Exhibit 10.13
$75,000,000
CREDIT AGREEMENT
DATED AS OF OCTOBER 23, 1997
AMONG
THE PANTRY, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
FIRST UNION NATIONAL BANK,
AS ADMINISTRATIVE AGENT
AND
CANADIAN IMPERIAL BANK OF COMMERCE,
AS SYNDICATION AGENT
ARRANGED BY:
CIBC WOOD GUNDY SECURITIES CORP.
AND
FIRST UNION CAPITAL MARKETS CORP.
THE PANTRY, INC.
$75,000,000
CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1.
DEFINITIONS................................................................................................................... 2
1.1 Certain Defined Terms......................................................................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement............................ 32
1.3 Other Definitional Provisions and Rules of Construction....................................................... 32
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.................................................................... 32
2.1 Commitments; Making of Loans; the Register; Notes............................................................. 32
2.2 Interest on the Loans......................................................................................... 40
2.3 Fees.......................................................................................................... 45
2.4 Repayments, Prepayments and Reductions in Acquisition Term Loan Commitments and Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty...................................................................................................... 45
2.5 Use of Proceeds............................................................................................... 53
2.6 Special Provisions Governing Eurodollar Rate Loans............................................................ 54
2.7 Increased Costs; Taxes; Capital Adequacy...................................................................... 56
2.8 Obligation of Lenders and Issuing Lenders to Mitigate......................................................... 61
SECTION 3. LETTERS OF CREDIT............................................................................................ 62
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein................................. 62
3.2 Letter of Credit Fees......................................................................................... 65
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit............................................ 66
3.4 Obligations Absolute.......................................................................................... 69
3.5 Indemnification; Nature of Issuing Lenders' Duties............................................................ 70
3.6 Increased Costs and Taxes Relating to Letters of Credit....................................................... 71
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT..................................................................... 72
4.1 Conditions to Initial Revolving Loans and Swing Line Loans.................................................... 72
4.2 Conditions to All Loans....................................................................................... 82
4.3 Conditions to Letters of Credit............................................................................... 83
(i)
PAGE
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SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES...................................................................... 84
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries................................. 84
5.2 Authorization of Borrowing, etc............................................................................... 85
5.3 Financial Condition........................................................................................... 87
5.4 No Material Adverse Change; No Restricted Junior Payments..................................................... 87
5.5 Title to Properties; Liens; Real Property..................................................................... 87
5.6 Litigation; Adverse Facts..................................................................................... 88
5.7 Payment of Taxes.............................................................................................. 89
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts.................................. 89
5.9 Governmental Regulation....................................................................................... 89
5.10 Securities Activities......................................................................................... 90
5.11 Employee Benefit Plans........................................................................................ 90
5.12 Certain Fees.................................................................................................. 91
5.13 Environmental Protection...................................................................................... 91
5.14 Employee Matters.............................................................................................. 92
5.15 Solvency...................................................................................................... 92
5.16 Matters Relating to Collateral................................................................................ 92
5.17 Related Agreements............................................................................................ 93
5.18 Disclosure.................................................................................................... 94
5.19 Permits....................................................................................................... 94
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS............................................................................... 95
6.1 Financial Statements and Other Reports........................................................................ 95
6.2 Corporate Existence, etc...................................................................................... 101
6.3 Payment of Taxes and Claims; Tax Consolidation................................................................ 101
6.4 Maintenance of Properties; Insurance; Application of Net Asset Sale Proceeds.................................. 102
6.5 Inspection Rights; Lender Meeting............................................................................. 105
6.6 Compliance with Laws, etc..................................................................................... 105
6.7 Environmental Review and Investigation, Disclosure, Etc.; Company's Actions Regarding Hazardous Materials
Activities, Environmental Claims and Violations of Environmental Laws......................................... 105
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral Documents by Certain Subsidiaries and Future
Subsidiaries.................................................................................................. 108
6.9 Matters Relating to Additional Real Property Collateral....................................................... 109
SECTION 7. COMPANY'S NEGATIVE COVENANTS.................................................................................. 111
7.1 Indebtedness.................................................................................................. 112
7.2 Liens and Related Matters..................................................................................... 113
7.3 Investments; Joint Ventures................................................................................... 115
7.4 Contingent Obligations........................................................................................ 116
(ii)
PAGE
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7.5 Restricted Junior Payments; Other Restricted Payments......................................................... 117
7.6 Financial Covenants........................................................................................... 118
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.............................................. 121
7.8 Consolidated Capital Expenditures............................................................................. 123
7.9 Sales and Lease-Backs......................................................................................... 124
7.10 Sale or Discount of Receivables............................................................................... 125
7.11 Transactions with Shareholders and Affiliates................................................................. 125
7.12 Disposal of Subsidiary Stock.................................................................................. 125
7.13 Conduct of Business........................................................................................... 126
7.14 Amendments or Waivers of Certain Related Agreements; Amendments of Documents Relating to Subordinated
Indebtedness or the Senior Notes; Designation of "Designated Senior Indebtedness"............................. 126
7.15 Fiscal Year................................................................................................... 127
SECTION 8. EVENTS OF DEFAULT............................................................................................. 127
8.1 Failure to Make Payments When Due............................................................................. 127
8.2 Default in Other Agreements................................................................................... 128
8.3 Breach of Certain Covenants................................................................................... 128
8.4 Breach of Warranty............................................................................................ 128
8.5 Other Defaults Under Loan Documents........................................................................... 128
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.......................................................... 129
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc............................................................ 129
8.8 Judgments and Attachments..................................................................................... 129
8.9 Dissolution................................................................................................... 130
8.10 Employee Benefit Plans........................................................................................ 130
8.11 Change in Control............................................................................................. 130
8.12 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation of Obligations............................ 130
8.13 Failure to Consummate Lil' Champ Acquisition and Other Transactions........................................... 131
SECTION 9. AGENTS........................................................................................................ 132
9.1 Appointment................................................................................................... 132
9.2 Powers and Duties; General Immunity........................................................................... 134
9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness........................... 135
9.4 Right to Indemnity............................................................................................ 136
9.5 Successor Administrative Agent and Swing Line Lender.......................................................... 136
9.6 Collateral Documents and Guaranties........................................................................... 137
SECTION 10. MISCELLANEOUS................................................................................................. 138
10.1 Assignments and Participations in Loans and Letters of Credit................................................. 138
10.2 Expenses...................................................................................................... 141
(iii)
PAGE
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10.3 Indemnity..................................................................................................... 142
10.4 Set-Off; Security Interest in Deposit Accounts................................................................ 143
10.5 Ratable Sharing............................................................................................... 144
10.6 Amendments and Waivers........................................................................................ 144
10.7 Independence of Covenants..................................................................................... 145
10.8 Notices....................................................................................................... 146
10.9 Survival of Representations, Warranties and Agreements........................................................ 146
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative......................................................... 146
10.11 Marshalling; Payments Set Aside............................................................................... 147
10.12 Severability.................................................................................................. 147
10.13 Obligations Several; Independent Nature of Lenders' Rights.................................................... 147
10.14 Headings...................................................................................................... 147
10.15 Applicable Law................................................................................................ 148
10.16 Successors and Assigns........................................................................................ 148
10.17 Consent to Jurisdiction and Service of Process................................................................ 148
10.18 Waiver of Jury Trial.......................................................................................... 149
10.19 Confidentiality............................................................................................... 149
10.20 Counterparts; Effectiveness................................................................................... 150
Signature pages............................................................................................... S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF ACQUISITION TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF OPINION OF RIORDAN & MCKINZIE
IX FORM OF OPINION OF O'MELVENY & MYERS LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF AUDITOR'S LETTER
XII FORM OF MORTGAGE
XIII FORM OF FINANCIAL CONDITION CERTIFICATE
XIV FORM OF COLLATERAL ACCOUNT AGREEMENT
XV FORM OF COMPANY PLEDGE AGREEMENT
XVI FORM OF COMPANY SECURITY AGREEMENT
XVII FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
XVIII FORM OF SUBSIDIARY GUARANTY
XIX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XX FORM OF SUBSIDIARY SECURITY AGREEMENT
XXI FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
(v)
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP; MANAGEMENT
4.1I CLOSING DATE MORTGAGED PROPERTIES
5.1 SUBSIDIARIES OF COMPANY
5.5 REAL PROPERTY
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.13 ENVIRONMENTAL MATTERS
5.17 AFFILIATE AGREEMENTS; AMENDMENTS TO RELATED AGREEMENTS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
(vi)
THE PANTRY, INC.
$75,000,000
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of October 23, 1997 and entered into
by and among THE PANTRY, INC., a Delaware corporation ("COMPANY"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "LENDER" and collectively as "LENDERS"), FIRST UNION NATIONAL BANK
("FIRST UNION"), as administrative agent for Lenders (in such capacity, the
"ADMINISTRATIVE AGENT"), and CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as
syndication agent for Lenders (in such capacity, "SYNDICATION AGENT").
R E C I T A L S
- - - - - - - -
WHEREAS, PHH (this and other capitalized terms used in these recitals
without definition being used as defined in subsection 1.1) has entered into the
Lil' Champ Stock Purchase Agreement;
WHEREAS, PHH has assigned all of its rights and obligations under the
Lil' Champ Stock Purchase Agreement to Company and Company has assumed all of
the rights and obligations of PHH under the Lil' Champ Stock Purchase Agreement,
in each case pursuant to the Assignment and Assumption Agreement, and upon the
consummation of the transactions contemplated by the Lil' Champ Stock Purchase
Agreement and the Assignment and Assumption Agreement, Company shall have
acquired all of the outstanding shares of capital stock of Lil' Champ (the "LIL'
CHAMP ACQUISITION");
WHEREAS, on or before the Closing Date, Freeman Spogli and CMC,
together with certain members of Company's management, will purchase additional
capital stock of Company for a cash consideration of not less than $32,400,000,
which cash proceeds shall be used for purposes of effecting the Lil' Champ
Acquisition (the "EQUITY INVESTMENT");
WHEREAS, on or before the Closing Date, Company will issue and sell not
less than $190,000,000 in aggregate principal amount of Senior Subordinated
Notes;
WHEREAS, not less than $4,000,000 of cash of Company and its
Subsidiaries will be used, together with the cash proceeds from the Senior
Subordinated Notes and the Equity Investment, (i) to finance the purchase price
payable in connection with the Lil' Champ Acquisition, (ii) to refinance
Indebtedness of Company and Lil' Champ outstanding under the Existing Credit
Agreements in an aggregate maximum
1
principal amount not exceeding $25,000,000 (including without limitation
Existing Letters of Credit with an aggregate stated amount of approximately
$9,100,000), (iii) to finance the repurchase of $51,000,000 in principal amount
of Senior Notes and to pay accrued and unpaid interest thereon, (iv) to finance
the payment of up to $7,000,000 in tender offer premiums and consent fees
related to the repurchase of Senior Notes and the solicitation of consents from
the holders of the Senior Notes to certain amendments to the Senior Note
Indenture, and (v) to pay Transaction Costs in an aggregate amount of
approximately $15,000,000;
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, which facilities will be available, upon the consummation of the Lil'
Champ Acquisition, for acquisitions by Company permitted hereunder and to
provide for the working capital requirements and general corporate purposes of
Company and its Restricted Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations hereunder and
under the other Loan Documents by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of its personal and owned
real property, including a pledge of all of the capital stock of each of its
Restricted Subsidiaries and PHH; and
WHEREAS, all of the Restricted Subsidiaries of Company have agreed to
guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of their respective personal
and owned real property, including a pledge of all of the capital stock of each
of their respective Restricted Subsidiaries:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders, Administrative
Agent and Syndication Agent agree as follows:
SECTION 1. DEFINITIONS
1.1. CERTAIN DEFINED TERMS.
----------------------
The following terms used in this Agreement shall have the following
meanings:
"ACQUISITION TERM LOAN COMMITMENT" means the commitment of a Lender to
make an Acquisition Term Loan to Company pursuant to subsection 2.1A(i), and
"ACQUISITION TERM LOAN COMMITMENTS" means such commitments of all Lenders in the
aggregate.
2
"ACQUISITION TERM LOAN COMMITMENT TERMINATION DATE" means October 31,
1999.
"ACQUISITION TERM LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the Acquisition
Term Loan Commitments, the sum of (a) that Lender's Acquisition Term Loan
Commitment plus (b) the aggregate outstanding principal amount of the
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Acquisition Term Loans of that Lender and (ii) after the termination of the
Acquisition Term Loan Commitments, the aggregate outstanding principal amount of
the Acquisition Term Loans of that Lender.
"ACQUISITION TERM LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(i).
"ACQUISITION TERM NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Acquisition Term Loan Commitments
or Acquisition Term Loans of any Lenders, in each case substantially in the form
of Exhibit IV annexed hereto, as they may be amended, supplemented or otherwise
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modified from time to time.
"ADJUSTED EURODOLLAR RATE" means a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by Administrative Agent
pursuant to the following formula:
Adjusted Eurodollar Rate = LIBOR
------------------------------------------
1.00-Eurodollar Reserve Percentage
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" means a Lender during such period of time as such
Lender's obligation to make Loans as, or to convert Loans to, Eurodollar Rate
Loans is suspended pursuant to subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
3
"AFFILIATE AGREEMENTS" means, collectively, all employment agreements,
consulting agreements, and any other agreements, documents or arrangements
between any Loan Party and any of its Affiliates, officers, directors,
shareholders or any Affiliates of any such officers, directors or shareholders.
"AGENTS" means, collectively, the Administrative Agent and the
Syndication Agent, and also means and includes any successor Administrative
Agent or Syndication Agent, as the case may be, appointed pursuant to subsection
9.5A.
"AGREEMENT" means this Credit Agreement dated as of October 23, 1997,
as it may be amended, supplemented or otherwise modified from time to time.
"APPLICABLE BASE RATE MARGIN" means, as of any date of determination,
(i) 0.75% per annum in the event that after the first anniversary of the Closing
Date the Consolidated Pro Forma Leverage Ratio is less than 4.00:1.00; and (ii)
1.00% per annum in the event that the foregoing clause (i) is not applicable,
including for the period from the Closing Date through the first anniversary of
the Closing Date until a Margin Determination Certificate is delivered pursuant
to subsection 6.1(xix) establishing that clause (i) is applicable.
"APPLICABLE EURODOLLAR MARGIN" means, as of any date of determination,
(i) 2.25% per annum in the event that after the first anniversary of the Closing
Date the Consolidated Pro Forma Leverage Ratio is less than 4.00:1.00 and (ii)
2.50% per annum in the event that the foregoing clause (i) is not applicable,
including for the period from the Closing Date through the first anniversary of
the Closing Date until a Margin Determination Certificate is delivered pursuant
to subsection 6.1(xix) establishing that clause (i) is applicable.
"ASSET SALE" means (A) the sale, assignment or other transfer (whether
voluntary or involuntary) for value (collectively, a "transfer") by Company or
any of its Restricted Subsidiaries to any Person other than Company or any of
its wholly-owned Restricted Subsidiaries of (i) any of the stock of PHH or any
of Company's Restricted Subsidiaries, (ii) substantially all of the assets of
any division or line of business of Company or any of its Restricted
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Company or any of its Restricted Subsidiaries or (B) the occurrence of any loss
or damage of any assets of Company or any of its Restricted Subsidiaries giving
rise to insurance proceeds, including without limitation the proceeds of any
related business interruption insurance, in each case other than (a) inventory
sold in the ordinary course of business, (b) property or assets sold in
sale/leaseback transactions permitted pursuant to subsection 7.9 and (c) any
such other assets to the extent that the aggregate value of such assets
transferred, lost or damaged (x) is equal to $50,000 or less in any single
transaction or related series of transactions or (y) is equal to $500,000 or
less in any Fiscal Year.
4
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit X annexed hereto.
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" means that certain Assignment and
Assumption Agreement dated as of October 23, 1997 by and between Company, PHH
and Docks U.S.A., Inc., as such agreement may be amended from time to time to
the extent permitted under subsection 7.14A.
"AUDITOR'S LETTER" means a letter, substantially in the form of Exhibit
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XI annexed hereto, executed by Deloitte & Touche LLP and delivered to Agents
- --
pursuant to subsection 4.1R.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or North Carolina is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day
described in clause (i) above and that is also a day for trading by and between
banks in Dollar deposits in the interbank Eurodollar market.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) 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, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either
5
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("MOODY'S"); (iii) commercial paper maturing no more than one year from the date
of creation thereof and having, at the time of the acquisition thereof, a rating
of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of
deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least "adequately capitalized" (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1 capital
(as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500,000,000, and (c) has the highest
rating obtainable from either S&P or Moody's.
"CERTIFICATE RE NON-BANK STATUS" means a certificate, in form and
substance satisfactory to Administrative Agent, delivered by a Lender to
Administrative Agent pursuant to subsection 2.7B(iii) pursuant to which such
Lender certifies that it is not (i) a "bank" as such term is defined in
subsection 881(c)(3) of the Internal Revenue Code; (ii) a 10 percent shareholder
of Company within the meaning of Section 871(h)(3)(B) or Section 881(c)(3)(B) of
the Internal Revenue Code; or (iii) a "controlled" foreign corporation related
to Company within the meaning of Section 864(d)(4) of the Internal Revenue Code.
"CIBC" has the meaning assigned to that term in the introduction to
this Agreement.
"CIBC WG" means CIBC Wood Gundy Securities Corp.
"CLOSING DATE" means the date on or before November 14, 1997, on which
each of the conditions set forth in subsection 4.1 hereof shall have been
satisfied or waived in accordance with the provisions of subsection 4.1.
"CMC" means Chase Manhattan Capital, L.P.
"COLLATERAL" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by Company and Administrative Agent on the Closing Date,
substantially in the form of Exhibit XIV annexed hereto, as such Collateral
-----------
Account
6
Agreement may hereafter be amended, supplemented or otherwise modified from time
to time.
"COLLATERAL DOCUMENTS" means the Company Pledge Agreement, the Company
Security Agreement, the Company Trademark Security Agreement, the Collateral
Account Agreement, the Subsidiary Pledge Agreements, the Subsidiary Security
Agreements, the Subsidiary Trademark Security Agreement, the Mortgages, and all
other instruments or documents delivered by any Loan Party pursuant to this
Agreement or any of the other Loan Documents in order to grant to Administrative
Agent, on behalf of Lenders, a Lien on any real, personal or mixed property of
that Loan Party as security for the Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Restricted Subsidiaries in the ordinary course of business of Company
or such Restricted Subsidiary.
"COMMITMENTS" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY CERTIFICATE OF DESIGNATIONS" means the provisions of Company's
Certificate of Designations, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof relating to the Company Preferred Stock, in the form
delivered to Agents and Lenders prior to their execution of this Agreement and
as such provisions may be amended from time to time thereafter to the extent
permitted under subsection 7.14A.
"COMPANY CAPITAL STOCK" means, collectively, (i) the common stock, par
value $.01 per share, of Company and (ii) the Company Preferred Stock.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement executed
and delivered by Company on the Closing Date, substantially in the form of
Exhibit XV annexed hereto, as such Company Pledge Agreement may thereafter be
- ----------
amended, supplemented or otherwise modified from time to time.
"COMPANY PREFERRED STOCK" means, collectively, (i) the Series A
Preferred Stock, par value $.01 per share, of Company, and (ii) the Series B
Preferred Stock, par value $.01 per share, of Company.
7
"COMPANY SECURITY AGREEMENT" means the Company Security Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XVI annexed hereto, as such Company Security Agreement may thereafter
-----------
be amended, supplemented or otherwise modified from time to time.
"COMPANY TRADEMARK SECURITY AGREEMENT" means the Company Trademark
Security Agreement executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XVII annexed hereto, as such Company
------------
Trademark Security Agreement may thereafter be amended, supplemented or
otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit VII annexed hereto delivered to Administrative Agent and Lenders by
-----------
Company pursuant to subsection 6.1(iv).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain Confidential
Information Memorandum for The Pantry, Inc. $75,000,000 Senior Credit
Facilities, dated September 1997.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries net of the amount of any reimbursement payments made to Company or
any of its Subsidiaries by any third parties in connection with any such
expenditures to the extent that such expenditures have actually been made by
Company or its Subsidiaries but excluding however any such expenditures made in
--------- -------
connection with any Permitted Acquisition.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts for
such period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense,
(iii) provisions for taxes based on income, (iv) total depreciation expense, (v)
total amortization expense, including but not limited to goodwill, organization
costs and other intangibles, (vi) adjustments relating to the Lil' Champ
Acquisition for the four-Fiscal Quarter period ending as of the last day of the
first Fiscal Quarter in Fiscal Year 1998, the second Fiscal Quarter in Fiscal
Year 1998, the third Fiscal Quarter in Fiscal Year 1998 and the fourth Fiscal
Quarter in Fiscal Year 1998, in the aggregate amount of $4,300,000, $4,300,000,
$3,440,000 and $2,150,000, respectively, and (vii) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing Consolidated Net
----
Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP.
8
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Agreements, but excluding, however, any
amounts referred to in subsection 2.3 payable to Agents, Affiliates of Agents
and Lenders on or before the Closing Date.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
cash dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED PRO FORMA EBITDA" means, for any consecutive four-Fiscal
Quarter period, (a) Consolidated EBITDA for such four-Fiscal Quarter period less
----
(b) EBITDA attributable to all businesses acquired during such four-Fiscal
Quarter period plus (c) for any business acquired during such four-Fiscal
----
Quarter period, EBITDA of such acquired business determined as though such
business was acquired as of the first day of such period by Company and its
Subsidiaries, which EBITDA shall be adjusted as follows with respect to any
business acquired after the Closing Date: (1) for the four-Fiscal Quarter
period ending with the Fiscal Quarter in which the acquisition of any such
acquired business was consummated, an amount equal to 100% of the Adjustment
Amount with respect to such acquired business shall be added, (2) for the four-
Fiscal Quarter period ending one Fiscal Quarter after the four-Fiscal Quarter
period described in clause (1), an amount equal to 75% of the Adjustment Amount
with respect to such acquired business shall be added, (3) for the four-Fiscal
Quarter period ending two Fiscal Quarters after the four-Fiscal Quarter period
described in clause (1), an amount equal to 50% of the Adjustment Amount with
respect to such acquired business shall be added, and (4) for the four-Fiscal
Quarter period ending three Fiscal Quarters after the four-Fiscal Quarter period
described in clause (1), an amount equal to 25% of the Adjustment Amount with
respect to
9
such acquired business shall be added. For purposes of this definition,
"Adjustment Amount" shall mean, with respect to any acquired business, the
following as determined as of the date of such acquisition for the four-Fiscal
Quarter period immediately preceding the date of such acquisition: (i) any
historical extraordinary or non-recurring costs or expenses or other verifiable
costs or expenses that will not continue after the acquisition date (including
without limitation excess owner/management compensation) plus (ii) any
reasonable operating expenses to be eliminated that are approved by
Administrative Agent, plus (iii) any cost synergies that are reasonably expected
----
to be realized that are approved by Administrative Agent; provided that the
aggregate amount of such synergies does not exceed 20% of EBITDA of such
acquired business for the four Fiscal-Quarter period immediately preceding the
date of acquisition, as such EBITDA is adjusted by the operation of the
foregoing clauses (i) and (ii), minus (iv) any incremental expenses projected by
Company in its assessment of the operations of such acquired business.
