by Liens $___________________
f. Interest Rate Protection Agreements $___________________
g. Redemption amount with respect
to stock of Borrower within
12 months $___________________
h. TOTAL DEBT (sum of a through g) $___________________
i. Consolidated Net Income $___________________
j. Consolidated Interest Expense $___________________
k. Provisions for taxes $___________________
l. Extraordinary gains/losses $___________________
m. Depreciation/amortization
expenses and other non-cash
charges $___________________
n. EBITDA $___________________
o. TOTAL DEBT TO EBITDA RATIO
(Ratio of h to n; not more
than 3.0 to 1.0) ________ to ________
2. TOTAL DEBT TO TOTAL CAPITAL RATIO
A. TOTAL DEBT (1.H. ABOVE) $___________________
B. CONSOLIDATED NET WORTH $___________________
c. TOTAL CAPITAL (A PLUS B) $___________________
D. TOTAL DEBT TO TOTAL CAPITAL RATIO
(RATIO OF A TO C; NOT MORE
THAN 55%) __________________%
3. FIXED CHARGE COVERAGE RATIO
a. Consolidated Net Income $____________________
b. Provisions for taxes $____________________
c. CONSOLIDATED CASH INTEREST EXPENSE $____________________
d. LEASE EXPENSE $____________________
E. CONSOLIDATED EARNINGS BEFORE
INTEREST, LEASES AND TAXES
(A PLUS - TO EXTENT DEDUCTED FROM
A - B, C AND D) $___________________
f. FIXED CHARGE COVERAGE RATIO
(RATIO OF E TO C PLUS D; NOT LESS
THAN 2.5 TO 1.0) ________ to ________
C. To the best of my knowledge after due inquiry, all of the
representations and warranties contained in the Credit Agreement are true and
correct in all material respects on the date hereof as if made on the date
hereof except, (i) to the extent such representation and warranty relates solely
to an earlier date in which case it shall have been true and correct in all
material respects as of such earlier date, (ii) as a result of
the transactions expressly permitted under the Credit Agreement, or (iii) as to
the following matters: [Describe or attach a schedule of all such
representations and warranties that are no longer true or correct and, if
applicable, what action the Borrower has taken or proposes to take].
E. (Check EITHER 1 or 2) To the best of my knowledge after due
inquiry:
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[__] 1.As of the date hereof, no Default or Event of Default
has occurred and is continuing.
[__] 2.As of the date hereof, no Default or Event of Default has
occurred and is continuing except the following matters: [Describe all such
Defaults or Events of Default, specifying the nature, duration and status
thereof and what action the Borrower has taken or proposes to take with respect
thereto].
Date: __________________,_____.
THE YORK GROUP, INC.
By:
Name:
Title:
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "AGREEMENT") dated as of , 199__, is by
and among (the "ASSIGNOR"), (the "ASSIGNEE"), THE YORK GROUP, INC., a Delaware
corporation (the "BORROWER"), and ABN AMRO Bank N.V., as Agent for the Lenders
(as hereinafter defined) (in such capacity, the "AGENT").
WITNESSETH:
WHEREAS, the Borrower and the Agent have entered into that certain
Credit Agreement (as amended, supplemented and restated from time to time, the
"CREDIT AGREEMENT") dated as of March 12, 1998, by and among the Borrower, the
lenders from time to time parties thereto (collectively, the "LENDERS"),
including the Assignor as one such Lender, and the Agent, as agent for the
Lenders;
WHEREAS, the Assignor has agreed to make certain Loans to and
participate in Letters of Credit for the account of the Borrower in accordance
with the terms of the Credit Agreement, with the maximum aggregate amount of the
Assignor's Loans and participation in Letters of Credit outstanding not to
exceed the Assignor's Commitment; and
WHEREAS, on a PRO RATA basis, the Assignor proposes to sell and assign
to the Assignee, and the Assignee proposes to buy and accept from the Assignor,
a __________% interest (the "ASSIGNED INTEREST") in the rights and obligations
of the Assignor under the Credit Documents with the effect that the Assignee
will have a maximum Commitment of $________________, resulting in a Percentage
of ______%;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Any term defined in the Credit Agreement and
used in this Agreement shall have the meaning ascribed to it in the Credit
Agreement. Section 1.1 of the Credit Agreement is hereby incorporated into this
Agreement by reference.