"CONSOLIDATED PRO FORMA LEVERAGE RATIO" means, as of any date of
determination, the ratio of (i) Consolidated Total Debt as of the last day of
the Fiscal Quarter of Company ending immediately prior to such date of
determination minus, to the extent that the aggregate amount of Cash and Cash
-----
Equivalents on the consolidated balance sheet of Company and its Subsidiaries as
of such last day exceeds $10,000,000, the amount of such Cash and Cash
Equivalents in excess of $10,000,000 to (ii) Consolidated Pro Forma EBITDA for
the four consecutive Fiscal Quarter period ending as of the last day of the
Fiscal Quarter of Company ending immediately prior to such date of
determination.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Operating Leases to which
Company or any of its Subsidiaries is a party as lessee (net of sublease
income).
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of
10
the obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any Security issued by that Person or of any material indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"EBITDA" means for any business acquired by Company and its
Subsidiaries, "Consolidated EBITDA" as defined herein substituting references to
such acquired business for references to "Company and its Subsidiaries" as used
in such definition.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof having unimpaired capital and
surplus of not less than $500,000,000; (ii) a savings and loan association or
savings bank organized under the laws of the United States or any state thereof
having unimpaired capital and surplus of not less than $500,000,000; (iii) a
commercial bank organized under the laws of any other country or a political
subdivision thereof having unimpaired capital and surplus of not less than
$500,000,000; provided that (x) such bank is acting through a branch or agency
--------
located in the United States or (y) such bank is organized under the laws of a
country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other
entity that has net assets of not less than
11
$1,000,000,000 which is an "accredited investor" (as defined in Regulation D
under the Securities Act) which extends credit or buys loans as one of its
businesses including insurance companies, mutual funds and lease financing
companies; and (B) any Lender and any Affiliate of any Lender; provided that no
--------
Affiliate of Company shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any written investigation, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other published requirements of governmental
authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Company or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.), the
-- ---
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
-- ---
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal
-- ---
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
-- ---
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
- -- ---
(S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et
-- --- --
seq.), the Oil Pollution Act (33 U.S.C. (S) 2701 et seq) and the Emergency
- --- ------
Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as
-- ---
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"EQUITY INVESTMENT" has the meaning assigned to that term in the
recitals of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
12
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standards of Section 412 of the Internal Revenue Code with respect to
any Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
constitutes grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
it is insolvent pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of
13
ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits or for a qualified
domestic relations order) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in connection with any
Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee Benefit Plan intended
to be qualified under Section 401(a) of the Internal Revenue Code) to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXISTING CREDIT AGREEMENTS" means (i) that certain Amended and
Restated Loan Agreement dated as of January 31, 1994 between Company and First
Union, (ii) that certain Revolving Facility dated as of November 8, 1994 between
Lil' Champ and Societe General, New York Branch, (iii) that certain Revolving
and Term Credit Agreement dated as of January 28, 1988 between Lil' Champ and
Credit Agricole Indosuez (as successor by merger to Banque Indosuez), and (iv)
that certain revolving credit facility between Lil' Champ and Credit Lyonnais,
in each case as amended prior to the Closing Date.
"EXISTING LETTERS OF CREDIT" means the letters of credit identified as
such in Schedule 7.4 annexed hereto (but not any refinancings, renewals or
------------
extensions thereof).
"FACILITIES" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased
14
or operated by Company or any of its Subsidiaries or any of their respective
predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FINANCIAL PLAN" means Company's consolidated plan and financial
forecast for each Fiscal Year.
"FIRST PRIORITY" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien on such Collateral other than any
Permitted Encumbrances having priority by operation of law over the Liens
purported to be created pursuant to the Collateral Documents and (ii) such Lien
is the only Lien (other than Permitted Encumbrances) to which such Collateral is
subject.
"FIRST UNION" has the meaning assigned to that term in the introduction
to this Agreement.
"FIRST UNION CMC" means First Union Capital Markets Corporation, a
wholly-owned Subsidiary of First Union Corporation.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on the last Thursday in September of each calendar year.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
"FREEMAN SPOGLI" means Freeman Spogli & Co. Incorporated, a Delaware
corporation, and/or its affiliated investment funds.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Administrative
Agent and Swing Line Lender located at First Union National Bank, One First
Union Center TW-10, 301 S. College Street, Charlotte, North Carolina 28288-0608,
Attention: Syndication Agency Services, or (ii) such other office of
Administrative Agent and Swing
15
Line Lender as may from time to time hereafter be
designated as such in a written notice delivered by Administrative Agent and
Swing Line Lender to Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners, occupants or
any Persons in the vicinity of any Facility or to the indoor or outdoor
environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
16
"HEDGE AGREEMENT" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA and
any such obligations which represent accounts payable incurred in the ordinary
course of business), which purchase price (a) is due more than six months from
the date of incurrence of the obligation in respect thereof or (b) is evidenced
by a note or similar written instrument, and (v) all indebtedness secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute (X) in the case of Hedge
Agreements, Contingent Obligations, and (Y) in all other cases, Investments, and
in neither case constitute Indebtedness.
"INDEMNITEE" means each of the Agents, the Lenders, CIBC WG, First
Union CMC and their respective officers, directors, employees, agents and
affiliates which are indemnified by Company pursuant to subsection 10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each January 31, April 30, July 31 and October 31 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of six months
--------
"Interest Payment Date" shall also include the date that is three months after
the commencement of such Interest Period.
"INTEREST PERIOD" means the interest period for each Eurodollar Rate
Loan selected by Company, which interest period shall consist of a one, two,
three or six month period.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
17
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"INVENTORY" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Restricted Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person, (ii) any direct or
indirect redemption, retirement, purchase or other acquisition for value, by any
Restricted Subsidiary of Company from any Person other than Company or any of
its Restricted Subsidiaries, of any equity Securities of such Person, (iii) any
direct or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Company or any of
its Restricted Subsidiaries to any other Person (other than a wholly-owned
Restricted Subsidiary of Company), including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business, or (iv)
Interest Rate Agreements or Currency Agreements not constituting Hedge
Agreements. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
----
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IP COLLATERAL" means, collectively, the Collateral under the Company
Trademark Security Agreement and the Subsidiary Trademark Security Agreements.
"ISSUING LENDER" means, with respect to any Letter of Credit, the
Lender which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
--------
the term "Lenders", when
18
used in the context of a particular Commitment, shall mean Lenders having that
Commitment.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of Company pursuant to subsection 3.1 and the Existing Letters
of Credit.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company.
"LIBOR" means the rate for deposits in Dollars for a period equal to
the Interest Period selected which appears on the Telerate Page 3750 at
approximately 11:00 A.M. (London time), two (2) Business Days prior to the
commencement of the applicable Interest Period. If, for any reason, such rate
is not available, then "LIBOR" shall mean the rate per annum at which, as
determined by Administrative Agent, Dollars in the amount of $5,000,000 are
being offered to leading banks at approximately 11:00 A.M. (London time), two
(2) Business Days prior to the commencement of the applicable Interest Period
for settlement in immediately available funds by leading banks in the London
interbank market for a period equal to the Interest Period selected.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LIL' CHAMP" means Lil' Champ Food Stores, Inc., a Florida corporation.
"LIL' CHAMP ACQUISITION" has the meaning assigned to that term in the
recitals of this Agreement.
"LIL' CHAMP STOCK PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement by and among Docks U.S.A., Inc. and PHH dated as of August 26, 1997,
in the form delivered to Agents and Lenders prior to their execution of this
Agreement and as such agreement may be amended from time to time thereafter to
the extent permitted under subsection 7.14A.
"LOAN" or "LOANS" means one or more of the Acquisition Term Loans,
Revolving Loans or Swing Line Loans or any combination thereof.
19
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Subsidiary Guaranty and the Collateral Documents.
"LOAN PARTY" means each of Company and any of Company's Subsidiaries
from time to time executing a Loan Document, and "LOAN PARTIES" means all such
Persons, collectively.
"MARGIN DETERMINATION CERTIFICATE" means an Officers' Certificate of
Company delivered with the financial statements required pursuant to subsection
6.1(ii) or 6.1(iii) setting forth in reasonable detail the Consolidated Pro
Forma Leverage Ratio which is applicable as of the date on which such Officers'
Certificate is delivered.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries, taken as a whole, or (ii) the
material impairment of the ability of any Loan Party to perform, or of
Administrative Agent or Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.
"MORTGAGE" means a security instrument (whether designated as a deed of
trust or a mortgage or by any similar title) executed and delivered by any Loan
Party, substantially in the form of Exhibit XII annexed hereto or in such other
-----------
form as may be approved by Administrative Agent in its sole discretion, in each
case with such changes thereto as may be recommended by Administrative Agent's
local counsel based on local laws or customary local mortgage or deed of trust
practices, as such security instrument may be amended, supplemented or otherwise
modified from time to time.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received, and including any Cash received under any insurance policy or as a
result of the taking of any assets pursuant to the power of eminent domain,
condemnation or otherwise) received from
20
such Asset Sale, net of any direct costs incurred in connection with such Asset
Sale, including (i) taxes reasonably estimated to be actually payable within two
years of the date of such Asset Sale as a result of such Asset Sale, (ii)
payment of the outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness (other than the Loans) that is secured by a Lien on
the stock or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale, and (iii) reasonable reserves
established in good faith by Company to satisfy any indemnification obligations
undertaken in connection with such Asset Sale.
"NOTES" means one or more of the Acquisition Term Notes, Revolving
Notes or Swing Line Note or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
- ---------
to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Administrative Agent
----------
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Administrative
-----------
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest, reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFER AND CONSENT SOLICITATION" means, collectively, (i) the offer by
Company to the holders of outstanding Senior Notes to repurchase for cash
$51,000,000 in aggregate principal amount of such notes and (ii) the
solicitation by Company from the holders of outstanding Senior Notes of consents
to certain amendments and waivers to the Senior Note Indenture, in each case as
described in the Offer and Consent Solicitation Materials, for an aggregate
payment which does not exceed the principal amount of Senior Notes so
repurchased, plus accrued and unpaid interest thereon, and up to $7,000,000 in
tender offer premiums and consent fees.
"OFFER AND CONSENT SOLICITATION MATERIALS" means, collectively, (i) the
Offer to Purchase and Consent Solicitation Statement dated as of September 18,
1997, (ii) the Consent and Letter of Transmittal, together with the Substitute
Form W-9, (iii) the Notice of Guaranteed Delivery, and (iv) such other
documents, transmittal letters and related materials provided to the holders of
outstanding Senior Notes in connection with
21
the Offer and Consent Solicitation and delivered to Agents and Lenders prior to
their execution of this Agreement, as each such document, letter or material may
be amended from time to time thereafter to the extent permitted under subsection
7.14A.
"OFFERING MEMORANDUM" means that certain Offering Memorandum relating
to the Senior Subordinated Notes dated October 17, 1997.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
--------
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ACQUISITION" means an acquisition of assets or a business
effected in accordance with the provisions of subsection 7.7(vi).
"PERMITTED ENCUMBRANCES" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
22
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 30 days) are being contested
in good faith by appropriate proceedings, so long as (1) such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts, and (2) in the case of a Lien
with respect to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral on
account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money), so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or any
of its Subsidiaries or resulting in a material diminution in the value of
any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct of
the business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease to
any restriction or encumbrance referred to in the preceding clause (b), so
long as the holder of such restriction or encumbrance agrees to recognize
the rights of such lessee or sublessee under such lease;
23
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PHH" means PH Holding Corporation, a North Carolina corporation and a
wholly-owned subsidiary of Company.
"PLEDGED COLLATERAL" means, collectively, the "Pledged Collateral" as
defined in the Company Pledge Agreement and the Subsidiary Pledge Agreements.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that First Union announces from time to
time as its prime lending rate, as in effect from time to time. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. First Union or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
24
"PRO RATA SHARE" means (i) with respect to all payments, computations
and other matters relating to the Acquisition Term Loan Commitment or the
Acquisition Term Loan of any Lender, the percentage obtained by dividing (x) the
--------
Acquisition Term Loan Exposure of that Lender by (y) the aggregate Acquisition
--
Term Loan Exposure of all Lenders, (ii) with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender or any Letters of Credit issued or participations
therein purchased by any Lender or any participations in any Swing Line Loans
purchased by any Lender, the percentage obtained by dividing (x) the Revolving
--------
Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all
--
Lenders, and (iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Acquisition Term Loan
--------
Exposure of that Lender plus the Revolving Loan Exposure of that Lender by (y)
---- --
the sum of the aggregate Acquisition Term Loan Exposure of all Lenders plus the
----
aggregate Revolving Loan Exposure of all Lenders, in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
subsection 10.1. The initial Pro Rata Share of each Lender for purposes of each
of clauses (i), (ii) and (iii) of the preceding sentence is set forth opposite
the name of that Lender in Schedule 2.1 annexed hereto.
------------
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.
"REAL PROPERTY ASSET" means, at any time of determination, any interest
then owned by any Loan Party in any real property.
"REFUNDED SWING LINE LOANS" means Swing Line Loans which are refunded
through the proceeds of Revolving Loans made by the Lenders.
"REGISTER" means the register established pursuant to subsection 2.1D
for the recordation of each Lender's Commitments and Loans.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" means the date on which Company is required to
reimburse the Issuing Lender for a drawing on a Letter of Credit.
"RELATED AGREEMENTS" means, collectively, the Lil' Champ Stock Purchase
Agreement, the Assignment and Assumption Agreement, the Offer and Consent
Solicitation Materials, the Offering Memorandum, the Company Certificate of
Designation, the Stockholders Agreement, the Related Financing Documents and the
Affiliate Agreements.
25
"RELATED FINANCING DOCUMENTS" means, collectively, the Senior Notes,
the Senior Note Indenture, the Senior Subordinated Notes, the Senior
Subordinated Note Indenture and all other agreements or instruments delivered
pursuant to or in connection with any of the foregoing including any purchase
agreement or registration rights agreement.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.
"REQUISITE LENDERS" means Lenders having or holding more than 50% of
the sum of the aggregate Acquisition Term Loan Exposure of all Lenders plus the
----
aggregate Revolving Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"RESTRICTED SUBSIDIARY" means any Subsidiary of Company other than an
Unrestricted Subsidiary.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(ii), and "REVOLVING LOAN
COMMITMENTS" means such commitments of all Lenders in the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means October 31, 2002.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
----
the event that Lender is an Issuing Lender, the
26
aggregate Letter of Credit Usage in respect of all Letters of Credit issued by
that Lender (in each case net of any participations purchased by other Lenders
in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) the
----
aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit or any unreimbursed drawings under any Letters of
Credit plus (d) in the case of Swing Line Lender, the aggregate outstanding
----
principal amount of all Swing Line Loans (net of any participations therein
purchased by other Lenders) plus (e) the aggregate amount of all participations
----
purchased by that Lender in any outstanding Swing Line Loans.
"REVOLVING LOANS" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(ii).
"REVOLVING NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit V
---------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"SENIOR NOTE INDENTURE" means the indenture dated as of November 4,
1993 between Company and IBJ Schroder Bank & Trust Company, as trustee, pursuant
to which the Senior Notes were issued, as amended by the supplemental indenture
dated as of December 4, 1996, and as amended as described in the Offer and
Consent Solicitation Materials and as such indenture may be further amended from
time to time to the extent permitted under subsection 7.14C.
"SENIOR NOTES" means $100,000,000 in initial aggregate principal amount
of 12% Series B Senior Notes due 2000 of Company issued pursuant to the Senior
Note Indenture, as such notes may be amended from time to time to the extent
permitted under subsection 7.14C.
27
"SENIOR SUBORDINATED NOTE INDENTURE" means the indenture pursuant to
which the Senior Subordinated Notes are issued, as such indenture may be amended
from time to time to the extent permitted under subsection 7.14B.
"SENIOR SUBORDINATED NOTES" means the 10 1/4% Senior Subordinated Notes
due 2007 of Company issued pursuant to the Senior Subordinated Note Indenture,
as such notes may be amended from time to time to the extent permitted under
subsection 7.14B.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Restricted Subsidiaries in respect of industrial revenue
or development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Restricted Subsidiaries, (iii) the obligations of third
party insurers of Company or any of its Restricted Subsidiaries arising by
virtue of the laws of any jurisdiction requiring third party insurers, (iv)
obligations with respect to Capital Leases or Operating Leases of Company or any
of its Restricted Subsidiaries, and (v) performance, payment, deposit, surety or
indemnity obligations of Company or any of its Restricted Subsidiaries, in any
case if required by law or governmental rule or regulation or in accordance with
custom and practice in the industry; provided that Standby Letters of Credit may
--------
not be issued for the purpose of supporting (a) trade payables or (b) any
Indebtedness constituting "antecedent debt" (as that term is used in Section 547
of the Bankruptcy Code).
"STOCKHOLDERS AGREEMENT" means that certain Stockholders' Agreement
dated as of August 19, 1996 by and among Company, Freeman Spogli, CMC and the
other stockholders of Company, in the form delivered to Agents and Lenders prior
to their execution of this Agreement and as such agreement may be amended from
time to time thereafter to the extent permitted under subsection 7.14A.
28
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company
evidenced by the Senior Subordinated Notes and (ii) any other Indebtedness of
Company subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance satisfactory to Administrative Agent and Requisite Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"SUBSIDIARY GUARANTOR" means any Restricted Subsidiary of Company that
executes and delivers a counterpart of the Subsidiary Guaranty on the Closing
Date or from time to time thereafter pursuant to subsection 6.8.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed and
delivered by existing Restricted Subsidiaries of Company on the Closing Date and
to be executed and delivered by additional Restricted Subsidiaries of Company
from time to time thereafter in accordance with subsection 6.8, substantially in
the form of Exhibit XVIII annexed hereto, as such Subsidiary Guaranty may
-------------
hereafter be amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENT" means each Subsidiary Pledge Agreement
executed and delivered by an existing Subsidiary Guarantor on the Closing Date
or executed and delivered by any additional Subsidiary Guarantor from time to
time thereafter in accordance with subsection 6.8, in each case substantially in
the form of Exhibit XIX annexed hereto, as such Subsidiary Pledge Agreement may
-----------
be amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY PLEDGE AGREEMENTS" means all such Subsidiary Pledge Agreements,
collectively.
"SUBSIDIARY SECURITY AGREEMENT" means each Subsidiary Security
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Closing Date or executed and delivered by any additional Subsidiary Guarantor
from time to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XX annexed hereto, as such Subsidiary
----------
Security Agreement may be amended, supplemented or otherwise modified from time
to time, and "SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security
Agreements, collectively.
29
"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means each Subsidiary
Trademark Security Agreement executed and delivered by an existing Subsidiary
Guarantor on the Closing Date or executed and delivered by any additional
Subsidiary Guarantor from time to time thereafter in accordance with subsection
6.8, in each case substantially in the form of Exhibit XXI annexed hereto, as
-----------
such Subsidiary Trademark Security Agreement may be amended, supplemented or
otherwise modified from time to time, and "SUBSIDIARY TRADEMARK SECURITY
AGREEMENTS" means all such Subsidiary Trademark Security Agreements,
collectively.
"SUPPLEMENTAL COLLATERAL AGENT" means any additional collateral agent
appointed pursuant to subsection 9.1D.
"SWING LINE LENDER" means First Union, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing Line Lender
to make Swing Line Loans to Company pursuant to subsection 2.1A(iii).
"SWING LINE LOANS" means the Loans made by Swing Line Lender to Company
pursuant to subsection 2.1A(iii).
"SWING LINE NOTE" means (i) the promissory note of Company issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note
issued by Company to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VI annexed hereto, as it may be amended, supplemented or
----------
otherwise modified from time to time.
"SYNDICATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
--------
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
30
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at any date
of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans plus (ii) the aggregate principal amount of all
----
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
----
"TRANSACTION COSTS" means the fees, costs and expenses payable by
Company on or before the Closing Date in connection with the transactions
contemplated by the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"UNRESTRICTED SUBSIDIARIES" means PHH and any Subsidiary of PHH,
whether in existence on the Closing Date or thereafter created or acquired;
provided, that Company or any of its Restricted Subsidiaries do not directly own
- --------
any equity interest in such Subsidiary.
1.2. ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
------------------------------------------------------------------------
AGREEMENT.
---------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3. OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all
31
other items or matters that fall within the broadest possible scope of such
general statement, term or matter.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
-------------------------------------------------
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to make the Loans described in subsections
2.1A(i) and 2.1A(ii) and Swing Line Lender hereby agrees to make the Loans
described in subsection 2.1A(iii).
(i) Acquisition Term Loans. Each Lender severally agrees, subject to
----------------------
the provisions set forth in subsection 7.7(vi), to lend to Company from time
to time during the period from the Closing Date to but excluding the
Acquisition Term Loan Commitment Termination Date an amount not exceeding
its Pro Rata Share of the aggregate amount of the Acquisition Term Loan
Commitments to be used for the purposes identified in subsection 2.5A. The
original amount of each Lender's Acquisition Term Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
------------
amount of the Acquisition Term Loan Commitments is $30,000,000; provided
--------
that the Acquisition Term Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Acquisition Term Loan Commitments
pursuant to subsection 10.1B; and provided, further that the amount of the
-------- -------
Acquisition Term Loan Commitment of any Lender shall be reduced from time to
time by the amount of any Acquisition Term Loan made by such Lender and
shall be further reduced from time to time by the amount of any reductions
thereto made pursuant to subsections 2.4B(ii) and 2.4B(iii). Each Lender's
Acquisition Term Loan Commitment shall expire on the Acquisition Term Loan
Commitment Termination Date and all outstanding Acquisition Term Loans on
such date shall be repaid in accordance with subsection 2.4A; provided that
--------
each Lender's Acquisition Term Loan Commitment shall expire immediately and
without further action on November 14, 1997 if the Closing Date shall not
have occurred on or before that date. Amounts borrowed under this subsection
2.1A(i) and subsequently repaid or prepaid may not be reborrowed.
(ii) Revolving Loans. Each Lender severally agrees, subject to the
---------------
limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date an aggregate amount not exceeding
its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments
to be used for the purposes identified in subsection 2.5B. The original
amount of each
32
Lender's Revolving Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original amount of the
------------
Revolving Loan Commitments is $45,000,000; provided that the Revolving Loan
--------
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Revolving Loan Commitments pursuant to subsection 10.1B; and
provided, further that the amount of the Revolving Loan Commitments shall
-------- -------
be reduced from time to time by the amount of any reductions thereto made
pursuant to subsections 2.4B(ii) and 2.4B(iii). Each Lender's Revolving
Loan Commitment shall expire on the Revolving Loan Commitment Termination
Date and all Revolving Loans and all other amounts owed hereunder with
respect to the Revolving Loans and the Revolving Loan Commitments shall be
paid in full no later than that date; provided that each Lender's Revolving
--------
Loan Commitment shall expire immediately and without further action on
November 14, 1997 if the Closing Date shall not have occurred on or before
that date. Amounts borrowed under this subsection 2.1A(ii) may be repaid
and reborrowed to but excluding the Revolving Loan Commitment Termination
Date.
Anything contained in this Agreement to the contrary notwithstanding,
in no event shall the Total Utilization of Revolving Loan Commitments at
any time exceed the Revolving Loan Commitments then in effect.
(iii) Swing Line Loans. Swing Line Lender hereby agrees, subject to
----------------
the limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Company from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5B, notwithstanding
the fact that such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving Loan Commitment. The original amount of the Swing Line
Loan Commitment is $3,000,000; provided that any reduction of the Revolving
--------
Loan Commitments made pursuant to subsection 2.4B(ii) or 2.4B(iii) which
reduces the aggregate Revolving Loan Commitments to an amount less than the
then current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments, as so reduced, without any
further action on the part of Company, any Agent or Swing Line Lender. The
Swing Line Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Swing Line Loans and all other amounts owed
hereunder with respect to the Swing Line Loans shall be paid in full no
later than that date; provided that the Swing Line Loan Commitment shall
--------
expire immediately and without further action on November 14, 1997 if the
Closing
33
Date shall not have occurred on or before that date. Amounts borrowed under
this subsection 2.1A(iii) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
in no event shall the Total Utilization of Revolving Loan Commitments at
any time exceed the Revolving Loan Commitments then in effect.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Administrative
Agent (with a copy to Company), no later than 11:00 A.M. (Charlotte, NC
time) on the first Business Day in advance of the proposed Funding Date, a
notice (which shall be deemed to be a Notice of Borrowing given by Company)
requesting Lenders to make Revolving Loans that are Base Rate Loans on such
Funding Date in an amount equal to the amount of such Swing Line Loans (the
"REFUNDED SWING LINE LOANS") outstanding on the date such notice is given
which Swing Line Lender requests Lenders to prepay. Anything contained in
this Agreement to the contrary notwithstanding, (i) the proceeds of such
Revolving Loans made by Lenders other than Swing Line Lender shall be
immediately delivered by Administrative Agent to Swing Line Lender (and not
to Company) and applied to repay a corresponding portion of the Refunded
Swing Line Loans and (ii) on the day such Revolving Loans are made, Swing
Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan made by Swing Line
Lender, and such portion of the Swing Line Loans deemed to be so paid shall
no longer be outstanding as Swing Line Loans and shall no longer be due
under the Swing Line Note, of Swing Line Lender but shall instead
constitute part of Swing Line Lender's outstanding Revolving Loans and
shall be due under the Revolving Note, of Swing Line Lender. Company hereby
authorizes Administrative Agent and Swing Line Lender to charge Company's
accounts with Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay Swing Line
Lender the amount of the Refunded Swing Line Loans to the extent the
proceeds of such Revolving Loans made by Lenders, including the Revolving
Loan deemed to be made by Swing Line Lender, are not sufficient to repay in
full the Refunded Swing Line Loans. If any portion of any such amount paid
(or deemed to be paid) to Swing Line Lender should be recovered by or on
behalf of Company from Swing Line Lender in bankruptcy, by assignment for
the benefit of creditors or otherwise, the loss of the amount so recovered
shall be ratably shared among all Lenders in the manner contemplated by
subsection 10.5.
Immediately upon the funding of each Swing Line Loan by Swing Line
Lender, each Lender shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans in an amount
equal to its Pro
34
Rata Share (calculated without giving effect to clauses (d) and (e) of the
definition of Revolving Loan Exposure) of the unpaid amount of such Swing
Line Loans together with accrued interest thereon. Upon one Business Day's
notice from Swing Line Lender, each Lender shall deliver to Swing Line
Lender an amount equal to its respective participation in same day funds at
the Funding and Payment Office. In order to evidence such participation,
each Lender agrees to enter into a separate participation agreement at the
request of Swing Line Lender in form and substance reasonably satisfactory
to all parties. In the event any Lender fails to make available to Swing
Line Lender the amount of such Lender's participation as provided in this
paragraph, Swing Line Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the rate
customarily used by Swing Line Lender for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. In the event
Swing Line Lender receives a payment of any amount in which other Lenders
have purchased participations as provided in this paragraph, Swing Line
Lender shall promptly distribute to each such other Lender its Pro Rata
Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and
each Lender's obligation to purchase a participation in any unpaid Swing
Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including (a) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against Swing Line Lender, Company or any other
Person for any reason whatsoever; (b) the occurrence or continuation of an
Event of Default or a Potential Event of Default; (c) any adverse change in
the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company or any of its Subsidiaries; (d) any
breach of this Agreement or any other Loan Document by any party thereto;
or (e) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing; provided that such obligations of each
--------
Lender are subject to the condition that (X) Swing Line Lender believed in
good faith that all conditions under Section 4 to the making of the
applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, as
the case may be, were satisfied at the time such Refunded Swing Line Loans
or unpaid Swing Line Loans were made or (Y) the satisfaction of any such
condition not satisfied had been waived in accordance with subsection 10.6.
B. Borrowing Mechanics. Acquisition Term Loans or Revolving Loans made on
any Funding Date (other than Revolving Loans made pursuant to a request by Swing
Line Lender pursuant to subsection 2.1A(iii) for the purpose of repaying any
Refunded Swing Line Loans or Revolving Loans made pursuant to subsection 3.3B
for the purpose of reimbursing any Issuing Lender for the amount of a drawing
under a Letter of Credit issued by it) shall be in an aggregate minimum amount
of $1,000,000 and integral
35
multiples of $500,000 in excess of that amount; provided that Acquisition Term
--------
Loans or Revolving Loans made on any Funding Date as Eurodollar Rate Loans with
a particular Interest Period shall be in an aggregate minimum amount of
$3,000,000 and integral multiples of $1,000,000 in excess of that amount. Swing
Line Loans made on any Funding Date shall be in an aggregate minimum amount of
$200,000 and integral multiples of $100,000 in excess of that amount. Whenever
Company desires that Lenders make Acquisition Term Loans or Revolving Loans it
shall deliver to Administrative Agent a Notice of Borrowing no later than 11:00
A.M. (Charlotte, NC time) at least three Business Days in advance of the
proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least one
Business Day in advance of the proposed Funding Date (in the case of a Base Rate
Loan). Whenever Company desires that Swing Line Lender make a Swing Line Loan,
it shall deliver to Administrative Agent a Notice of Borrowing no later than
12:00 Noon (Charlotte, NC time) on the proposed Funding Date. The Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount and type of Loans requested, (iii) in the case of Swing
Line Loans and any Loans made on the Closing Date or the two Business Days
immediately succeeding the Closing Date, that such Loans shall be Base Rate
Loans, (iv) in the case of Acquisition Term Loans and Revolving Loans not made
on the Closing Date, whether such Loans shall be Base Rate Loans or Eurodollar
Rate Loans, and (v) in the case of any Loans requested to be made as Eurodollar
Rate Loans, the initial Interest Period requested therefor. Acquisition Term
Loans and Revolving Loans may be continued as or converted into Base Rate Loans
and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
--------
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
36
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. Disbursement of Funds. All Acquisition Term Loans and Revolving Loans
under this Agreement shall be made by Lenders simultaneously and proportionately
to their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Administrative Agent not later than 1:00
P.M. (Charlotte, NC time) on the applicable Funding Date, and Swing Line Lender
shall make the amount of its Swing Line Loan available to Administrative Agent
not later than 2:00 P.M.(Charlotte, NC time) on the applicable Funding Date, in
each case in same day funds in Dollars, at the Funding and Payment Office.
Except as provided in subsection 2.1A(iii) or subsection 3.3B with respect to
Revolving Loans used to repay Refunded Swing Line Loans or to reimburse any
Issuing Lender for the amount of a drawing under a Letter of Credit issued by
it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date) and 4.2 (in the
case of all Loans), Administrative Agent shall make the proceeds of such Loans
available to Company on the applicable Funding Date by causing an amount of same
day funds in Dollars equal to the proceeds of all such Loans received by
Administrative Agent from Lenders or Swing Line Lender, as the case may be, to
be credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall
37
immediately pay such corresponding amount to Administrative Agent together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Administrative Agent, at the rate payable under this Agreement for
Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Company may have against any Lender as a result of any default
by such Lender hereunder.
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to
in subsection 10.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from time
to time (the "REGISTER"). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Acquisition Term Loan Commitment and Revolving Loan Commitment and the
Acquisition Term Loan and Revolving Loans from time to time of each Lender,
the Swing Line Loan Commitment and the Swing Line Loans from time to time
of Swing Line Lender, and each repayment or prepayment in respect of the
principal amount of the Acquisition Term Loan or Revolving Loans of each
Lender or the Swing Line Loans of Swing Line Lender. Any such recordation
shall be conclusive and binding on Company and each Lender, absent manifest
error; provided that failure to make any such recordation, or any error in
--------
such recordation, shall not affect any Lender's Commitments or Company's
Obligations in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records (including the
Notes held by such Lender) the amount of the Acquisition Term Loan and each
Revolving Loan made by it and each payment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest
error; provided that failure to make any such recordation, or any error in
--------
such recordation, shall not affect any Lender's Commitments or Company's
Obligations in respect of any applicable Loans; and provided, further that
-------- -------
in the event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern absent manifest
error.
(iv) Company, Agents and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be
effective, in each case unless and until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with
38
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.
(v) Company hereby designates First Union to serve as Company's
agent solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent First Union
serves in such capacity, First Union and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 10.3.
E. NOTES. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender) (a) an Acquisition Term
Note substantially in the form of Exhibit IV annexed hereto to evidence that
----------
Lender's Acquisition Term Loan, in the principal amount of that Lender's
Acquisition Term Loan Commitment and with other appropriate insertions, and (b)
a Revolving Note substantially in the form of Exhibit V annexed hereto to
---------
evidence that Lender's Revolving Loans, in the principal amount of that Lender's
Revolving Loan Commitment and with other appropriate insertions, and (ii) to
Swing Line Lender (or to Administrative Agent for Swing Line Lender) a Swing
Line Note substantially in the form of Exhibit VI annexed hereto to evidence
----------
Swing Line Lender's Swing Line Loans, in the principal amount of the Swing Line
Loan Commitment and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Acquisition Term Loan and each Revolving Loan shall bear interest on
the unpaid principal amount thereof from the date made to maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount thereof from
the date made to maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Acquisition Term Loan or any Revolving
Loan shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection 2.1B, and the basis for
determining the interest rate with respect to any Acquisition Term Loan or any
Revolving Loan may be changed from time to time pursuant to subsection 2.2D. If
on any day an Acquisition Term Loan or a Revolving Loan is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.
39
Subject to the provisions of subsections 2.2E and 2.7, the Acquisition
Term Loans and the Revolving Loans shall bear interest through maturity as
follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
----
Applicable Base Rate Margin; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Margin.
----
Upon delivery of the Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(xix), the Applicable Base Rate
Margin and the Applicable Eurodollar Margin shall automatically be adjusted in
accordance with such Margin Determination Certificate, such adjustment to become
effective on the next succeeding Business Day following the receipt by
Administrative Agent of such Margin Determination Certificate; provided that if
--------
a Margin Determination Certificate is not delivered at the time required
pursuant to subsection 6.1(xix), clause (ii) of the definitions of "Applicable
Base Rate Margin" and "Applicable Eurodollar Rate Margin", as the case may be,
shall be applicable from such time until delivery of a succeeding Margin
Determination Certificate; provided further that if a Margin Determination
-------- -------
Certificate erroneously indicates an applicable margin more favorable to Company
than should be afforded by the actual calculation of the Consolidated Pro Forma
Leverage Ratio, Company shall promptly pay additional interest and letter of
credit fees to correct for such error.
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest to maturity at the sum of the Base Rate plus the
----
Applicable Base Rate Margin.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
--------
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice
of Conversion/Continuation, each successive Interest Period shall commence
on the day on which the next preceding Interest Period expires;
40
(iii) if an Interest Period would otherwise expire on a day that is
no a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that, if any Interest Period would otherwise expire
--------
on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the
Acquisition Term Loans shall extend beyond October 31, 2002 and no Interest
Period with respect to any portion of the Revolving Loans shall extend
beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the
Acquisition Term Loans shall extend beyond a date on which Company is
required to make a scheduled payment of principal of the Acquisition Term
Loans unless the sum of (a) the aggregate principal amount of Acquisition
Term Loans that are Base Rate Loans plus (b) the aggregate principal amount
----
of Acquisition Term Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the principal
amount required to be paid on the Acquisition Term Loans on such date;
(vii) there shall be no more than five Interest Periods outstanding
at any time with respect to Revolving Loans and there shall be no more than
five Interest Periods outstanding at any time with respect to Acquisition
Term Loans; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
--------
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
41
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Acquisition Term Loans or Revolving Loans equal to $1,000,000
and integral multiples of $500,000 in excess of that amount from Loans bearing
interest at a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to an alternative basis; provided
--------
that Loans converted to Eurodollar Loans shall be in an aggregate minimum amount
of $3,000,000 and integral multiples of $1,000,000 in excess of that amount; or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $3,000,000 and
integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate
Loan; provided, however, that a Eurodollar Rate Loan may only be converted into
--------- -------
a Base Rate Loan on the expiration date of an Interest Period applicable
thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 11:00 A.M. (Charlotte, NC time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
--------
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan
42
(or telephonic notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and Company shall be bound to effect
a conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2.00% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to the applicable Loans (or,
in the case of any such fees and other amounts, at a rate which is 2.00% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
--------
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2.00% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of any Agent or
any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if a Loan is repaid
--------
on the same day on which it is made, one day's interest shall be paid on that
Loan.
2.3 FEES.
----
A. REVOLVING LOAN COMMITMENT FEES. Company agrees to pay to
Administrative Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Closing Date to and excluding the Revolving Loan Commitment Termination Date in
an amount equal to (x) the daily excess of the Revolving Loan Commitments over
the sum of (i) the aggregate principal amount of outstanding Revolving Loans
plus (ii) the aggregate principal amount of outstanding Swing Line Loans plus
- ---- ----
(iii) the Letter of Credit Usage multiplied by (y) 0.50% per annum, such
-------------
commitment fees to be calculated on the basis of a 360-day year
43
and the actual number of days elapsed and to be payable quarterly in arrears on
January 31, April 30, July 31 and October 31 of each year, commencing on the
first such date to occur after the Closing Date, and on the Revolving Loan
Commitment Termination Date.
B. ACQUISITION TERM LOAN COMMITMENT FEES. Company agrees to pay to
Administrative Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Closing Date to and excluding the Acquisition Term Loan Commitment Termination
Date in an amount equal to (x) the Acquisition Term Loan Commitments multiplied
----------
by (y) 0.50% per annum, such commitment fees to be calculated on the basis of a
- --
360-day year and the actual number of days elapsed and to be payable quarterly
in arrears on January 31, April 30, July 31 and October 31 of each year,
commencing on the first such date to occur after the Closing Date, and on the
Acquisition Term Loan Commitment Termination Date.
C. OTHER FEES. Company agrees to pay to Agents, CIBC WG and/or First
Union CMC, as the case may be, such other fees in the amounts and at the times
agreed upon between Company, Agents, CIBC WG and/or First Union CMC, as the case
may be.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN ACQUISITION TERM LOAN
---------------------------------------------------------------
COMMITMENTS AND REVOLVING LOAN COMMITMENTS; GENERAL PROVISIONS REGARDING
------------------------------------------------------------------------
PAYMENTS; APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER
------------------------------------------------------------------
SUBSIDIARY GUARANTY.
-------------------
A. SCHEDULED PAYMENTS OF ACQUISITION TERM LOANS.
Company shall make principal payments on the Acquisition Term Loans
in installments on each January 31, April 30, July 31 and October 31,
commencing on January 31, 2000, in an amount equal to 8.33%, or 8.37%
with respect to the installment payable on October 31, 2002, of the
aggregate amount of the Acquisition Term Loans outstanding on the
Acquisition Term Loan Commitment Termination Date; provided that the
--------
scheduled installments of principal of the Acquisition Term Loans shall
be reduced in connection with any voluntary or mandatory prepayments of
the Acquisition Term Loans in accordance with subsection 2.4B(iv); and
provided, further that the Acquisition Term Loans and all other amounts
-------- -------
owed hereunder with respect to the Acquisition Term Loans shall be paid
in full no later than October 31, 2002, and the final installment
payable by Company in respect of the Acquisition Term Loans on such date
shall be in an amount, if such amount is different from that specified
above, sufficient to repay all amounts owing by Company under this
Agreement with respect to the Acquisition Term Loans.
44
B. PREPAYMENTS AND REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon written or
---------------------
telephonic notice to Administrative Agent on or prior to 12:00 Noon
(Charlotte, NC time) on the date of prepayment, which notice, if
telephonic, shall be promptly confirmed in writing, at any time and from
time to time prepay any Swing Line Loan on any Business Day in whole or
in part in an aggregate minimum amount of $200,000 and integral multiples
of $100,000 in excess of that amount. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic notice,
in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 12:00 Noon (Charlotte, NC time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or telephone
to each Lender), at any time and from time to time prepay any Acquisition
Term Loans or Revolving Loans on any Business Day in whole or in part in
an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount; provided, however, that a Eurodollar
-------- -------
Rate may only be prepaid on a date prior to the date of the expiration of
the Interest Period applicable thereto upon payment of all amounts due
with respect to such prepayment under subsection 2.6D. Notice of
prepayment having been given as aforesaid, the principal amount of the
Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Commitments. Company may, upon not
-----------------------------------
less than three Business Days' prior written or telephonic notice
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time terminate in whole or permanently reduce in part, without premium or
penalty, (a) the Revolving Loan Commitments in an amount up
to the amount by which the Revolving Loan Commitments exceed the Total
Utilization of Revolving Loan Commitments at the time of such proposed
termination or reduction or (b) the Acquisition Term Loan Commitments;
provided that any such partial reduction of the Revolving Loan
--------
Commitments or the Acquisition Term Loan Commitments shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $500,000
in excess of that amount. Company's notice to Administrative Agent shall
designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination
or reduction of the Revolving Loan Commitments or the Acquisition Term
Loan Commitments shall be effective on the date specified in Company's
notice and shall reduce the Revolving Loan Commitment or the Acquisition
Term Loan Commitments, as applicable, of each Lender proportionately to
its Pro Rata Share.
45
(iii) Mandatory Prepayments and Mandatory Reductions of Commitments.
-------------------------------------------------------------
The Loans shall be prepaid and/or the Commitments shall be permanently reduced
in the amounts and under the circumstances set forth below, all such prepayments
and/or reductions to be applied as set forth below or as more specifically
provided in subsection 2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds.
-------------------------------------------------------
No later than the first Business Day following the date of receipt by
Company or its Restricted Subsidiaries of any Net Asset Sale Proceeds in
respect of any Asset Sale and subject to subsection 6.4C in the case of
insurance proceeds which constitute Net Asset Sale Proceeds, Company shall
prepay the Loans and/or the Revolving Loan Commitments and/or the
Acquisition Term Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Asset Sale Proceeds; provided, however,
-------- -------
that, so long as no Event of Default shall have occurred and be
continuing, Net Asset Sale Proceeds received by Company and its Restricted
Subsidiaries from and after the date hereof need not be applied to the
mandatory prepayment of the Loans pursuant to this subsection 2.4B(iii)(a)
to the extent that such Net Asset Sale Proceeds are reinvested in assets
or properties currently utilized or anticipated to be utilized in any line
of business engaged in by Company and its Restricted Subsidiaries on the
Closing Date, or any similar or related business, within 270 days of
receipt thereof and so long as the aggregate amount of such Net Asset Sale
Proceeds so held for reinvestment and excluded from the mandatory
prepayment provisions of this subsection 2.4B(iii)(a) does not exceed
$10,000,000 at any time; provided, further, that Company shall, within ten
-------- -------
Business Days of the receipt by Company or any of its Restricted
Subsidiaries of any Net Asset Sale Proceeds to be excluded from such
mandatory prepayment provisions pursuant to the immediately preceding
proviso, deliver to Administrative Agent an Officers' Certificate setting
forth the amount of such Net Asset Sale Proceeds, the amount of other Net
Asset Sale Proceeds excluded from such mandatory prepayment provisions
pursuant to the immediately preceding proviso, and the amount of any
mandatory prepayment to be made pursuant to this subsection 2.4B(iii)(a)
and setting forth in reasonable detail the calculations from which such
amounts were derived, which Officers' Certificate may be amended at any
time and from time to time by Company during the 270-day period following
receipt of such Net Asset Sale Proceeds. In the event that any portion of
any Net Asset Sale Proceeds received by Company or any of its Restricted
Subsidiaries which are so excluded from the mandatory prepayment of the
Loans are not expended for the purposes permitted pursuant to this
subsection 2.4B(iii)(a) within the 270-day period, Company shall,
immediately upon the expiration of the applicable 270-day period, make a
mandatory prepayment of the Loans as
46
specified in the first sentence of this subsection 2.4B(iii)(a) in an
amount equal to such unexpended portion.