SECTION 2. ASSIGNMENT. The Assignor hereby assigns and sells, without
recourse or warranty except as specifically set forth herein, to the Assignee
the Assigned Interest in the rights and obligations of the Assignor under the
Credit Documents. The Assignee hereby purchases and accepts, without recourse or
warranty except as specifically set forth herein, from the Assignor all of such
rights and obligations of the Assignor, including the corresponding portion of
(a) the principal amount of the Loans made by the Assignor, (b) the
participation of the Assignor in the Letters of Credit, if any, and (c) any
Reimbursement Obligations of the Borrower owing to the Assignor outstanding on
the date hereof. As of the date hereof, the Assignee's Percentage of the
outstanding principal balance of the Loans and Reimbursement Obligations of the
Borrower is ________%. Subject to the execution and delivery hereof by the
Assignor, the Assignee, the Borrower and the Agent on the date hereof, (a) the
Assignee shall succeed, on a PRO RATA basis, to the rights and interests, and be
obligated to perform the obligations of, a Lender under the Credit Documents
with a Percentage of __________%, and shall be considered a Lender for all
purposes; (b) the Assignee shall deliver to the Assignor, in immediately
available funds, the Assignee's Percentage of the outstanding Loans (minus an
amount equal to the Assignee's Percentage of any Letter of Credit fee paid by
the Borrower to the Assignor pursuant to the terms of the Credit Agreement for
the remaining portion of the calendar quarter); and (c) the Percentage of the
Assignor as of the date hereof shall be reduced by the Percentage acquired by
the Assignee, and the Assignor shall be released from its obligations under the
Credit Documents which have been so assigned to and accepted by the Assignee.
The Assignee shall participate in all outstanding Letters of Credit as provided
in the Credit Documents.
SECTION 3. PAYMENTS. Commitment fees accrued to the date hereof with
respect to the Assignor's Percentage of the Commitment pursuant to Section 3.1
of the Credit Agreement are for the account of the Assignor and such fees
accruing from and including the date hereof with respect to the Assigned
Interest are for the account of the Assignee. All payments of principal of and
accrued interest on the Loans and of Reimbursement Obligations are to be made by
the Borrower to the Agent. The Agent shall divide such payments among the
Lenders as their interests may appear, with all interest accruing on the Loans
of the Assignor, and Reimbursement Obligations payable to the Assignor, before
the date hereof to belong to the Assignor. Each of the Assignor and the Assignee
hereby agrees that if it receives any amount from the Borrower under the Credit
Documents which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other party. The rights
of the Assignor and the Assignee under this Section are in addition to other
rights and remedies which the Assignor or the Assignee may have.
SECTION 4. CONSENT OF THE BORROWER AND THE AGENT. This Agreement is
conditioned upon the consent of the Borrower and the Agent to the extent
required by Section 10.10(b) of the Credit Agreement. The execution of this
Agreement by the Borrower and the Agent is evidence of any such consent.
Pursuant to Section 10.10(b) of the Credit Agreement, (a) the Assignor agrees to
deliver its current Note(s) executed by the Borrower to the Borrower, marked
"Renewed" or its equivalent, and simultaneously therewith (b) the Borrower
agrees to execute and deliver new Notes payable to the order of the Assignee
and, if applicable, to the Assignor to evidence the
assignment and acceptance provided for herein.
SECTION 5. THE ASSIGNOR. The Assignor (a) represents and warrants to the
Assignee that it is the legal and beneficial owner of the Assigned Interest and
that such Assigned Interest is free and clear of any Lien; (b) makes no
representation or warranty and assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any document
furnished pursuant thereto or (ii) the financial condition of the Borrower or
the performance or observance by the Borrower or any other Credit Party of any
of its obligations under the Credit Documents.
SECTION 6. THE ASSIGNEE. The Assignee (a) confirms that it has received
a copy of the Credit Documents, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement; (b) agrees that it will, independently
and without reliance upon the Agent, the Assignor 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
the Credit Documents; (c) appoints and authorizes the Agent to take such action
as agent on behalf of the Assignee and to exercise such powers under the Credit
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (d) agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender. If the Assignee
is organized under the laws of any jurisdiction other than the United States of
America or any State thereof, the Assignee hereby (a) represents to the
Assignor, the Agent and the Borrower that under applicable law and treaties no
taxes will be required to be withheld by the Agent, the Borrower or the Assignor
with respect to any payments to be made to such Assignor in respect of the Loans
or the Letters of Credit, (b) agrees to furnish to the Assignor, the Agent and
the Borrower the forms required by Section 10.10(d) of the Credit Agreement,
either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein the Assignee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder), and (c) agrees
for the benefit of the Assignor, the Agent and the Borrower to furnish to the
Agent and the Borrower from time to time new forms as required by Sections
10.10(d) and 3.3 of the Credit Agreement, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
SECTION 7. NOTICES AND PAYMENT INSTRUCTIONS. All notices in connection
herewith shall be given in accordance with Section 10.7 of the Credit Agreement.
The address of the Assignee for notices hereunder and thereunder, together with
payment instructions for amounts to be paid to the Assignee under the Credit
Agreement, shall be initially as set forth on the signature pages hereof.
SECTION 8. MISCELLANEOUS. This Agreement (a) embodies the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes all prior agreements, consents and understandings
relating to such subject matter, (b) is a Credit Document, and (c) shall be
governed by
and construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By:
Name:
Title:
[NAME OF ASSIGNEE]
By:
Name:
Title:
[INSERT ADDRESS]
Attention:
Telecopy No.: (___)
Send payments to:
[Reference: The York Group, Inc.]
THE YORK GROUP, INC.
By:
Name:
Title:
ABN AMRO BANK N.V., AS AGENT
By:
Name:
Title:
EXHIBIT 10.10
FORM OF ASSIGNMENT AGREEMENT