(b) Prepayments and Reductions Due to Issuance of Equity
----------------------------------------------------
Securities. On the date of receipt by Company of the Cash proceeds (any
----------
such proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable
legal fees and expenses, being "NET SECURITIES PROCEEDS") from the
issuance of any equity Securities of Company after the Closing Date (other
than issuances of equity to management employees pursuant to agreements or
stock option plans permitted under subsection 7.11), Company shall prepay
the Loans and/or the Revolving Loan Commitments and/or the Acquisition
Term Loan Commitments shall be permanently reduced in an aggregate amount
equal to such Net Securities Proceeds.
(c) Prepayments and Reductions Due to Issuance of Debt
--------------------------------------------------
Securities. On the date of receipt by Company of the Net Securities
----------
Proceeds from the issuance of any debt Securities of Company after the
Closing Date (other than as permitted pursuant to subsection 7.1 as such
subsection is in effect on the Closing Date), Company shall prepay the
Loans and/or the Revolving Loan Commitments and/or the Acquisition Term
Loan Commitments shall be permanently reduced in an aggregate amount equal
to such Net Securities Proceeds.
(d) Prepayments Due to Failure to Refinance Senior Notes.
----------------------------------------------------
In the event that by April 30, 2000 Company fails to retire from funds
other than the proceeds of Revolving Loans (except to the extent permitted
by subsection 7.5B) or to refinance all of the then outstanding principal
amount of Senior Notes pursuant to subsection 7.1(vi), then on April 30,
2000 Company shall prepay all of the outstanding Loans and deliver to the
Administrative Agent an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not
any beneficiary under any such Letter of Credit shall have presented, or
shall be entitled at such time to present, the drafts or other documents
or certificates required to draw under such Letter of Credit) to be held
by Administrative Agent as cash collateral pursuant to the terms of the
Collateral Account Agreement, and the Revolving Loan Commitments shall be
permanently reduced to zero.
(e) Calculations of Net Proceeds Amounts; Additional
------------------------------------------------
Prepayments and Reductions Based on Subsequent Calculations. Concurrently
-----------------------------------------------------------
with any prepayment of the Loans and/or reduction of the Revolving Loan
Commitments and/or the Acquisition Term Loan Commitments pursuant to
subsections 2.4B(iii)(a)-(d), Company shall deliver
47
to Administrative Agent an Officers' Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the applicable
Net Asset Sale Proceeds or the applicable Net Securities Proceeds that
gave rise to such prepayment and/or reduction. In the event that Company
shall subsequently determine that the actual Net Proceeds Amount was
greater than the amount set forth in such Officers' Certificate, Company
shall promptly make an additional prepayment of the Loans (and/or, if
applicable, the Revolving Loan Commitments and/or the Acquisition Term
Loan Commitments shall be permanently reduced) in an amount equal to the
amount of such excess, and Company shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the derivation
of the additional Net Proceeds Amount resulting in such excess.
(f) Prepayments Due to Reductions or Restrictions of
------------------------------------------------
Revolving Loan Commitments. Company shall from time to time prepay first
-------------------------- -----
the Swing Line Loans and second the Revolving Loans to the extent
------
necessary so that the Total Utilization of Revolving Loan Commitments
shall not at any time exceed the Revolving Loan Commitments then in
effect.
(iv) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans
-----------------------------------------------------
and Order of Maturity. Any voluntary prepayments pursuant to subsection
---------------------
2.4B(i) shall be applied as specified by Company in the applicable notice
of prepayment; provided that in the event Company fails to specify the
--------
Loans to which any such prepayment shall be applied, such prepayment shall
be applied first to repay outstanding Swing Line Loans to the full extent
-----
thereof, second to repay outstanding Revolving Loans to the full extent
------
thereof, and third to repay outstanding Acquisition Term Loans to the full
-----
extent thereof. Any voluntary prepayments of the Acquisition Term Loans
pursuant to subsection 2.4B(i) shall be applied first to reduce the
scheduled installments of principal of the Acquisition Term Loans due in
the next succeeding twelve months in forward order of maturity and
thereafter on a pro rata basis to reduce the remaining scheduled
installments of principal of the Acquisition Term Loans set forth in
subsection 2.4A.
(b) Application of Mandatory Prepayments by Type of Loans.
-----------------------------------------------------
Any amount (the "APPLIED AMOUNT") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments and/or the Acquisition Term Loan Commitments pursuant to
subsections 2.4B(iii)(a)-(d) shall be applied first, to prepay the
-----
Acquisition Term Loans to the full extent thereof, second, to the extent
------
of any remaining portion of the Applied Amount, to prepay the Swing Line
Loans to the full extent thereof but without any reduction to the
Revolving
48
Loan Commitments, third, to the extent of any remaining portion
-----
of the Applied Amount, to prepay the Revolving Loans to the full extent
thereof but without any reduction to the Revolving Loan Commitments, and
fourth, to the extent of any remaining portion of the Applied Amount, to
permanently reduce the Acquisition Term Loan Commitments to the full
extent thereof; provided that notwithstanding the foregoing, to the extent
--------
of any remaining portion of the Applied Amount after the reduction of all
Acquisition Term Loan Commitments, the Revolving Loan Commitments shall be
permanently reduced by the amount of such remaining portion of the Applied
Amount.
(c) Application of Mandatory Prepayments of Acquisition
---------------------------------------------------
Term Loans by Order of Maturity. Any mandatory prepayments of the
-------------------------------
Acquisition Term Loans pursuant to subsection 2.4B(iii) shall be applied
on a pro rata basis to reduce the scheduled installments of principal of
the Acquisition Term Loans set forth in subsection 2.4A.
(d) Application of Prepayments to Base Rate Loans and
-------------------------------------------------
Eurodollar Rate Loans. Considering Acquisition Term Loans and Revolving
Loans being prepaid separately, any prepayment thereof shall be applied
first to Base Rate Loans to the full extent thereof before application to
Eurodollar Rate Loans, in each case in a manner which minimizes the amount
of any payments required to be made by Company pursuant to subsection
2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of principal,
--------------------------
interest, fees and other Obligations hereunder and under the Notes shall be made
in Dollars in same day funds, without defense, setoff or counterclaim, free of
any restriction or condition, and delivered to Administrative Agent not later
than 12:00 Noon (Charlotte, NC time) on the date due at the Funding and Payment
Office for the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Company on the
next succeeding Business Day. Company hereby authorizes Administrative Agent to
charge its accounts with Administrative Agent in order to cause timely payment
to be made to Administrative Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts for
that purpose).
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, all payments in respect of the principal amount of
any Loan shall include payment of accrued interest on the principal amount being
repaid or prepaid, and all such payments shall be applied to the payment of
interest before application to principal.
49
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments in respect of Acquisition Term Loans and Revolving Loans shall be
apportioned among all outstanding Loans to which such payments relate, in each
case proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or at such other address
as such Lender may request, its Pro Rata Share of all such payments received by
Administrative Agent and the commitment fees of such Lender when received by
Administrative Agent pursuant to subsection 2.3. Notwithstanding the foregoing
provisions of this subsection 2.4C(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its
Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give
effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder
or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
-------------------
any Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of all Loans evidenced by
that Note and all principal payments previously made thereon and of the date to
which interest thereon has been paid; provided that the failure to make (or any
--------
error in the making of) a notation of any Loan made under such Note shall not
limit or otherwise affect the obligations of Company hereunder or under such
Note with respect to any Loan or any payments of principal or interest on such
Note.
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as provided in
-------------------------------------
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Administrative Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
under any Collateral Document may, in the discretion of Administrative Agent, be
held by Administrative Agent as Collateral for, and/or (then or at any time
thereafter) applied in full or in part by Administrative Agent against, the
applicable Secured Obligations (as defined in such Collateral Document) in the
following order of priority:
50
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Administrative Agent and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Administrative Agent in
connection therewith, and all amounts for which Administrative Agent is
entitled to indemnification under such Collateral Document and all
advances made by Administrative Agent thereunder for the account of the
applicable Loan Party, and to the payment of all costs and expenses paid
or incurred by Administrative Agent in connection with the exercise of any
right or remedy under such Collateral Document, all in accordance with the
terms of this Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds,
to the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds,
to the payment to or upon the order of such Loan Party or to whosoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) Application of Payments Under Subsidiary Guaranty. All payments
-------------------------------------------------
received by Administrative Agent under the Subsidiary Guaranty shall be applied
promptly from time to time by Administrative Agent in the following order of
priority:
(a) To the payment of the costs and expenses of any
collection or other realization under the Subsidiary Guaranty, including
reasonable compensation to Administrative Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, all in accordance with the
terms of this Agreement and the Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such payments,
to the payment of all other Guarantied Obligations (as defined in the
Subsidiary Guaranty for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments,
to the payment to the applicable Subsidiary Guarantor or to whosoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
51
2.5 USE OF PROCEEDS.
---------------
A. Acquisition Term Loans. Subject to subsection 7.7(vi), the proceeds of
the Acquisition Term Loans may be used by Company to finance Permitted
Acquisitions.
B. Revolving Loans; Swing Line Loans. Up to $10,000,000 of the Revolving
Loan Commitments shall be used by Company on the Closing Date in connection with
the Existing Letters of Credit becoming Letters of Credit hereunder. The
proceeds of any Revolving Loans and any Swing Line Loans shall be applied by
Company for working capital and general corporate purposes, which may include
the making of intercompany loans to any of Company's wholly-owned Restricted
Subsidiaries, in accordance with subsection 7.1(iv), for their own working
capital and general corporate purposes.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 10:00 A.M. (Charlotte, NC time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the
52
circumstances giving rise to such notice no longer exist and (ii) any Notice of
Borrowing or Notice of Conversion/Continuation given by Company with respect to
the Loans in respect of which such determination was made shall be deemed to be
rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall be
an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or
by telephone confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans shall be terminated
at the earlier to occur of the expiration of the Interest Periods then in effect
with respect to such outstanding Eurodollar Rate Loans or when required by law,
and (d) such outstanding Eurodollar Rate Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
53
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4B(i)) or other principal payment or any conversion of
any of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Company, or (iv) as a consequence of any other default by
Company in the repayment of its Eurodollar Rate Loans when required by the terms
of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
- -------- -------
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
54
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
----------------------------------------
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts
55
owed to such Lender under this subsection 2.7A, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company or any
-----------------------------
other Loan Party under this Agreement and the other Loan Documents shall (except
to the extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the overall
net income of any Lender) imposed, levied, collected, withheld or assessed by or
within the United States of America or any political subdivision in or of the
United States of America or any other jurisdiction from or to which a payment is
made by or on behalf of Company or any other Loan Party or by any federation or
organization of which the United States of America or any such jurisdiction is a
member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
-----------------------
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by Company or any other Loan Party to any Agent or
any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to pay
is imposed on Company) for its own account or (if that liability is
imposed on such Agent or such Lender, as the case may be) on behalf of and
in the name of such Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be increased
to the extent necessary to ensure that, after the making of that
deduction, withholding or payment, such Agent or such Lender, as the case
may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days
after the due date of payment of any Tax which it is required by clause
(b) above to pay, Company shall deliver to Administrative Agent evidence
satisfactory to the other affected parties of such deduction, withholding
or payment and of the remittance thereof to the relevant taxing or other
authority;
56
provided that no such additional amount shall be required to be paid to
--------
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the signature
pages hereof) or after the date of the Assignment Agreement pursuant to
which such Lender became a Lender (in the case of each other Lender) in
any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date of this
Agreement or at the date of such Assignment Agreement, as the case may be,
in respect of payments to such Lender. Upon the reasonable request of
Company, and at Company's expense, each Lender shall cooperate with
Company in seeking to obtain refunds of Taxes paid by Company. If a Lender
shall receive a refund (or a refund in the form of a credit) from a taxing
authority (as a result of any error in the imposition of Tax by such
taxing authority) of any Taxes paid by Company pursuant to this subsection
2.7B(ii), such Lender, so long as no Event of Default shall then exist,
shall promptly pay to Company the amount so received.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other political
subdivision thereof (for purposes of this subsection 2.7B(iii), a "NON-US
LENDER") shall deliver to Administrative Agent for transmission to
Company, on or prior to the Closing Date (in the case of each Lender
listed on the signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be necessary in the
determination of Company or Administrative Agent (each in the reasonable
exercise of its discretion), (1) two original copies of Internal Revenue
Service Form 1001 or 4224 (or any successor forms), properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not subject
to deduction or withholding of United States federal income tax with
respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents or (2) if such
Lender is not a "bank" or other Person described in Section 881(c)(3) of
the Internal Revenue Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (1) above, a Certificate re
Non-Bank Status together with two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly completed and duly
executed by such Lender, together with any other certificate or statement
of exemption required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal
57
income tax with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates
or other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such forms,
certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence obsolete
or inaccurate in any material respect, that such Lender shall promptly (1)
deliver to Administrative Agent for transmission to Company two new
original copies of Internal Revenue Service Form 1001 or 4224, or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed
by such Lender, together with any other certificate or statement of
exemption required in order to confirm or establish that such Lender is
not subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents or
(2) notify Administrative Agent and Company of its inability to deliver
any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional
amount to any Non-US Lender under clause (c) of subsection 2.7B(ii) if
such Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender shall
--------
have satisfied the requirements of subsection 2.7B(iii)(a) on the Closing
Date (in the case of each Lender listed on the signature pages hereof) or
on the date of the Assignment Agreement pursuant to which it became a
Lender (in the case of each other Lender), nothing in this subsection
2.7B(iii)(c) shall relieve Company of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that,
as a result of any change in any applicable law, treaty or governmental
rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent
date establishing the fact that such Lender is not subject to withholding
as described in subsection 2.7B(iii)(a).
(C) Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or 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 applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect
58
of reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such Lender's
Loans or Commitments or Letters of Credit or participations therein or other
obligations hereunder with respect to the Loans or the Letters of Credit to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
------------------------------------------------------
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
reasonable discretion, the making, issuing, funding or maintaining of such
Commitments or Loans or Letters of Credit through such other lending or letter
of credit office or in accordance with such other measures, as the case may be,
would not otherwise materially adversely affect such Commitments or Loans or
Letters of Credit or the interests of such Lender or Issuing Lender; provided
--------
that such Lender or Issuing Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection 2.8 unless
Company agrees to pay all incremental expenses incurred by such Lender or
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described in clause (i) above. A certificate as to the amount of any
such expenses payable by Company pursuant to this subsection 2.8 (setting forth
in reasonable detail the basis for requesting such amount) submitted by such
Lender or Issuing Lender to Company (with a copy to Administrative Agent) shall
be conclusive absent manifest error.
59
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
---------------------------------------------------------------------
THEREIN.
-------
A. LETTERS OF CREDIT. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(ii) and that Swing Line Lender make
Swing Line Loans pursuant to subsection 2.1A(iii), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders issue Letters of Credit for the
account of Company for the purposes specified in the definitions of Commercial
Letters of Credit and Standby Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Lenders may, but (except
as provided in subsection 3.1B(ii)) shall not be obligated to, issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
- --------
shall issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed the
Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $20,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) the Revolving Loan Commitment Termination Date and
(b) the date which is one year from the date of issuance of such Standby
Letter of Credit; provided that the immediately preceding clause (b) shall
--------
not prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive periods
not to exceed one year each unless upon the giving of 30 days' prior notice
thereof to Company and the beneficiary of such Letter of Credit, such
Issuing Lender elects not to extend for any such additional period; and
provided, further that such Issuing Lender shall elect not to extend such
-------- -------
Standby Letter of Credit if it has knowledge that an Event of Default has
occurred and is continuing (and has not been waived in accordance with
subsection 10.6) at the time such Issuing Lender must elect whether or not
to allow such extension; or
(iv) any Commercial Letter of Credit having an expiration date (a)
later than the earlier of (X) the Revolving Loan Commitment Termination
Date and (Y) the date which is 180 days from the date of issuance of such
Commercial Letter of Credit or (b) that is otherwise unacceptable to the
applicable Issuing Lender in its reasonable discretion.
60
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance of a
------------------
Letter of Credit, it shall deliver to Administrative Agent a Notice of
Issuance of Letter of Credit substantially in the form of Exhibit III
-----------
annexed hereto no later than 12:00 Noon (Charlotte, NC time) at least three
Business Days (in the case of Standby Letters of Credit) or five Business
Days (in the case of Commercial Letters of Credit), or in each case such
shorter period as may be agreed to by the Issuing Lender in any particular
instance, in advance of the proposed date of issuance. The Notice of
Issuance of Letter of Credit shall specify (a) the proposed date of
issuance (which shall be a Business Day), (b) whether the Letter of Credit
is to be a Standby Letter of Credit or a Commercial Letter of Credit, (c)
the face amount of the Letter of Credit, (d) the expiration date of the
Letter of Credit, (e) the name and address of the beneficiary, and (f)
either the verbatim text of the proposed Letter of Credit or the proposed
terms and conditions thereof, including a precise description of any
documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its reasonable discretion, may require
--------
changes in the text of the proposed Letter of Credit or any such documents;
and provided, further that no Letter of Credit shall require payment
-------- -------
against a conforming draft to be made thereunder on the same business day
(under the laws of the jurisdiction in which the office of the Issuing
Lender to which such draft is required to be presented is located) that
such draft is presented if such presentation is made after 10:00 A.M. (in
the time zone of such office of the Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and
Administrative Agent, if Administrative Agent is not such Issuing Lender)
prior to the issuance of any Letter of Credit in the event that any of the
matters to which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit is no longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the issuance
of any Letter of Credit Company shall be deemed to have re-certified, as of
the date of such issuance, as to the matters to which Company is required
to certify in the applicable Notice of Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Administrative
-------------------------------
Agent of a Notice of Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and Administrative Agent shall be
the Issuing Lender with respect thereto. In the event that Administrative
Agent, in its sole discretion, elects not to issue such Letter of Credit,
Administrative Agent shall promptly so notify Company, whereupon Company
may request any other Lender to issue such Letter
61
of Credit by delivering to such Lender a copy of the applicable Notice of
Issuance of Letter of Credit. Any Lender so requested to issue such Letter
of Credit shall promptly notify Company and Administrative Agent whether or
not, in its sole discretion, it has elected to issue such Letter of Credit,
and any such Lender which so elects to issue such Letter of Credit shall be
the Issuing Lender with respect thereto. In the event that all other
Lenders shall have declined to issue such Letter of Credit, notwithstanding
the prior election of Administrative Agent not to issue such Letter of
Credit, Administrative Agent shall be obligated to issue such Letter of
Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect to
such Letter of Credit and with respect to all other Letters of Credit
issued by Administrative Agent, when aggregated with Administrative Agent's
outstanding Revolving Loans and Swing Line Loans, may exceed Administrative
Agent's Revolving Loan Commitment then in effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter of
-----------------------
Credit the applicable Issuing Lender shall promptly notify Administrative
Agent and each other Lender of such issuance, which notice shall be
accompanied by a copy of such Letter of Credit. Promptly after receipt of
such notice (or, if Administrative Agent is the Issuing Lender, together
with such notice), Administrative Agent shall notify each Lender of the
amount of such Lender's respective participation in such Letter of Credit,
determined in accordance with subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of each
------------------
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to each other Lender a report setting forth
for such calendar quarter the daily aggregate amount available to be drawn
under the Letters of Credit issued by such Issuing Lender that were
outstanding during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder. Upon satisfaction of
the conditions set forth in subsection 4.1, the Existing Letters of Credit
shall, effective as of the Closing Date, become Letters of Credit under this
Agreement to the same extent as if initially issued hereunder and each Revolving
Loan Lender shall be deemed to have irrevocably purchased from the Issuing
62
Lender(s) of such Existing Letters of Credit a participation in such Letters of
Credit and drawings thereunder in an amount equal to such Revolving Lender's Pro
Rata Share of the maximum amount which is or at any time may become available to
be drawn thereunder. All such Existing Letters of Credit which become Letters
of Credit under this Agreement shall be fully secured by the Collateral
commencing on the Closing Date to the same extent as if initially issued
hereunder on such date.
3.2 LETTER OF CREDIT FEES.
---------------------
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a fronting
fee, payable directly to the applicable Issuing Lender for its own account,
equal to the greater of (X) $500 and (Y) 0.25% per annum of the daily
amount available to be drawn under such Standby Letter of Credit and (b) a
letter of credit fee, payable to the Administrative Agent for the account
of Lenders, equal to the Applicable Eurodollar Margin multiplied by the
---------- --
daily amount available to be drawn under such Letter of Credit, each such
fronting fee or letter of credit fee to be payable in arrears on and to
(but excluding) each January 31, April 30, July 31 and October 31 of each
year and computed on the basis of a 360-day year for the actual number of
days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a) a fronting
fee, payable directly to the applicable Issuing Lender for its own account,
equal to the greater of (X) $100 and (Y) 0.25% per annum of the daily
amount available to be drawn under such Commercial Letter of Credit and (b)
a letter of credit fee, payable to the Administrative Agent for the account
of Lenders, equal to the Applicable Eurodollar Margin minus 1.00% per annum
-----
multiplied by the daily amount available to be drawn under such Commercial
---------- --
Letter, each such fronting fee or letter of credit fee to be payable in
arrears on and to (but excluding) each January 31, April 30, July 31 and
October 31 of each year and computed on the basis of a 360-day year for the
actual number of days elapsed; and
(iii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clauses (i) and (ii) above),
documentary and processing charges payable directly to the applicable
Issuing Lender for its own account in accordance with such Issuing Lender's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by
63
Administrative Agent of any amount described in clauses (i)(b) or (ii)(b) of
this subsection 3.2, Administrative Agent shall distribute to each Lender its
Pro Rata Share of such amount. With respect to Existing Letters of Credit, the
fees described in clauses (i) and (ii) above shall accrue from and including the
Closing Date.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
------------------------------------------------------------------
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars and in same day funds
equal to the amount of such honored drawing; provided that, anything contained
--------
in this Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and such Issuing Lender prior to 11:00 A.M.
(Charlotte, NC time) on the date such drawing is honored that Company intends to
reimburse such Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Revolving Loans, Company shall be deemed to have
given a timely Notice of Borrowing to Administrative Agent requesting Lenders to
make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an
amount in Dollars equal to the amount of such honored drawing and (ii) subject
to satisfaction or waiver of the conditions specified in subsection 4.2B,
Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base
Rate Loans in the amount of such honored drawing, the proceeds of which shall be
applied directly by Administrative Agent to reimburse such Issuing Lender for
the amount of such honored drawing; and provided, further that if for any reason
-------- -------
proceeds of Revolving Loans are not received by such Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such honored drawing,
Company shall reimburse such Issuing Lender, on demand, in an amount in same day
funds equal to the excess of the amount of such honored drawing over the
aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in this
Agreement, and Company shall retain any and all rights it may have against any
Lender resulting from the failure of such Lender to make such Revolving Loans
under this subsection 3.3B.
64
C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS OF
CREDIT.
(i) Payment by Lenders. In the event that Company shall fail for any
------------------
reason to reimburse any Issuing Lender as provided in subsection 3.3B in an
amount equal to the amount of any drawing honored by such Issuing Lender
under a Letter of Credit issued by it, such Issuing Lender shall promptly
notify each other Lender of the unreimbursed amount of such honored drawing
and of such other Lender's respective participation therein based on such
Lender's Pro Rata Share. Each Lender shall make available to such Issuing
Lender an amount equal to its respective participation, in Dollars and in
same day funds, at the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (Charlotte, NC time) on the first
business day (under the laws of the jurisdiction in which such office of
such Issuing Lender is located) after the date notified by such Issuing
Lender. In the event that any Lender fails to make available to such
Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit as provided in this subsection 3.3C,
such Issuing Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the rate customarily used by
such Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this subsection
3.3C shall be deemed to prejudice the right of any Lender to recover from
any Issuing Lender any amounts made available by such Lender to such
Issuing Lender pursuant to this subsection 3.3C in the event that it is
determined by the final judgment of a court of competent jurisdiction that
the payment with respect to a Letter of Credit by such Issuing Lender in
respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Company.
---------------------------------------------------------------
In the event any Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing
honored by such Issuing Lender under a Letter of Credit issued by it, such
Issuing Lender shall distribute to each other Lender which has paid all
amounts payable by it under subsection 3.3C(i) with respect to such honored
drawing such other Lender's Pro Rata Share of all payments subsequently
received by such Issuing Lender from Company in reimbursement of such
honored drawing when such payments are received. Any such distribution
shall be made to a Lender at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Lender, with respect to drawings honored under any Letters of
Credit issued
65
by it, interest on the amount paid by such Issuing Lender in respect of
each such honored drawing from the date such drawing is honored to but
excluding the date such amount is reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B) at a rate equal to (a) for the period from the date such drawing is
honored to but excluding the Reimbursement Date, the rate then in effect
under this Agreement with respect to Revolving Loans that are Base Rate
Loans and (b) thereafter, a rate which is 2% per annum in excess of the
rate of interest otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans. Interest payable pursuant to this
subsection 3.3D(i) shall be computed on the basis of a 360-day year for the
actual number of days elapsed in the period during which it accrues and
shall be payable on demand or, if no demand is made, on the date on which
the related drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
---------------------------------------------------
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date such drawing is honored to but excluding the date
on which such Issuing Lender is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B), the amount that such other Lender would have
been entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such Letter
of Credit, and (b) in the event such Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any
portion of such honored drawing, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such honored drawing such other Lender's Pro Rata
Share of any interest received by such Issuing Lender in respect of that
portion of such honored drawing so reimbursed by other Lenders for the
period from the date on which such Issuing Lender was so reimbursed by
other Lenders to but excluding the date on which such portion of such
honored drawing is reimbursed by Company. Any such distribution shall be
made to a Lender at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such Lender
may request.
3.4 OBLIGATIONS ABSOLUTE.
--------------------
The obligation of Company to reimburse each Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Revolving
Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under subsection 3.3C(i) shall be unconditional and irrevocable and shall be
paid strictly in accordance with
66
the terms of this Agreement under all circumstances including any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or other document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
- --------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
--------------------------------------------------
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing
67
Lender from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which such
Issuing Lender may incur or be subject to as a consequence, direct or indirect,
of (i) the issuance of any Letter of Credit by such Issuing Lender, other than
as a result of (a) the gross negligence or willful misconduct of such Issuing
Lender as determined by a final judgment of a court of competent jurisdiction or
(b) subject to the following clause (ii), the wrongful dishonor by such Issuing
Lender of a proper demand for payment made under any Letter of Credit issued by
it or (ii) the failure of such Issuing Lender to honor a drawing under any such
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "GOVERNMENTAL
ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any
68
liability arising solely out of the gross negligence or willful misconduct of
such Issuing Lender, as determined by a final judgment of a court of competent
jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable lending
or letter of credit office) to any additional Tax (other than any Tax on
the overall net income of such Issuing Lender or Lender) with respect to
the issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement in respect
of any Letters of Credit issued by any Issuing Lender or participations
therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written
69
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Issuing Lender or Lender under this subsection
3.6, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO INITIAL REVOLVING LOANS AND SWING LINE LOANS.
----------------------------------------------------------
The obligations of Lenders to make any Revolving Loans and Swing Line
Loans to be made on the Closing Date are, in addition to the conditions
precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions and the Existing Letters of Credit
shall become Letters of Credit under this Agreement upon the prior or concurrent
satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other
state in which such Person is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the Closing
Date by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of
the Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
70
(v) Executed originals of the Loan Documents to which such Person is
a party; and
(vi) Such other documents as any Agent may reasonably request.
B. NO MATERIAL ADVERSE EFFECT. Since September 26, 1996, no Material
Adverse Effect (in the sole opinion of Agents) shall have occurred.
C. CORPORATE AND CAPITAL STRUCTURE, OWNERSHIP, MANAGEMENT, ETC.
(i) Corporate Structure. The corporate organizational structure of
-------------------
Company and its Subsidiaries, both before and after giving effect to the
Lil' Champ Acquisition, shall be as set forth on Schedule 4.1C annexed
-------------
hereto.
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Company, both before and after giving effect to the Lil' Champ
Acquisition, shall be as set forth on Schedule 4.1C annexed hereto.
-------------
(iii) Management; Employment Contracts; Management Incentive Plans. The
------------------------------------------------------------
management structure of Company after giving effect to the Lil' Champ
Acquisition shall be as set forth on Schedule 4.1C annexed hereto, and
-------------
Agents shall have received copies of, and shall be satisfied with the form
and substance of, any and all employment contracts with senior management
of Company and any and all management incentive plans of Company and its
Subsidiaries.
D. PROCEEDS OF DEBT AND EQUITY CAPITALIZATION OF COMPANY AND ITS
SUBSIDIARIES.
(i) Debt and Equity Capitalization of Company. On or before the
-----------------------------------------
Closing Date, (a) Freeman Spogli, CMC and certain members of Company's
management, shall have purchased additional Capital Stock of Company for a
cash consideration of not less than $32,400,000 upon terms and conditions
satisfactory to Agents, and (b) Company shall have issued and sold not less
than $190,000,000 in aggregate principal amount of Senior Subordinated
Notes having an interest rate not in excess of 14%.
(ii) Use of Proceeds by Company. Company shall have provided evidence
--------------------------
satisfactory to Agents that the proceeds of the debt and equity
capitalization of Company described in the immediately preceding clause
(i), together with cash of Company and its Subsidiaries of not less than
$4,000,000, have been irrevocably committed, prior to the application of
the proceeds of any Revolving Loans made on the Closing Date, to the
payment of a portion of the following: (a) to finance the purchase price
payable in connection with the Lil' Champ Acquisition, (b) to refinance
Indebtedness of Company and Lil' Champ
71
outstanding under the Existing Credit Agreements in an aggregate maximum
principal amount not exceeding $25,000,000 (including without limitation
Existing Letters of Credit with an aggregate stated amount of approximately
$9,100,000), (c) to finance the repurchase of $51,000,000 in principal
amount of Senior Notes and to pay accrued and unpaid interest thereon, (d)
to finance the payment of up to $7,000,000 in tender offer premiums and
consent fees related to the repurchase of Senior Notes and the solicitation
of consents from the holders of the Senior Notes to certain amendments to
the Senior Note Indenture, and (e) to pay Transaction Costs in an aggregate
amount of approximately $15,000,000.
E. RELATED AGREEMENTS.
(i) Senior Subordinated Note Indenture. The Senior Subordinated Note
----------------------------------
Indenture shall be in form and substance satisfactory to Agents and
Requisite Lenders.
(ii) Approval of Related Agreements. The Offer and Consent
------------------------------
Solicitation Materials and each of the other Related Agreements shall each
be satisfactory in form and substance to Agents.
(iii) Related Agreements in Full Force and Effect. Agents shall have
-------------------------------------------
received a fully executed or conformed copy of each Related Agreement and
any documents executed in connection therewith, and each Related Agreement
shall be in full force and effect and no provision thereof shall have been
modified or waived in any respect determined by Agents to be material, in
each case without the consent of Agents.
F. MATTERS RELATING TO EXISTING CREDIT AGREEMENTS AND OFFER AND CONSENT
SOLICITATION; EXISTING LETTERS OF CREDIT.
(i) Termination of Existing Credit Agreements and Related Liens;
------------------------------------------------------------
Existing Letters of Credit. On the Closing Date, Company and its
--------------------------
Subsidiaries (including without limitation Lil' Champ) shall have (a)
repaid in full all Indebtedness outstanding under the Existing Credit
Agreements (the aggregate principal amount of which Indebtedness shall not
exceed $25,000,000 (including without limitation Existing Letters of Credit
with an aggregate stated amount of approximately $9,100,000)), (b)
terminated any commitments to lend or make other extensions of credit
thereunder, (c) delivered to Administrative Agent all documents or
instruments necessary to release all Liens securing Indebtedness or other
obligations of Company and its Subsidiaries thereunder or to assign such
Liens to Administrative Agent for the benefit of Lenders, and (d) made
arrangements satisfactory to Agents with respect to the cancellation of any
letters of credit (other than the Existing Letters of Credit) outstanding
thereunder or the issuance of Letters of Credit to support the obligations
of Company and its Restricted Subsidiaries with
72
respect thereto. Company shall have furnished to Agents copies of all
Existing Letters of Credit and all amendments thereto. Company shall have
paid to the Lenders with respect to such Existing Letters of Credit all
fees and other amounts owing with respect thereto but excluding the
Closing Date.
(ii) Offer and Consent Solicitation. Pursuant to the Offer and Consent
------------------------------
Solicitation, (i) $51,000,000 in aggregate principal amount of the Senior
Notes shall have been tendered in exchange for an aggregate cash payment
not exceeding the principal amount thereof plus accrued interest thereon
plus tender premiums and consent fees not exceeding $7,000,000, and (ii)
Company shall have obtained all such consents and amendments with respect
to the Senior Note Indenture as may be required to permit the consummation
of the Lil' Champ Acquisition, the related financings (including the
incurrence of the Obligations hereunder) and the other transactions
contemplated by the Loan Documents and the Related Agreements. The terms
and conditions of such consents and amendments shall be as described in the
Offer and Consent Solicitation Materials and shall otherwise be in form and
substance satisfactory to Agents and Requisite Lenders. Company shall have
delivered to Agents a fully executed or conformed copy of the Senior Note
Indenture as so amended.
(iii) Existing Indebtedness to Remain Outstanding. Agents shall have
-------------------------------------------
received an Officers' Certificate of Company stating that, after giving
effect to the transactions described in this subsection 4.1F, the
Indebtedness of Loan Parties (other than Indebtedness under the Loan
Documents, the Senior Notes and the Senior Subordinated Notes) shall
consist of (a) approximately $190,000 in aggregate principal amount of
outstanding Indebtedness described in Schedule 7.1 annexed hereto and (b)
------------
Indebtedness in an aggregate amount not to exceed $14,600,000 in respect of
Capital Leases.
G. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION OF
WAITING PERIODS, ETC. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Lil' Champ Acquisition, the other
transactions contemplated by the Loan Documents and the Related Agreements, and
the continued operation of the business conducted by Company, Lil' Champ and
their respective Subsidiaries in substantially the same manner as conducted
prior to the consummation of the Lil' Champ Acquisition, and each of the
foregoing shall be in full force and effect, in each case other than those the
failure to obtain or maintain which, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. All
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or otherwise
impose adverse conditions on the Lil' Champ Acquisition or the financing
thereof. No action, request for stay, petition for review or rehearing,
reconsideration, or appeal with respect to any of the foregoing shall be
pending,
73
and the time for any applicable agency to take action to set aside its consent
on its own motion shall have expired.
H. CONSUMMATION OF LIL' CHAMP ACQUISITION.
(i) All conditions to the Lil' Champ Acquisition set forth in the
Lil' Champ Stock Purchase Agreement and the Assignment and Assumption
Agreement shall have been satisfied or the fulfillment of any such
conditions shall have been waived with the consent of Agents;
(ii) The aggregate cash consideration paid to the holders of equity
interests in Lil' Champ in respect of such equity interests in connection
with the Lil' Champ Acquisition shall not exceed $132,700,000;
(iii) Transaction Costs shall not exceed $15,000,000, and Agents shall
have received evidence to its satisfaction to such effect; and
(iv) Agents shall have received an Officers' Certificate of Company to
the effect set forth in clauses (i)-(iii) above and stating that Company
will proceed to consummate the Lil' Champ Acquisition immediately upon the
making of the initial Loans.
I. CLOSING DATE MORTGAGES; CLOSING DATE MORTGAGE POLICIES; ETC.
Administrative Agent shall have received from Company and each applicable
Subsidiary Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized Mortgages,
----------------------
or all required documents relating to assignments to Administrative Agent
of Mortgages encumbering the owned Real Property Assets of Company and its
Restricted Subsidiaries existing as of the Closing Date (each a "CLOSING
DATE MORTGAGE" and, collectively, the "CLOSING DATE MORTGAGES"), duly
recorded or in proper form for recording, as the case may be, in all
appropriate places in all applicable jurisdictions, encumbering each Real
Property Asset listed in Schedule 4.11 annexed hereto (each a "CLOSING DATE
-------------
MORTGAGED PROPERTY" and, collectively, the "CLOSING DATE MORTGAGED
PROPERTIES");
(ii) Opinions of Local Counsel. If requested by Agents, an opinion of
-------------------------
counsel in each state in which a Closing Date Mortgaged Property is located
with respect to the enforceability of the form(s) of Closing Date Mortgages
to be recorded in such state and such other matters as Agents may
reasonably request, in each case in form and substance reasonably
satisfactory to Agents;
(iii) Matters Relating to Flood Hazard Properties. (a) Evidence, which
may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) any Closing Date Mortgaged Property is a Flood
Hazard Property
74
and (2) the community in which any such Flood Hazard Property is located is
participating in the National Flood Insurance Program, (b) if there are any
such Flood Hazard Properties, such Loan Party's written acknowledgement of
receipt of written notification from Administrative Agent (1) as to the
existence of each such Flood Hazard Property and (2) as to whether the
community in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program, and (c) in the event
any such Flood Hazard Property is located in a community that participates
in the National Flood Insurance Program, evidence that Company has obtained
flood insurance in respect of such Flood Hazard Property to the extent
required under the applicable regulations of the Board of Governors of the
Federal Reserve System; and
(iv) Environmental Indemnity . An environmental indemnity agreement,
------------------------
satisfactory in form and substance to Agents and their counsel, with
respect to the indemnification of Agents and Lenders for any liabilities
that may be imposed on or incurred by any of them as a result of any
Hazardous Materials Activity.
J. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. Agents shall have
received evidence satisfactory to it that Company and Subsidiary Guarantors
shall have taken or caused to be taken all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Agents, desirable in
order to create in favor of Administrative Agent, for the benefit of Lenders, a
valid and (upon such filing and recording) perfected First Priority security
interest in the entire personal and mixed property Collateral. Such actions
shall include the following:
(i) Schedules to Collateral Documents. Delivery to Agents of accurate
---------------------------------
and complete schedules to all of the applicable Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to Administrative
----------------------------------
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Agents) representing all capital
stock pledged pursuant to the Company Pledge Agreement and the Subsidiary
Pledge Agreements and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Agents) evidencing
any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to Agents
--------------------------------------------
of (a) the results of a recent search, by a Person satisfactory to Agents,
of all effective UCC financing statement filings which may have been made
with respect to any personal or mixed property of any Loan Party, together
with copies of all such filings disclosed by such search, and (b) UCC
termination statements duly
75
executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC financing
statements disclosed in such search (other than any such financing
statements in respect of Liens permitted to remain outstanding pursuant to
the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings. Delivery to
--------------------------------------------
Administrative Agent of UCC financing statements and, where appropriate,
fixture filings, duly executed by each applicable Loan Party with respect
to all personal and mixed property Collateral of such Loan Party, for
filing in all jurisdictions as may be necessary or, in the opinion of
Agents, desirable to perfect the security interests created in such
Collateral pursuant to the Collateral Documents;
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
---------------------
cover sheets or other documents or instruments required to be filed with
the PTO in order to create or perfect Liens in respect of any IP
Collateral;
(vi) Certificates of Title, Etc. If requested by Agents, delivery to
--------------------------
Administrative Agent of certificates of title with respect to all motor
vehicles and other rolling stock of Loan Parties and the taking of all
actions necessary to cause Administrative Agent to be noted as lienholder
thereon or otherwise necessary to perfect the First Priority Lien granted
to Administrative Agent on behalf of Lenders in such rolling stock; and
(vii) Opinions of Local Counsel. If requested by Agents, delivery to
-------------------------
Agents of an opinion of counsel (which counsel shall be reasonably
satisfactory to Agents) under the laws of each jurisdiction in which any
Loan Party or any personal or mixed property Collateral is located with
respect to the creation and perfection of the security interests in favor
of Administrative Agent in such Collateral and such other matters governed
by the laws of such jurisdiction regarding such security interests as
Agents may reasonably request, in each case in form and substance
reasonably satisfactory to Agents.
K. ENVIRONMENTAL REPORTS. Agents shall have received any existing reports
and other information, in form, scope and substance satisfactory to Agents,
regarding environmental matters relating to Company and its Subsidiaries and the
Facilities.
L. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Closing Date, Lenders shall have received from Company (i) audited financial
statements of Company and its Subsidiaries for Fiscal Years 1994, 1995 and 1996,
and of Lil' Champ and its Subsidiaries for fiscal years ended on December 31,
1994, December 30, 1995 and December 28, 1996, in each case consisting of
balance sheets and the related consolidated and consolidating statements of
income, stockholders' equity and cash flows for such periods, (ii) unaudited
financial statements of Company and its Subsidiaries as at June 26, 1997, and
unaudited financial statements of Lil' Champ and its Subsidiaries as at June 28,
76
1997, in each case consisting of a balance sheet and the related consolidated
and consolidating statements of income, stockholders' equity and cash flows for
the 9-month period and 6-month period, respectively, ending on such date, all in
reasonable detail and certified by the chief financial officer of Company that
they fairly present the financial condition of Company and its Subsidiaries and
Lil' Champ and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, (iii) pro forma
consolidated and consolidating balance sheets of Company and its Subsidiaries as
at the Closing Date, prepared in accordance with GAAP and reflecting the
consummation of the Lil' Champ Acquisition, the related financings and the other
transactions contemplated by the Loan Documents and the Related Agreements,
which pro forma financial statements shall be substantially consistent with any
financial statements for the same periods delivered to Agents prior to September
30, 1997, and otherwise in form and substance satisfactory to Lenders, and (iv)
projected consolidated and consolidating financial statements of Company and its
Subsidiaries for the five-year period after the Closing Date consisting of
consolidated and consolidating balance sheets and the related consolidated and
consolidating statements of income, shareholders' equity and cash flows, which
projected financial statements shall be substantially consistent with any
projected financial results for the same period delivered to Agents prior to
September 30, 1997 and otherwise in form and substance satisfactory to Agents
and Lenders.
M. SOLVENCY ASSURANCES. On the Closing Date, Agents and Lenders shall
have received a Financial Condition Certificate dated the Closing Date,
substantially in the form of Exhibit XIII annexed hereto and with appropriate
------------
attachments, demonstrating that, after giving effect to the consummation of the
Lil' Champ Acquisition, the related financings and the other transactions
contemplated by the Loan Documents and the Related Agreements, Company will be
Solvent.
N. EVIDENCE OF INSURANCE. Agents shall have received a list of all
insurance policies of Company and its Subsidiaries and a summary of the
coverages provided thereby and a certificate from Company's insurance broker or
other evidence satisfactory to it that all insurance required to be maintained
pursuant to subsection 6.4 is in full force and effect and that Administrative
Agent on behalf of Lenders has been named as additional insured and/or loss
payee thereunder to the extent required under subsection 6.4.
O. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of Riordan & McKinzie, counsel for Loan Parties, in
form and substance reasonably satisfactory to Agents and their counsel, dated as
of the Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit VIII annexed hereto and as to such other matters as Agents
------------
acting on behalf of Lenders may reasonably request and (ii) evidence
satisfactory to Agents that Company has requested such counsel to deliver such
opinions to Lenders.
77
P. OPINIONS OF AGENTS' COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers
LLP, counsel to Agents, dated as of the Closing Date, substantially in the form
of Exhibit IX annexed hereto and as to such other matters as Agents acting on
----------
behalf of Lenders may reasonably request.
Q. OPINIONS OF COUNSEL DELIVERED UNDER RELATED AGREEMENTS. Agents and
their counsel shall have received copies of each of the opinions of counsel
delivered to the parties under the Related Agreements, together with a letter
from each such counsel (to the extent not inconsistent with such counsel's
established internal policies) authorizing Lenders and Agents to rely upon such
opinion to the same extent as though it were addressed to Lenders and Agents.
R. AUDITOR'S LETTER. Agents shall have received an executed Auditor's
Letter.
S. FEES. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Agents, Lenders, CIBC WG and First Union CMC,
the fees payable on the Closing Date referred to in subsection 2.3.
T. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Agents an Officers' Certificate, in form and substance
satisfactory to Agents, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date), that Company
shall have performed in all material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed or satisfied by it
on or before the Closing Date except as otherwise disclosed to and agreed to in
writing by Agents and Requisite Lenders, and, if no Loans are made on the
Closing Date, that all conditions precedent described in subsection 4.2C have
been satisfied to the same extent as if the Existing Letters of Credit becoming
Letters of Credit under this Agreement were the making of a Loan and the date of
the Existing Letters of Credit becoming Letters of Credit under this Agreement
were a Funding Date.
U. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agents, acting
on behalf of Lenders, and their counsel shall be satisfactory in form and
substance to Agents and such counsel, and Agents and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agents may reasonably request.
78
4.2 CONDITIONS TO ALL LOANS.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer of Company or by any
executive officer of Company designated by any of the above-described officers
on behalf of Company in a writing delivered to Administrative Agent.
B. The Existing Letters of Credit shall have become Letters of
Credit under this Agreement.
C. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Each Loan Party shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in
79
writing pursuant to subsection 5.6 or 6.1(x) prior to the making of the
last preceding Loans (or, in the case of the initial Loans, prior to the
execution of this Agreement), and there shall have occurred no development
not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in the
opinion of Administrative Agent or of Requisite Lenders, would be expected
to have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of,
the transactions contemplated by this Agreement or the making of Loans
hereunder.
4.3 CONDITIONS TO LETTERS OF CREDIT.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as the
applicable Issuing Lender may reasonably require in connection with the issuance
of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2C shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lenders to issue Letters of Credit and to induce other
Lenders to purchase participations therein, Company represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit, that the following statements are true,
correct and complete:
80
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
----------------------------------------------------------------
SUBSIDIARIES.
------------
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
------------
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and Related Agreements to which it
is a party and to carry out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Restricted Subsidiaries are
engaged only in the businesses permitted to be engaged in pursuant to subsection
7.13.
D. SUBSIDIARIES. All of the Subsidiaries of Company as of the Closing
Date are identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
------------ ------------
supplemented from time to time pursuant to the provisions of subsection
6.1(xvi). The capital stock of each of the Subsidiaries of Company identified
in Schedule 5.1 annexed hereto is duly authorized, validly issued, fully paid
------------
and nonassessable and none of such capital stock constitutes Margin Stock. Each
of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto is a
------------
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation set forth therein, has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing or a lack of such corporate power and authority has not had and will
not have a Material Adverse Effect. Schedule 5.1 annexed hereto correctly sets
------------
forth for Company and each of its Subsidiaries (i) the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries of Company
identified therein, (ii) the jurisdiction of incorporation of Company and each
such Subsidiary, (iii) the number of issued and outstanding shares of capital
stock of each such Subsidiary and the owners thereof, and (iv) as of the Closing
Date, the number of issued and outstanding shares of capital stock of Company
and the owners thereof. As of the Closing Date, the fair market value of the
aggregate amount of assets of the Unrestricted Subsidiaries does not exceed
$1,500,000 and there exists no Indebtedness nor Contingent Obligations of the
Unrestricted Subsidiaries owed to Company or any of its Restricted Subsidiaries
or for which Company or any of its Restricted Subsidiaries is or may become
liable.
81
5.2 AUTHORIZATION OF BORROWING, ETC.
-------------------------------
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. NO CONFLICT. The execution, delivery and performance by Loan Parties
of the Loan Documents and the Related Agreements to which they are parties and
the consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of
Administrative Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.
D. BINDING OBLIGATION. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. VALID ISSUANCE OF COMPANY CAPITAL STOCK, SENIOR SUBORDINATED NOTES AND
SENIOR NOTES.
(i) Company Capital Stock. The Company Capital Stock to be sold on
---------------------
or before the Closing Date, when issued and delivered, will be duly and validly
issued, fully paid and nonassessable. Except as set forth in the Stockholders
Agreement, no stockholder of Company has or will have any preemptive rights to
subscribe for any
82
additional equity Securities of Company. The issuance and sale of such Company
Capital Stock, upon such issuance and sale, will either (a) have been registered
or qualified under applicable federal and state securities laws or (b) be exempt
therefrom.
(ii) Senior Subordinated Notes. Company has the corporate power and
-------------------------
authority to issue the Senior Subordinated Notes. The Senior Subordinated
Notes, when issued and paid for, will be the legally valid and binding
obligations of Company, enforceable against Company in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability. The
subordination provisions of the Senior Subordinated Notes will be enforceable
against the holders thereof and the Loans and all other monetary Obligations
hereunder are and will be within the definition of "Senior Indebtedness"
included in such provisions. The Senior Subordinated Notes, when issued and
sold, will either (a) have been registered or qualified under applicable federal
and state securities laws or (b) be exempt therefrom.
(iii) Senior Notes. The Senior Notes are the legally valid and binding
------------
obligations of Company, enforceable against Company in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability. The
Senior Notes are either (a) registered or qualified under applicable federal and
state securities laws or (b) exempt therefrom.
5.3 FINANCIAL CONDITION.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheet of Company and its Subsidiaries as at September 26, 1996 and the
related consolidated statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for the Fiscal Year then ended, (ii) the audited
consolidated balance sheet of Lil' Champ and its Subsidiaries as at December 28,
1996 and the related consolidated statements of income, stockholders' equity and
cash flows of Lil' Champ and its Subsidiaries for the fiscal year then ended and
(iii) the unaudited consolidated balance sheets of Company and its Subsidiaries
as at June 26, 1997 and the unaudited consolidated balance sheets of Lil' Champ
and its Subsidiaries, each as at June 28, 1997, and the related unaudited
consolidated statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries and of Lil' Champ and its Subsidiaries for the 9
months then ended and the 6 months then ended, respectively. All such
statements were prepared in conformity with GAAP and fairly present, in all
material respects, the financial position (on a consolidated basis) of the
entities described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a consolidated basis)
of the entities described therein for each of the periods then ended, subject,
in the case of any such unaudited financial statements, to changes resulting
from audit and normal year-end adjustments and the absence of footnotes. None
of Company, Lil' Champ nor any of their
83
respective Subsidiaries has (and will not following the Closing Date have) any
Contingent Obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that is not reflected in the
foregoing financial statements or the notes thereto and which in any such case
is material and adverse in relation to the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company, Lil' Champ
and their respective Subsidiaries, taken as a whole.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
---------------------------------------------------------
Since September 26, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
5.5 TITLE TO PROPERTIES; LIENS; REAL PROPERTY.
-----------------------------------------
A. TITLE TO PROPERTIES; LIENS. Upon consummation of the Lil' Champ
Acquisition, Company and its Subsidiaries will have (i) good, sufficient and
legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of their respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent financial
statements delivered pursuant to subsection 6.1, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
B. REAL PROPERTY. As of the Closing Date, Schedule 5.5 annexed
------------
hereto contains a true, accurate and complete list of (i) all fee properties and
(ii) all leases, subleases or assignments of leases (together with all
amendments, modifications, supplements, renewals or extensions of any thereof)
affecting each Real Property Asset of any Loan Party, regardless of whether such
Loan Party is the landlord or tenant (whether directly or as an assignee or
successor in interest) under such lease, sublease or assignment. Except as
specified in Schedule 5.5 annexed hereto, each agreement listed in clause (ii)
------------
of the immediately preceding sentence is in full force and effect and Company
does not have knowledge of any default that has occurred and is continuing
thereunder which, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect, and each such agreement constitutes the
legally valid and binding obligation of each applicable Loan Party, enforceable
against such Loan Party in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles.
84
5.6 LITIGATION; ADVERSE FACTS.
-------------------------
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Company or any of its
Subsidiaries) at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign (including any Environmental Claims) that
are pending or, to the knowledge of Company, threatened against or affecting
Company or any of its Subsidiaries or any property of Company or any of its
Subsidiaries and that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither Company nor any of its
Subsidiaries (i) is in violation of any applicable laws (including Environmental
Laws) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, or (ii) is subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
----------------
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid prior to delinquency.
Company knows of no proposed tax assessment against Company or any of its
Subsidiaries which is not being actively contested by Company or such Subsidiary
in good faith and by appropriate proceedings; provided that such reserves or
--------
other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
------------------------------------------------------------------
CONTRACTS.
---------
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal
85
restrictions which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
C. All Material Contracts are in full force and effect and no
material defaults currently exist thereunder.
5.9 GOVERNMENTAL REGULATION.
-----------------------
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 SECURITIES ACTIVITIES.
---------------------
A. Neither Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 EMPLOYEE BENEFIT PLANS.
----------------------
A. Company, each of its Subsidiaries and each of their respective
ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their obligations under each Employee Benefit Plan. Each Employee Benefit Plan
which is intended to qualify under Section 401(a) of the Internal Revenue Code
is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
-------------
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of Company, any of
its Subsidiaries or any of their respective ERISA Affiliates.
86
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $1,000,000.
E. As of the most recent valuation date for each Multiemployer Plan
for which the actuarial report is available, the potential liability of Company,
its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $1,000,000.
5.12 CERTAIN FEES.
------------
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
------------------------
Except as set forth in Schedule 5.13 annexed hereto:
-------------
(i) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to (a)
any Environmental Law, (b) any Environmental Claim, or (c) any Hazardous
Materials Activity that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(ii) neither Company nor any of its Subsidiaries has received any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9604) or
any comparable state law;
(iii) there are and, to Company's knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be
expected to form the basis of an Environmental Claim against Company or any of
its Subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
87
(iv) Company maintains an environmental management system for its and
each of its Subsidiaries' operations that demonstrates a commitment to
environmental compliance and includes procedures for (a) preparing and updating
written compliance manuals covering pertinent regulatory areas, (b) tracking
changes in applicable Environmental Laws and modifying operations to comply with
new requirements thereunder, (c) training employees to comply with applicable
environmental requirements and updating such training as necessary, (d)
performing regular internal compliance audits of each Facility and ensuring
correction of any incidents of non-compliance detected by means of such audits,
and (e) reviewing the compliance status of off-site waste disposal facilities;
(v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not, individually or
in the aggregate, have a reasonable possibility of giving rise to a Material
Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition has occurred or is occurring with respect to Company or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 5.13 annexed hereto, which individually or in the aggregate has had
-------------
or could reasonably be expected to have a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
----------------
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
--------
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
5.16 MATTERS RELATING TO COLLATERAL.
------------------------------
A. CREATION, PERFECTION AND PRIORITY OF LIENs. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1I, 4.1J,
6.8, 6.9 and 7.7(vi) and the filing of any UCC financing statements and PTO
filings delivered to Administrative Agent for filing (but not yet filed) and the
recording of any Closing Date Mortgages delivered to Administrative Agent for
recording (but not yet recorded), and (ii) the delivery to Administrative Agent
of any Pledged Collateral not delivered to Administrative Agent at the time of
execution and delivery of the applicable Collateral Document (all of which
88
Pledged Collateral has been so delivered) are effective to create in favor of
Administrative Agent for the benefit of Lenders, as security for the respective
Secured Obligations (as defined in the applicable Collateral Document in respect
of any Collateral), a valid and perfected First Priority Lien on all of the
Collateral, and all filings and other actions necessary or desirable to perfect
and maintain the perfection and First Priority status of such Liens have been
duly made or taken and remain in full force and effect, other than the filing of
any UCC financing statements and PTO filings delivered to Administrative Agent
for filing (but not yet filed) and the recording of any Closing Date Mortgages
delivered to Administrative Agent for recording (but not yet recorded) and the
periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A and except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been filed
in favor of Administrative Agent as contemplated by subsection 5.16A or except
as such may constitute Permitted Encumbrances, (i) no effective UCC financing
statement, fixture filing or other instrument similar in effect covering all or
any part of the Collateral is on file in any filing or recording office and (ii)
no effective filing covering all or any part of the IP Collateral is on file in
the PTO.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to Agents
by or on behalf of any Loan Party with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.
5.17 RELATED AGREEMENTS.
------------------
A. Delivery of Related Agreements. Company has delivered to Lenders
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto. Schedule 5.17 annexed hereto lists all Affiliate Agreements
-------------
as of the
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Closing Date. Except as set forth in Schedule 5.17 annexed hereto, none of the
-------------
Related Agreements have been amended, amended and restated, supplemented,
restated or otherwise modified on or before the Closing Date since the date any
such Related Agreement was first entered into.
B. Seller's Warranties. Except to the extent otherwise set forth
herein or in the schedules hereto, to Company's best knowledge, each of the
representations and warranties given by Docks U.S.A., Inc. to PHH or to Company
in the Lil' Champ Stock Purchase Agreement is true and correct in all material
respects as of the date hereof (or as of any earlier date to which such
representation and warranty specifically relates) and will be true and correct
in all material respects as of the Closing Date (or as of such earlier date, as
the case may be), in each case subject to the qualifications set forth in the
schedules to the Lil' Champ Stock Purchase Agreement.
C. Warranties of PHH and Company. Subject to the qualifications set
forth therein, each of the representations and warranties given by PHH or
Company to Docks U.S.A., Inc. in the Lil' Champ Stock Purchase Agreement or the
Assignment and Assumption Agreement is true and correct in all material respects
as of the date hereof and will be true and correct in all material respects as
of the Closing Date.
D. Survival. Notwithstanding anything in the Lil' Champ Stock
Purchase Agreement to the contrary, the representations and warranties of
Company set forth in subsections 5.17B and 5.17C shall, solely for purposes of
this Agreement, survive the Closing Date for the benefit of Lenders.
5.18 DISCLOSURE.
-----------
No representation or warranty of Company or any of its Subsidiaries
contained in the Confidential Information Memorandum or in any Loan Document or
Related Agreement or in any other document, certificate or written statement
furnished to Lenders by or on behalf of Company or any of its Subsidiaries for
use in connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a material fact (known
to Company, in the case of any document not furnished by it) necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time made,
it being recognized by Lenders that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results. There
are no facts known (or which should upon the reasonable exercise of diligence be
known) to Company (other than matters of a general economic nature) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect and that have not been
90
disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
5.19 PERMITS.
-------
Each of the Loan Parties, prior to and after giving effect to the Lil'
Champ Acquisition, the issuance of the Senior Subordinated Notes, the Equity
Investment and the Offer and Consent Solicitation and the related transactions
contemplated by the Loan Documents and the Related Agreements, has such
certificates, permits, licenses, franchises, consents, approvals, authorizations
and clearances that are material to the condition (financial or otherwise),
business or operations of any Loan Party ("PERMITS") and is (and will be
immediately after the consummation of such transactions) in compliance in all
respects with all applicable laws as are necessary to own, lease or operate its
properties and to conduct its businesses in the manner as presently conducted
and to be conducted immediately after the consummation of such transactions
except where failure to be in compliance could not reasonably be expected to
result in a Material Adverse Effect, and all such Permits are valid and in full
force and effect and will be valid and in full force and effect immediately upon
consummation of such transactions except for those where the failure to be valid
or in effect could not reasonably be expected to result in a Material Adverse
Effect. Each of the Loan Parties, prior to and after giving effect to such
transactions, is and will be in compliance in all respects with its obligations
under such Permits except where failure to be in compliance could not reasonably
be expected to result in a Material Adverse Effect, and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination of such Permits except where such revocation or termination could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
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(i) Monthly Financials: as soon as available and in any event within
------------------
30 days after the end of each month ending after the Closing Date, the
consolidated balance sheet of Company and its Subsidiaries as at the end of such
month and the related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for such month and for the period
from the beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding figures
from the Financial Plan for the current Fiscal Year, to the extent prepared on a
monthly basis, all in reasonable detail and certified by the chief financial
officer of Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments;
(ii) Quarterly Financials: as soon as available and in any event
--------------------
within 45 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year and within 90 days after the end of the fourth Fiscal Quarter of
each Fiscal Year, (a) the consolidated and consolidating balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal Quarter
and for the period from the beginning of the then current Fiscal Year to the end
of such Fiscal Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the Financial Plan for the current Fiscal
Year, all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and (b)
a narrative report describing the operations of Company and its Subsidiaries in
the form prepared for presentation to senior management for such Fiscal Quarter
and for the period from the beginning of the then current Fiscal Year to the end
of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event within
-------------------
90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated and consolidating statements of
income, stockholders' equity and cash flows of Company and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and the corresponding figures
from the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief financial
officer of Company that they fairly present, in all material
92
respects, the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for the
periods indicated, (b) a narrative report describing the operations of Company
and its Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) in the case of such consolidated financial
statements, a report thereon of Deloitte & Touche LLP or other independent
certified public accountants of recognized national standing selected by
Company, which report shall be unqualified, shall express no doubts about the
ability of Company and its Subsidiaries to continue as a going concern, and
shall state that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: (a) together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant to
subdivisions (i), (ii) and (iii) above, an Officers' Certificate of Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries during
the accounting period covered by such financial statements and that such review
has not disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the date of
such Officers' Certificate, of any condition or event that constitutes an Event
of Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof and
what action Company has taken, is taking and proposes to take with respect
thereto; and (b) together with each delivery of financial statements of Company
and its Subsidiaries pursuant to subdivisions (ii) and (iii) above, a Compliance
Certificate demonstrating in reasonable detail compliance during and at the end
of the applicable accounting periods with the restrictions contained in Section
7;
(v) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of the
audited financial statements referred to in subsection 5.3, the consolidated
financial statements of Company and its Subsidiaries delivered pursuant to
subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1 will differ in
any material respect from the consolidated financial statements that would have
been delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first delivery of
financial statements pursuant to subdivision (i), (ii), (iii) or (xiii) of this
subsection 6.1 following such change, consolidated
93
financial statements of Company and its Subsidiaries for (y) the current Fiscal
Year to the effective date of such change and (z) the two full Fiscal Years
immediately preceding the Fiscal Year in which such change is made, in each case
prepared on a pro forma basis as if such change had been in effect during such
periods, and (b) together with each delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following such
change, a written statement of the chief accounting officer or chief financial
officer of Company setting forth the differences (including any differences that
would affect any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant to
subdivision (iii) above, a written statement by the independent certified public
accountants giving the report thereon (a) stating that their audit examination
has included a review of the terms of this Agreement and the other Loan
Documents as they relate to accounting matters, (b) stating whether, in
connection with their audit examination, any condition or event that constitutes
an Event of Default or Potential Event of Default has come to their attention
and, if such a condition or event has come to their attention, specifying the
nature and period of existence thereof; provided that such accountants shall not
--------
be liable by reason of any failure to obtain knowledge of any such Event of
Default or Potential Event of Default that would not be disclosed in the course
of their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the matters
set forth in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iv) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in connection
with each annual, interim or special audit of the financial statements of
Company and its Subsidiaries made by such accountants, including any comment
letter submitted by such accountants to management in connection with their
annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by Company to its security holders
or by any Subsidiary of Company to its security holders other than Company or
another Subsidiary of Company, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or
94
with the Securities and Exchange Commission or any governmental or private
regulatory authority, and (c) all press releases and other statements made
available generally by Company or any of its Subsidiaries to the public
concerning material developments in the business of Company or any of its
Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
----------------------
obtaining knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming aware that any Lender has
given any notice (other than to Administrative Agent) or taken any other action
with respect to a claimed Event of Default or Potential Event of Default, (b)
that any Person has given any notice to Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or condition
of the type referred to in subsection 8.2, (c) of any condition or event that
would be required to be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such
Form as in effect on the date hereof) if Company were required to file such
reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice given or
action taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action Company
has taken, is taking and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon any officer of
-------------------------------
Company obtaining knowledge of (X) the institution of, or non-frivolous threat
of, any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
Company or any of its Subsidiaries or any property of Company or any of its
Subsidiaries (collectively, "PROCEEDINGS") not previously disclosed in writing
by Company to Lenders or (Y) any material development in any Proceeding that, in
any case:
(1) if adversely determined, has a reasonable possibility of giving
rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated hereby;
written notice thereof together with such other information as may be reasonably
available to Company to enable Lenders and their counsel to evaluate such
matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of or
------------
forthcoming occurrence of any ERISA Event that could reasonably be expected
95
to result in a material liability, a written notice specifying the nature
thereof, what action Company, any of its Subsidiaries or any of their respective
ERISA Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
-------------
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed
by Company, any of its Subsidiaries or any of their respective ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan; (b) all
notices received by Company, any of its Subsidiaries or any of their respective
ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event
that could reasonably be expected to result in a material liability; and (c)
copies of such other documents or governmental reports or filings relating to
any Employee Benefit Plan as Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days after the beginning of each Fiscal Year, a consolidated plan
and financial forecast for such Fiscal Year (the "FINANCIAL PLAN" for such
Fiscal Year), including (a) forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of Company and its Subsidiaries
for such Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, and (b) such other information and projections as any
Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained as of
the date of such report by Company and its Restricted Subsidiaries and all
material insurance coverage planned to be maintained by Company and its
Restricted Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written notice of
------------------
any change in the Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a Subsidiary
----------------
of Company, a written notice setting forth with respect to such Person (a) the
date on which such Person became a Subsidiary of Company and (b) all of the data
required to be set forth in Schedule 5.1 annexed hereto with respect to all
------------
Subsidiaries of Company (it being understood that such written notice shall be
deemed to supplement Schedule 5.1 annexed hereto for all purposes of this
------------
Agreement);
96
(xvii) Material Contracts: promptly, and in any event within ten
------------------
Business Days after any Material Contract of Company or any of its Restricted
Subsidiaries is terminated or amended in a manner that is materially adverse to
Company or such Restricted Subsidiary, as the case may be, a written statement
describing such event with copies of such material amendments, and an
explanation of any actions being taken with respect thereto;
(xviii) UCC Search Report: as promptly as practicable after the date of
-----------------
delivery to Administrative Agent of any UCC financing statement executed by any
Loan Party pursuant to subsection 4.1J(iv), 6.8A or 7.7(vi), copies of completed
UCC searches evidencing the proper filing, recording and indexing of all such
UCC financing statement and listing all other effective financing statements
that name such Loan Party as debtor, together with copies of all such other
financing statements not previously delivered to Administrative Agent by or on
behalf of Company or such Loan Party;
(xix) Margin Determination Certificate: concurrently with the delivery
--------------------------------
of the financial statements required under subsections 6.1(ii) and 6.1(iii),
Company shall deliver a Margin Determination Certificate; and
(xx) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as from
time to time may be reasonably requested by any Lender through Administrative
Agent.
6.2 CORPORATE EXISTENCE, ETC.
------------------------
Except as permitted under subsection 7.7, Company will, and will cause
each of its Restricted Subsidiaries to, at all times preserve and keep in full
force and effect its corporate existence and all rights and franchises material
to its business; provided, however that neither Company nor any of its
-------- -------
Restricted Subsidiaries shall be required to preserve any such right or
franchise if the Board of Directors of Company or such Restricted Subsidiary
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Company or such Restricted Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any material respect
to Company, such Restricted Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
----------------------------------------------
A. Company will, and will cause each of its Restricted Subsidiaries
to, pay all taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any penalty accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become
97
a Lien upon any of its properties or assets, prior to the time when any penalty
or fine shall be incurred with respect thereto; provided that no such charge or
--------
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (1) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (2) in the case of a
charge or claim which has or may become a Lien against any of the Collateral,
such contest proceedings conclusively operate to stay the sale of any portion of
the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET ASSET SALE
--------------------------------------------------------------------
PROCEEDS.
--------
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each of
its Restricted Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of Company and its Restricted
Subsidiaries (including all Intellectual Property) and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof.
B. INSURANCE. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Restricted Subsidiaries as
may customarily be carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses, in each
case in such amounts (giving effect to self-insurance), with such deductibles,
covering such risks and otherwise on such terms and conditions as shall be
customary for corporations similarly situated in the industry. Without limiting
the generality of the foregoing, Company will maintain or cause to be maintained
(i) flood insurance with respect to each Flood Hazard Property that is located
in a community that participates in the National Flood Insurance Program, in
each case in compliance with any applicable regulations of the Board of
Governors of the Federal Reserve System, and (ii) replacement value casualty
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts, with such deductibles, and covering such
risks as are at all times satisfactory to Administrative Agent in its
commercially reasonable judgment. Each such policy of insurance shall (a) name
Administrative Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Administrative Agent, that
names Administrative Agent for the benefit of Lenders as the loss payee
thereunder
98
for any covered loss in excess of $1,000,000 and provides for at least 30 days
prior written notice to Administrative Agent of any modification or cancellation
of such policy.
C. Application of Certain Net Asset Sale Proceeds.
(i) Business Interruption Insurance. Upon receipt by Company or any of
-------------------------------
its Restricted Subsidiaries of any business interruption insurance proceeds
constituting Net Asset Sale Proceeds, (a) so long as no Event of Default shall
have occurred and be continuing, Company or such Restricted Subsidiary may
retain such Net Asset Sale Proceeds, and (b) if an Event of Default shall have
occurred and be continuing, Company shall apply an amount equal to such Net
Asset Sale Proceeds to prepay the Loans (and/or the Revolving Loan Commitments
and/or the Acquisition Term Loan Commitments shall be reduced) as provided in
subsection 2.4B(iii)(a);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by Company
----------------------------------------
or any of its Restricted Subsidiaries of any insurance proceeds other than from
business interruption insurance, (a) so long as no Event of Default shall have
occurred and be continuing, Company shall, or shall cause one or more of its
Restricted Subsidiaries to, promptly and diligently apply such Net Asset Sale
Proceeds to pay or reimburse the costs of repairing, restoring or replacing the
assets in respect of which such Net Asset Sale Proceeds were received or, to the
extent not so applied or in the process of being so applied, to prepay the Loans
(and/or the Revolving Loan Commitments and/or the Acquisition Term Loan
Commitments shall be reduced) as provided in subsection 2.4B(iii)(a); provided
--------
that if the aggregate amount of Net Asset Sale Proceeds received by Company or
any of its Restricted Subsidiaries in respect of any covered loss exceeds
$10,000,000, Company shall deliver such Net Asset Sale Proceeds to
Administrative Agent to be held and disbursed by Administrative Agent in
accordance with clause (b)(2) of subsection 6.4(C)(iii), and (b) if an Event of
Default shall have occurred and be continuing, Company shall apply an amount
equal to such Net Asset Sale Proceeds to prepay the Loans (and/or the Revolving
Loan Commitments and/or the Acquisition Term Loan Commitments shall be reduced)
as provided in subsection 2.4B(iii)(a). In the event that after receipt of any
such insurance proceeds an Event of Default occurs, then so long as such Event
of Default is continuing, Company shall cease using such Net Asset Sale Proceeds
to pay or reimburse the costs of repairing, restoring or replacing any such
assets and, in the event that such Event of Default is not cured or waived
within 15 days after the occurrence thereof, Company shall apply an amount equal
to such unexpended Net Asset Sale Proceeds to prepay the Loans (and/or the
Revolving Loan Commitments and/or the Acquisition Term Loan Commitments shall be
reduced) as provided in subsection 2.4B(iii)(a).
99
(iii) Net Asset Sale Proceeds Received by Administrative Agent. Upon
--------------------------------------------------------
receipt by Administrative Agent of any Net Asset Sale Proceeds as loss payee,
(a) if and to the extent Company would have been required to apply such Net
Asset Sale Proceeds (if it had received them directly) to prepay the Loans
and/or reduce the Revolving Loan Commitments and/or reduce the Acquisition Term
Loan Commitments, Administrative Agent shall, and Company hereby authorizes
Administrative Agent to, apply such Net Asset Sale Proceeds to prepay the Loans
(and/or the Revolving Loan Commitments and/or the Acquisition Term Loan
Commitments shall be reduced) as provided in subsection 2.4B(iii)(a), and (b) to
the extent the foregoing clause (a) does not apply and (1) the aggregate amount
of such Net Asset Sale Proceeds received (and reasonably expected to be
received) by Administrative Agent in respect of any covered loss does not exceed
$10,000,000, Administrative Agent shall deliver such Net Asset Sale Proceeds to
Company, and Company shall, or shall cause one or more of its Restricted
Subsidiaries to, promptly apply such Net Asset Sale Proceeds to the costs of
repairing, restoring, or replacing the assets in respect of which such Net Asset
Sale Proceeds were received, and (2) if the aggregate amount of Net Asset Sale
Proceeds received (and reasonably expected to be received) by Administrative
Agent in respect of any covered loss exceeds $10,000,000, Administrative Agent
shall hold such Net Asset Sale Proceeds pursuant to the terms of the Collateral
Account Agreement and, so long as Company or any of its Restricted Subsidiaries
proceeds diligently to repair, restore or replace the assets of Company or such
Restricted Subsidiary in respect of which such Net Asset Sale Proceeds were
received, Administrative Agent shall from time to time disburse to Company or
such Restricted Subsidiary from the Collateral Account, to the extent of any
such Net Asset Sale Proceeds remaining therein in respect of the applicable
covered loss, amounts necessary to pay the cost of such repair, restoration or
replacement after the receipt by Administrative Agent of invoices or other
documentation reasonably satisfactory to Administrative Agent relating to the
amount of costs so incurred and the work performed (including, if required by
Administrative Agent, lien releases and architects' certificates). In the event
that after receipt of any such insurance proceeds an Event of Default occurs,
then so long as such Event of Default is continuing, Administrative Agent shall
cease using such Net Asset Sale Proceeds to pay or reimburse Company for the
costs of repairing, restoring or replacing any such assets and, in the event
that such Event of Default is not cured or waived within 15 days after the
occurrence thereof, Administrative Agent shall, and Company hereby authorizes
Administrative Agent to, apply an amount equal to such unexpended Net Asset Sale
Proceeds to prepay the Loans (and/or the Revolving Loan Commitments and/or the
Acquisition Term Loan Commitments shall be reduced) as provided in subsection
2.4B(iii)(a).
6.5 INSPECTION RIGHTS; LENDER MEETING.
---------------------------------
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Restricted Subsidiaries to, permit any authorized representatives designated by
any Lender
100
to visit and inspect any of the properties of Company or of any of its
Restricted Subsidiaries, to inspect, copy and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. LENDER MEETING. Company will, upon the request of Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Company's corporate offices
(or at such other location as may be agreed to by Company and Administrative
Agent) at such time as may be agreed to by Company and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
-------------------------
Company shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority (including all
Environmental Laws), noncompliance with which could reasonably be expected to
cause, individually or in the aggregate, a Material Adverse Effect.
6.7 ENVIRONMENTAL REVIEW AND INVESTIGATION, DISCLOSURE, ETC.; COMPANY'S ACTIONS
---------------------------------------------------------------------------
REGARDING HAZARDOUS MATERIALS ACTIVITIES, ENVIRONMENTAL CLAIMS AND
------------------------------------------------------------------
VIOLATIONS OF ENVIRONMENTAL LAWS.
--------------------------------
A. ENVIRONMENTAL REVIEW AND INVESTIGATION. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company and (ii) in the event (a)
Administrative Agent reasonably believes that Company has breached any
representation, warranty or covenant contained in subsection 5.6, 5.13, 6.6 or
6.7 or that there has been a material violation of Environmental Laws at any
Facility or by Company or any of its Restricted Subsidiaries at any other
location or (b) an Event of Default has occurred and is continuing, subject to
the terms of any applicable lease, conduct its own investigation of any
Facility; provided that, in the case of any Facility no longer owned, leased,
--------
operated or used by Company or any of its Restricted Subsidiaries, Company shall
only be obligated to use its best efforts to obtain permission for
Administrative Agent's professional consultant to conduct an investigation of
such Facility. For purposes of conducting such a review and/or investigation,
subject to the terms of any applicable lease, Company hereby grants to
Administrative Agent and its agents, employees, consultants and contractors the
right to enter into or onto any Facilities currently owned, leased, operated or
used by Company or any of its Restricted Subsidiaries and to perform such tests
on such property (including taking samples of soil, groundwater
101
and suspected asbestos-containing materials) as are reasonably necessary in
connection therewith. Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Company and Administrative Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause any
damage or loss to any property at such Facility. Company and Administrative
Agent hereby acknowledge and agree that any report of any investigation
conducted at the request of Administrative Agent pursuant to this subsection
6.7A will be obtained and shall be used by Administrative Agent and Lenders for
the purposes of Lenders' internal credit decisions, to monitor and police the
Loans and to protect Lenders' security interests, if any, created by the Loan
Documents. Administrative Agent agrees to deliver a copy of any such report to
Company with the understanding that Company acknowledges and agrees that (x) it
will indemnify and hold harmless Administrative Agent and each Lender from any
costs, losses or liabilities relating to Company's use of or reliance on such
report, (y) neither Administrative Agent nor any Lender makes any representation
or warranty with respect to such report, and (z) by delivering such report to
Company, neither Administrative Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
B. Environmental Disclosure. Company will deliver to Administrative
Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable following
--------------------------------
receipt thereof, copies of all environmental audits, investigations, analyses
and reports of any kind or character, whether prepared by personnel of Company
or any of its Subsidiaries or by independent consultants, governmental
authorities or any other Persons, with respect to significant environmental
matters at any Facility which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or with respect to
any Environmental Claims which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon
-------------------------------------------------
the occurrence thereof, written notice describing in reasonable detail (a) any
Release required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws the existence of which
has a reasonable possibility of resulting in one or more Environmental Claims
having, individually or in the aggregate, a Material Adverse Effect, and (b) any
remedial action taken by Company or any other Person in response to (1) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, have a reasonable
possibility of resulting in a Material Adverse Effect.
102
(iii) Written Communications Regarding Environmental Claims, Releases,
----------------------------------------------------------------
Etc. As soon as practicable following the sending or receipt thereof by Company
- ---
or any of its Subsidiaries, a copy of any and all written communications with
respect to (a) any Environmental Claims that, individually or in the aggregate,
have a reasonable possibility of giving rise to a Material Adverse Effect, (b)
any Release required to be reported to any federal, state or local governmental
or regulatory agency the existence of which has a reasonable possibility of
resulting in one or more Environmental Claims having, individually or in the
aggregate, a Material Adverse Effect, and (c) any request for information from
any governmental agency that suggests such agency is investigating whether
Company or any of its Restricted Subsidiaries may be potentially responsible for
any Hazardous Materials Activity that, individually or in the aggregate, have a
reasonable possibility of giving rise to a Material Adverse Effect.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
--------------------------------------------------------------
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to (1) expose Company or any of its
Subsidiaries to, or result in, Environmental Claims that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
(2) affect the ability of Company or any of its Restricted Subsidiaries to
maintain in full force and effect all material Governmental Authorizations
required under any Environmental Laws for their respective operations and (b)
any proposed action to be taken by Company or any of its Restricted Subsidiaries
to modify current operations in a manner that could reasonably be expected to
subject Company or any of its Restricted Subsidiaries to any material additional
obligations or requirements under any Environmental Laws.
(v) Other Information. With reasonable promptness, such other documents
-----------------
and information as from time to time may be reasonably requested by
Administrative Agent in relation to any matters disclosed pursuant to this
subsection 6.7.
C. COMPANY'S ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES,
ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS.
(i) Remedial Actions Relating to Hazardous Materials Activities.
-----------------------------------------------------------
Company shall, to the extent required by law, promptly undertake, and shall
cause each of its Restricted Subsidiaries promptly to undertake, any and all
investigations, studies, sampling, testing, abatement, cleanup, removal,
remediation or other response actions necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity on, under or about any Facility that
is in violation of any Environmental Laws. In the event Company or any of its
Restricted Subsidiaries undertakes any such action with respect to any Hazardous
Materials, Company or
103
such Restricted Subsidiary shall conduct and complete such action in compliance
with all applicable Environmental Laws and in accordance with the policies,
orders and directives of all federal, state and local governmental authorities
except when, and only to the extent that, Company's or such Restricted
Subsidiary's liability with respect to such Hazardous Materials Activity is
being contested in good faith by Company or such Restricted Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
--------------------------------------------------------------
Environmental Laws. Company shall promptly take, and shall cause each of its
- ------------------
Subsidiaries promptly to take, any and all actions necessary to (i) cure any
material violation of applicable Environmental Laws by Company or its Restricted
Subsidiaries except when, and only to the extent that, Company's or such
Restricted Subsidiary's liability with respect to such Hazardous Materials
Activity is being contested in good faith by Company or such Restricted
Subsidiary and (ii) make an appropriate response to any Environmental Claim
against Company or any of its Subsidiaries and discharge any obligations it may
have to any Person thereunder where failure to do so could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
6.8 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL DOCUMENTS
---------------------------------------------------------------------------
BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
-----------------------------------------------
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS. In the event that any Person becomes a Subsidiary of Company after
the date hereof, Company will promptly notify Administrative Agent of that fact
and cause such Subsidiary to execute and deliver to Administrative Agent if so
requested by Administrative Agent, within 30 days after such Person becomes a
Subsidiary, or if no earlier request is made by Administrative Agent, within six
months after such Person becomes a Subsidiary, a counterpart of the Subsidiary
Guaranty and a Subsidiary Pledge Agreement, a Subsidiary Security Agreement and
a Subsidiary Trademark Security Agreement and to take all such further actions
and execute all such further documents and instruments (including actions,
documents and instruments comparable to those described in subsection 4.1J) as
may be necessary or, in the opinion of Administrative Agent, desirable to create
in favor of Administrative Agent, for the benefit of Lenders, a valid and
perfected First Priority Lien on all of the personal and mixed property assets
of such Subsidiary described in the applicable forms of Collateral Documents.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority
104
of each of such jurisdictions, each to be dated a recent date prior to their
delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant secretary as of a recent
date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the fact that the attached resolutions of the Board of Directors of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Administrative Agent and its
counsel, as to (a) the due organization and good standing of such Subsidiary,
(b) the due authorization, execution and delivery by such Subsidiary of such
Loan Documents, (c) the enforceability of such Loan Documents against such
Subsidiary, (d) such other matters (including matters relating to the creation
and perfection of Liens in any Collateral pursuant to such Loan Documents) as
Administrative Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Administrative Agent and its counsel.
6.9 MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL.
-------------------------------------------------------
From and after the Closing Date, in the event that (i) Company or any
Subsidiary Guarantor acquires any fee interest in real property or (ii) at the
time any Person becomes a Subsidiary Guarantor, such Person owns or holds any
fee interest in real property, in either case excluding (a) any such Real
Property Asset the encumbrancing of which requires the consent of any applicable
then-existing senior lienholder, where Company and its Subsidiaries are unable
to obtain such senior lienholder's consent or (b) so long as no Event of Default
shall have occurred and be continuing, any such Real Property Asset that Company
or such Subsidiary Guarantor intends to sell and lease back (and does sell and
lease back) in accordance with subsection 7.9 within 270 days of the date of
acquisition of such Real Property Asset or the date such Person becomes a
Subsidiary Guarantor, as the case may be (any such non-excluded Real Property
Asset described in the foregoing clause (i) or (ii) being an "ADDITIONAL
MORTGAGED PROPERTY"), Company will promptly notify Administrative Agent of that
fact and Company or such Subsidiary Guarantor shall deliver to Administrative
Agent, if requested by Administrative Agent, within 30 days after such Person
acquires such Additional Mortgaged Property or becomes a Subsidiary Guarantor
or, in the case of any such Real Property Asset which was excluded from being an
Additional Mortgaged Property pursuant to clause (b) above, and which was not
sold and leased back within the applicable 270-day period, within 30 days of the
expiration of such 270-day period, or if no earlier request is made by
Administrative Agent, within six months after such Person acquires such
Additional Mortgaged Property or becomes a Subsidiary Guarantor or within six
months after the expiration of the applicable 270-day period, as the case may
be, the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage (an
-------------------
"ADDITIONAL MORTGAGE"), duly recorded in all appropriate places in all
applicable
105
jurisdictions, encumbering the interest of such Loan Party in such Additional
Mortgaged Property;
(ii) Opinions of Counsel. Unless otherwise approved by Administrative
-------------------
Agent, with respect to each Additional Mortgaged Property with a fair market
value of $2,500,000 or more or which Additional Mortgaged Property is located in
a jurisdiction as to which Lenders have not previously received an opinion as to
the enforceability of the form of Mortgage to be placed on such Additional
Mortgaged Property, (a) a favorable opinion of counsel to such Loan Party, in
form and substance satisfactory to Administrative Agent and its counsel, as to
the due authorization, execution and delivery by such Loan Party of such
Additional Mortgage and such other matters as Administrative Agent may
reasonably request, and (b) an opinion of counsel (which counsel shall be
reasonably satisfactory to Administrative Agent) in the state in which such
Additional Mortgaged Property is located with respect to the enforceability of
the form of Additional Mortgage to be recorded in such states and such other
matters (including any matters governed by the laws of such state regarding
personal property security interests in respect of any Collateral) as
Administrative Agent may reasonably request, in each case in form and substance
reasonably satisfactory to Administrative Agent;
(iii) Title Insurance. Unless otherwise approved by Administrative
---------------
Agent, with respect to each Additional Mortgaged Property with a fair market
value of $2,500,000 or more or if any Loan Party is purchasing title insurance
or is otherwise being provided with title insurance with respect to such
Additional Mortgaged Property, an ALTA mortgagee title insurance policy or an
unconditional commitment therefor (an "ADDITIONAL MORTGAGE POLICY") with respect
to such Additional Mortgaged Property, in an amount satisfactory to
Administrative Agent, insuring fee simple title to such Additional Mortgaged
Property vested in such Loan Party and assuring Administrative Agent that such
Additional Mortgage creates a valid and enforceable First Priority mortgage Lien
on such Additional Mortgaged Property, subject only to a standard survey
exception, which Additional Mortgage Policy (1) shall include an endorsement for
mechanics' liens, for future advances under this Agreement and for any other
matters reasonably requested by Administrative Agent and (2) shall provide for
affirmative insurance and such reinsurance as Administrative Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to Administrative Agent;
(iv) Title Report. Unless otherwise approved by Administrative Agent, a
------------
title report issued by a title company with respect thereto, in form and
substance satisfactory to Administrative Agent, and copies of all recorded
documents listed as exceptions to title or otherwise referred to in such title
report;
(v) Matters Relating to Flood Hazard Properties. (a) Evidence, which
-------------------------------------------
may be in the form of a letter from an insurance broker or a municipal engineer,
as
106
to (1) whether such Additional Mortgaged Property is a Flood Hazard Property and
(2) if so, whether the community in which such Flood Hazard Property is located
is participating in the National Flood Insurance Program, (b) if such Additional
Mortgaged Property is a Flood Hazard Property, such Loan Party's written
acknowledgement of receipt of written notification from Administrative Agent (1)
that such Additional Mortgaged Property is a Flood Hazard Property and (2) as to
whether the community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program, and (c) in the event such
Additional Mortgaged Property is a Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, evidence
that Company has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System; and
(vi) Environmental Audit. Unless otherwise approved by Administrative
-------------------
Agent, reports and other information, in form, scope and substance satisfactory
to Administrative Agent, concerning any environmental hazards or liabilities to
which Company or any of its Subsidiaries may be subject with respect to such
Additional Mortgaged Property.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Restricted Subsidiaries to
perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Restricted Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection 7.4 and,
upon any matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
107
(iii) Company and its Restricted Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases and
Indebtedness incurred in the ordinary course of business to finance the cost of
acquisition or the cost of construction, improvement or remodeling of an asset
used in the business of Company and its Restricted Subsidiaries; provided that
--------
(x) the principal amount of such Indebtedness does not exceed the sum of 100% of
such cost of acquisition plus the reasonable fees and expenses incurred in
connection therewith, (y) any lien or encumbrance securing such Indebtedness is
placed on such asset not more than 270 days after its acquisition or the
completion of construction, improvement or remodeling, as the case may be, and
(z) the aggregate amount of Indebtedness in respect of such Capital Leases and
other Indebtedness does not exceed $30,000,000 at any time outstanding;
(iv) Company may become and remain liable with respect to Indebtedness
to any of its wholly-owned Restricted Subsidiaries, and any wholly-owned
Restricted Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Restricted Subsidiary of
Company; provided that (a) all such intercompany Indebtedness shall be evidenced
--------
by promissory notes, (b) all such intercompany Indebtedness owed by Company to
any of its Restricted Subsidiaries shall be subordinated in right of payment to
the payment in full of the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination agreement, and (c) any payment
by any Restricted Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
--- -----
Indebtedness owed by such Restricted Subsidiary to Company or to any of its
Restricted Subsidiaries for whose benefit such payment is made;
(v) Company and its Restricted Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 7.1 annexed hereto;
------------
(vi) Company may remain liable with respect to (x) Indebtedness
evidenced by the Senior Notes in an aggregate principal amount not to exceed
$49,000,000 and (y) Indebtedness incurred to refinance the then outstanding
aggregate principal amount of such Senior Notes; provided that such refinancing
Indebtedness (a) shall be in an aggregate principal amount not to exceed the
then outstanding aggregate principal amount of such Senior Notes plus the amount
of accrued and unpaid interest thereon; (b) shall not mature earlier than twelve
months after the then-effective Revolving Loan Commitment Termination Date
unless such refinancing Indebtedness is incurred under, and pursuant to the
terms and conditions of, this Agreement; and (c) shall contain such other terms
and conditions as are satisfactory to Requisite Lenders, including without
limitation securing such refinancing Indebtedness on a pari passu basis with the
Indebtedness incurred under this Agreement;
108
(vii) Company may become and remain liable with respect to Indebtedness
evidenced by the Senior Subordinated Notes; provided that the aggregate
--------
principal amount of the Senior Subordinated Notes does not exceed $215,000,000
or, if less, the aggregate principal amount of Senior Subordinated Notes issued
on the Closing Date; and
(viii) Company and its Restricted Subsidiaries may become and remain
liable with respect to other Indebtedness in an aggregate principal amount not
to exceed $5,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
-------------------------
A. Prohibition on Liens. Company shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Restricted Subsidiaries, whether now owned
or hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens granted in connection with any refinancing of the Senior
Notes pursuant to subsection 7.1(vi); provided, however, that (x) Company shall
-------- -------
obtain the prior written consent of Requisite Lenders and such Liens are granted
on terms and conditions satisfactory to Requisite Lenders, and (y) to the extent
that such Liens are on property other than the Collateral, Company shall make or
cause to be made effective provision whereby the Obligations will be secured by
such Liens equally and ratably with such refinancing Indebtedness as long as
such refinancing Indebtedness shall be so secured;
(iv) Liens described in Schedule 7.2 annexed hereto;
------------
(v) Liens securing Indebtedness permitted pursuant to subsection
7.1(iii); and
(vi) Other Liens securing Indebtedness in an aggregate amount not to
exceed $1,000,000 at any time outstanding.
109
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Restricted Subsidiaries shall create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; provided that, notwithstanding the
--------
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, neither Company
nor any of its Restricted Subsidiaries shall enter into any agreement (other
than the Senior Note Indenture, the Senior Subordinated Note Indenture or any
other agreement prohibiting only the creation of Liens securing Subordinated
Indebtedness) prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, Company will not, and will not permit
any of its Restricted Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Restricted Subsidiary to (i) pay dividends or make
any other distributions on any of such Restricted Subsidiary's capital stock
owned by Company or any other Restricted Subsidiary of Company, (ii) repay or
prepay any Indebtedness owed by such Restricted Subsidiary to Company or any
other Restricted Subsidiary of Company, (iii) make loans or advances to Company
or any other Restricted Subsidiary of Company, or (iv) transfer any of its
property or assets to Company or any other Restricted Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
---------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, except:
(i) Company and its Restricted Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company and its Restricted Subsidiaries may continue to own the
Investments owned by them as of the Closing Date, and may make additional
Investments, in any Restricted Subsidiaries of Company;
110
(iii) Company and its Restricted Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iv);
(iv) Company and its Restricted Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(v) Company and its Restricted Subsidiaries may make and own
Investments in connection with Permitted Acquisitions made in accordance with
subsection 7.7(vi); provided that such Investments shall at all times be
--------
Restricted Subsidiaries of Company;
(vi) Company may continue to own the Investments owned by Company in
the Unrestricted Subsidiaries as of the Closing Date and Company may make
additional Investments in the Unrestricted Subsidiaries after the Closing Date
in an aggregate amount not exceeding $4,500,000;
(vii) Company and its Restricted Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
------------
(viii) Company or any of its Restricted Subsidiaries may make loans to
their employees for the purpose of purchasing Capital Stock of Company; provided
--------
that the aggregate amount of such loans shall not exceed $1,000,000 at any time
outstanding; and
(ix) Company and its Restricted Subsidiaries may make and own other
Investments (excluding Interest Agreements or Currency Agreements not
constituting Hedge Agreements) in an aggregate amount not to exceed at any time
$1,000,000.
7.4 CONTINGENT OBLIGATIONS.
----------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Restricted Subsidiaries of Company may become and remain liable
with respect to Contingent Obligations in respect of the Subsidiary Guaranty;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit; provided that no Loan Party shall
--------
have granted any Lien securing obligations (including any reimbursement
obligations) relating to any Existing Letters of Credit (other than pursuant to
the Loan Documents);
111
(iii) Company and its Restricted Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in connection
with Asset Sales or other sales of assets;
(iv) Company and its Restricted Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees in the ordinary
course of business of the obligations of suppliers, customers, franchisees and
licensees of Company and its Restricted Subsidiaries in an aggregate amount not
to exceed at any time $1,000,000;
(v) Company and its Restricted Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule 7.4 annexed
------------
hereto;
(vi) Subsidiary Guarantors may become and remain liable with respect to
Contingent Obligations arising under guaranties of the Senior Notes and the
Senior Subordinated Notes as set forth in and to the extent required under the
Senior Note Indenture and the Senior Subordinated Note Indenture as in effect on
the Closing Date;
(vii) Company may become and remain liable with respect to Contingent
Obligations under guarantees in respect of Capital Leases and Operating Leases
entered into by Company's Restricted Subsidiaries in the ordinary course of
business or under guarantees in respect of obligations of Company's Restricted
Subsidiaries (other than Indebtedness for borrowed money) incurred in the
ordinary course of business; and
(viii) Company and its Restricted Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the maximum
--------
aggregate liability, contingent or otherwise, of Company and its Restricted
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $1,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS; OTHER RESTRICTED PAYMENTS.
-----------------------------------------------------
A. RESTRICTED JUNIOR PAYMENTS. Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, declare, order,
pay, make or set apart any sum for any Restricted Junior Payment; provided that
--------
Company may make regularly scheduled payments of interest (including any
additional interest payable in the event the Company is not in compliance with
its agreements to register the Senior Subordinated Notes under the Securities
Act or effect an exchange offer pursuant to such registration) in respect of the
Senior Subordinated Notes in accordance with the terms of, and only to the
extent required by, and subject to the subordination provisions contained
112
in, the Senior Subordinated Indenture, as such indenture may be amended from
time to time to the extent permitted under subsection 7.14B.
B. OTHER RESTRICTED PAYMENTS. Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, declare, order,
pay, make or set apart any sum for any payment on or with respect to the Senior
Notes; provided that (i) on the Closing Date, Company may purchase an aggregate
--------
principal amount of $51,000,000 of Senior Notes, pay accrued and unpaid interest
thereon and pay tender offer premiums and consent fees related thereto, all as
provided pursuant to the Offer and Consent Solicitation, (ii) Company may make
regularly scheduled payments of interest in respect of the Senior Notes or
refinancing Indebtedness with respect to such Senior Notes incurred pursuant to
subsection 7.1(vi) in accordance with the terms of, and only to the extent
required by, the Senior Notes Indenture or the agreement governing such
refinancing Indebtedness as such indenture or agreement may be amended from time
to time to the extent permitted under subsection 7.14C and (iii) so long as no
Event of Default or Potential Event of Default shall have occurred and be
continuing, Company may redeem an aggregate amount of up to $5,000,000 of
principal amount of the Senior Notes after the Closing Date if after giving
effect to any such redemption and to any Indebtedness incurred to effect such
redemption, there shall be at least $5,000,000 of availability under the
Revolving Loan Commitments.
113
7.6 FINANCIAL COVENANTS.
-------------------
A. Minimum Coverage Ratio. Company shall not permit the ratio of (i)
Consolidated EBITDA plus Consolidated Rental Payments to (ii) Consolidated
----
Interest Expense plus Consolidated Rental Payments, in each case for any
----
consecutive four-Fiscal Quarter period ending during any of the periods set
forth below, to be less than the correlative ratio indicated:
Minimum
Period Coverage Ratio
- --------------------------------------- --------------
Last day of fourth Fiscal Quarter, 1.30:1.00
Fiscal Year 1998, through next to last
day of fourth Fiscal Quarter, Fiscal
Year 1999
Last day of fourth Fiscal Quarter, 1.50:1.00
Fiscal Year 1999, through next to last
day of fourth Fiscal Quarter, Fiscal
Year 2000
Last day of fourth Fiscal Quarter, 1.60:1.00
Fiscal Year 2000, through next to last
day of fourth Fiscal Quarter, Fiscal
Year 2001
Last day of fourth Fiscal Quarter, 1.70:1.00
Fiscal Year 2001, through next to last
day of fourth Fiscal Quarter, Fiscal
Year 2002
Last day of fourth Fiscal Quarter, 1.80:1.00
Fiscal Year 2002, through next to last
day of fourth Fiscal Quarter, Fiscal
Year 2003
114
B. Maximum Consolidated Pro Forma Leverage Ratio. Company shall not
permit the Consolidated Pro Forma Leverage Ratio at any time during any of the
periods set forth below to exceed the correlative ratio indicated:
Maximum
Consolidated Pro
Forma Leverage
Period Ratio
- ---------------------------- ---------
Closing Date through next to 5.00:1.00
last day of third Fiscal
Quarter, Fiscal Year 1999
Last day of third Fiscal 4.75:1.00
Quarter, Fiscal Year 1999
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 1999
Last day of fourth Fiscal 4.50:1.00
Quarter, Fiscal Year 1999
through next to last day of
second Fiscal Quarter,
Fiscal Year 2000
Last day of second Fiscal 4.25:1.00
Quarter, Fiscal Year 2000
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2000
Last day of fourth Fiscal 4.00:1.00
Quarter, Fiscal Year 2000
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2001
Last day of fourth Fiscal 3.75:1.00
Quarter, Fiscal Year 2001
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2002
Last day of fourth Fiscal 3.50:1.00
Quarter, Fiscal Year 2002
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2003
115
C. MiNIMUM CONSOLIDATED PRO FORMA EBITDA. Company shall not permit
Consolidated Pro Forma EBITDA for any consecutive four-Fiscal Quarter period
ending during any of the periods set forth below to be less than the
correlative amount indicated:
Minimum
Consolidated Pro
Period Forma EBITDA
- ---------------------------- ------------
Closing through next to last $48,000,000
day of first Fiscal
Quarter, Fiscal Year 1999
Last day of first Fiscal $49,000,000
Quarter, Fiscal Year 1999
through next to last day of
second Fiscal Quarter,
Fiscal Year 1999
Last day of second Fiscal $50,000,000
Quarter, Fiscal Year 1999
through next to last day of
third Fiscal Quarter,
Fiscal Year 1999
Last day of third Fiscal $52,000,000
Quarter, Fiscal Year 1999
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 1999
Last day of fourth Fiscal $54,000,000
Quarter, Fiscal Year 1999
through next to last day of
first Fiscal Quarter,
Fiscal Year 2000
Last day of first Fiscal $55,000,000
Quarter, Fiscal Year 2000
through next to last day of
second Fiscal Quarter,
Fiscal Year 2000
Last day of second Fiscal $57,000,000
Quarter, Fiscal Year 2000
through next to last day of
third Fiscal Quarter,
Fiscal Year 2000
Last day of third Fiscal $59,000,000
Quarter, Fiscal Year 2000
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2000
Last day of fourth Fiscal $61,000,000
Quarter, Fiscal Year 2000
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2001
Last day of fourth Fiscal $65,000,000
Quarter, Fiscal Year 2001
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2002
Last day of fourth Fiscal $70,000,000
Quarter, Fiscal Year 2002
through next to last day of
fourth Fiscal Quarter,
Fiscal Year 2003
116
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
----------------------------------------------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of its Restricted Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing or shall be caused thereby, (a) any Restricted
Subsidiary of Company may be merged with or into Company or any wholly-owned
Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company or any wholly-owned Subsidiary Guarantor and (b) in
connection with any Permitted Acquisition, Company or any Subsidiary Guarantor
may merge into or consolidate with any other Person or permit any other Person
to merge into or consolidate with it; provided that, in the case of such a
--------
merger, Company or such wholly-owned Subsidiary Guarantor shall be the
continuing or surviving corporation;
(ii) subject to subsection 7.7 (vi), Company and its Restricted
Subsidiaries may make Consolidated Capital Expenditures permitted under
subsection 7.8;
(iii) Company and its Restricted Subsidiaries may dispose of obsolete,
worn out or surplus property in the ordinary course of business;
(iv) Company and its Restricted Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales; provided
--------
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;
(v) subject to subsection 7.12, Company and its Restricted
Subsidiaries may make Asset Sales of assets having a fair market value not in
excess of $10,000,000; provided that (x) the consideration received for such
--------
assets shall be in an amount at least equal to the fair market value thereof;
(y) the sole consideration received shall be cash; and (z) the proceeds of such
Asset Sales shall be applied as required by subsection 2.4B(iii)(a); and
117
(vi) Company or any Restricted Subsidiary of Company may make non-
hostile acquisitions of assets and businesses (including non-hostile
acquisitions of the capital stock or other equity interests of another Person);
provided that:
- --------
(a) immediately prior to and after giving effect to any such
acquisition, Company and its Restricted Subsidiaries shall be in compliance with
the provisions of subsection 7.13 hereof;
(b) such Person becomes a Restricted Subsidiary of Company, or such
business, property or other assets are acquired by Company or a Restricted
Subsidiary of Company;
(c) prior to the consummation of such acquisition, Company shall
deliver to Administrative Agent an Officers' Certificate (1) certifying that no
Potential Event of Default or Event of Default under this Agreement shall then
exist or shall occur as a result of such acquisition, (2) demonstrating that
after giving effect to such acquisition and to all Indebtedness to be incurred
or assumed or repaid in connection with or as consideration for such
acquisition, that Company is in pro forma compliance with the financial
--- -----
covenants referred to in subsection 7.6 for the four consecutive Fiscal Quarter
period ending immediately prior to the date of the proposed acquisition, (3)
delivering a copy, prepared in conformity with GAAP, of (i) financial statements
of the Person or business so acquired for the immediately preceding four
consecutive Fiscal Quarter period corresponding to the calculation period for
the financial covenants in the immediately preceding clause, and (4) delivering
a copy of all environmental reports obtained in connection with such
acquisition, and (ii) if the aggregate consideration paid by Company and its
Restricted Subsidiaries in connection with such proposed acquisition and any
other related series of acquisitions(including without limitation earn outs or
deferred compensation or non-competition arrangements and the amount of
Indebtedness or other liability assumed by Company or any of its Restricted
Subsidiaries) exceeds $20,000,000, then (v) audited financial statements of the
Person or business so acquired for the fiscal year ended within such period and
for the fiscal year immediately preceding such fiscal year, (w) unaudited
interim financial statements (consisting of a balance sheet and statements of
income, stockholders' equity and cash flows) of the Person or business so
acquired for the fiscal periods most recently ended prior to the proposed
acquisition, (x) a pro forma balance sheet of Company and its Subsidiaries as of
--- -----
the date of the proposed acquisition after giving effect thereto, (y) projected
financial statements (including balance sheets and statements of income,
stockholders' equity and cash flows) of Company and its Subsidiaries for the
five-year period after the date of the proposed acquisition after giving effect
thereto,
118
and (z) such other information as Administrative Agent may reasonably
request;
(d) Company shall, and shall cause its Restricted Subsidiaries
to, comply with the requirements of subsections 6.8 and 6.9 with
respect to such acquisitions;
(e) the aggregate consideration paid by Company and its
Restricted Subsidiaries in connection with such proposed acquisition
and any other related series of acquisitions (including without
limitation earn outs or deferred compensation or non-competition
arrangements and the amount of Indebtedness or other liability
assumed by Company or any of its Subsidiaries) shall not exceed
$50,000,000; and
(vii) Company and its Restricted Subsidiaries may make transfers of
any of their properties or assets to another Person in transactions in which 80%
of the consideration received by the transferor consists of properties or assets
(other than Cash) that will be used in the business of the transferor; provided
--------
that (i) the aggregate fair market value (as determined in good faith by the
Board of Directors of Company) of the property or assets being transferred by
Company or such Restricted Subsidiary is not greater than the aggregate fair
market value (as determined in good faith by the Board of Directors of Company),
of the property or assets received by Company or such Restricted Subsidiary in
such exchange and (ii) the aggregate fair market value (as determined in good
faith by the Board of Directors of Company) of all property or assets
transferred by Company and any of its Restricted Subsidiaries in connection with
such exchanges in any Fiscal Year shall not exceed $20,000,000.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
---------------------------------
Company shall not, and shall not permit its Restricted Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated
below, in an aggregate amount in excess of the corresponding amount (the
"MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite
such Fiscal Year; provided that the Maximum Consolidated Capital Expenditures
--------
Amount for any Fiscal Year shall be increased by an amount equal to the excess,
if any, of the Maximum Consolidated Capital Expenditures Amount for the previous
Fiscal Year (prior to any adjustment in accordance with this proviso) over the
actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year; provided, further that in no event shall the amount of such increase
-------- -------
exceed the Maximum Consolidated Capital Expenditures Amount for such previous
Fiscal Year (prior to any adjustment in accordance with this proviso):
119
MAXIMUM
CONSOLIDATED
CAPITAL
PERIOD EXPENDITURES
- ------------------------ ------------
Fiscal Year 1998 $31,000,000
Fiscal Year 1999 $28,000,000
Fiscal Year 2000 and each $27,000,000
Fiscal Year thereafter
7.9 SALES AND LEASE-BACKS.
---------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as
a guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which Company or any of its
Restricted Subsidiaries has sold or transferred or is to sell or transfer to any
other Person (other than Company or any of its Restricted Subsidiaries) or (ii)
which Company or any of its Subsidiaries intends to use for substantially the
same purpose as any other property which has been or is to be sold or
transferred by Company or any of its Restricted Subsidiaries to any Person
(other than Company or any of its Restricted Subsidiaries) in connection with
such lease; provided that Company and its Restricted Subsidiaries may become and
--------
remain liable as lessee, guarantor or other surety with respect to any such
lease to the extent that (i) such lease, if a Capital Lease, is permitted
pursuant to subsection 7.1(iii), (ii) the consideration received is at least
equal to the fair market value of the property sold as determined in good faith
by Company's Board of Directors, (iii) to the extent such sale and lease-back
transaction relates to properties or assets acquired by Company or any of its
Restricted Subsidiaries after the Closing Date, such sale and lease-back
transaction occurs within 270 days of the acquisition or completion of
construction, improvement or remodeling, as the case may be, of such property or
asset by Company or any of its Restricted Subsidiaries, (iv) the aggregate
consideration received for all such sold properties or assets does not exceed
$30,000,000 in the aggregate, (v) the aggregate consideration received in any
Fiscal Year for all such sold properties or assets does not exceed $10,000,000
and (vi) the aggregate consideration received for all such sold properties or
assets which are properties or assets owned by Company and its Restricted
Subsidiaries as of the Closing Date does not exceed $10,000,000 in the
aggregate.
7.10 SALE OR DISCOUNT OF RECEIVABLES.
-------------------------------
120
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its notes or
accounts receivable.
7.11 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
---------------------------------------------
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any holder of 5% or more of any class of
equity Securities of Company or with any Affiliate of Company or of any such
holder (collectively "RELATED PERSONS") on terms that are less favorable to
Company or that Restricted Subsidiary, as the case may be, than those that might
be obtained at the time in an arm's length transaction from Persons who are not
Related Persons; provided that the foregoing restriction shall not apply to (i)
--------
any transaction between Company and any of its wholly-owned Restricted
Subsidiaries or between any of its wholly-owned Restricted Subsidiaries, (ii)
reasonable and customary fees paid to members of the Boards of Directors of
Company, or (iii) Affiliate Agreements relating to any services (including,
without limitation, consulting, management, broker or investment banking
services) to be provided by any of Freeman Spogli, CMC or any of their
respective Affiliates to any Loan Party as in effect on the Closing Date or as
amended from time to time to the extent permitted under subsection 7.14.
7.12 DISPOSAL OF SUBSIDIARY STOCK.
----------------------------
Except for any sale of 100% of the capital stock or other equity
Securities of any of its Restricted Subsidiaries in compliance with the
provisions of subsection 7.7(v), Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any of
its Restricted Subsidiaries, except to qualify directors if required by
applicable law; or
(ii) permit any of its Restricted Subsidiaries directly or indirectly
to sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Restricted Subsidiaries
(including such Restricted Subsidiary), except to Company, another Restricted
Subsidiary of Company, or to qualify directors if required by applicable law.
7.13 CONDUCT OF BUSINESS.
-------------------
From and after the Closing Date, Company shall not, and shall not
permit any of its Restricted Subsidiaries to, engage in any business other than
the businesses engaged in by Company and its Restricted Subsidiaries on the
Closing Date and similar or related businesses.
121
7.14 AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS; AMENDMENTS OF
------------------------------------------------------------------
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS OR THE SENIOR NOTES;
--------------------------------------------------------------------
DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS".
-----------------------------------------------
A. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Neither
Company nor any of its Restricted Subsidiaries will agree to any material
amendment to, or waive any of its material rights under, any Related Agreement
(other than any Related Agreement evidencing or governing the Senior Notes or
refinancing Indebtedness with respect to Senior Notes incurred under subsection
7.1(vi) or any Subordinated Indebtedness) after the Closing Date without in each
case obtaining the prior written consent of Requisite Lenders to such amendment
or waiver.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to
Company or Lenders.
C. AMENDMENTS OF DOCUMENTS RELATING TO SENIOR NOTES. Company shall
not, and shall not permit any of its Restricted Subsidiaries to, amend or
otherwise change the terms of the Senior Notes or refinancing Indebtedness with
respect to such Senior Notes incurred under subsection 7.1(vi) or make any
payment consistent with an amendment thereof or change thereto, if the effect of
such amendment or change is to increase the interest rate on such Senior Notes
or such refinancing Indebtedness (other than as provided for in the Senior Note
Indenture as in effect on the Closing Date or other than as provided for in the
agreement governing such refinancing Indebtedness as in effect on the date of
incurrence thereof), change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Senior Notes or such
122
refinancing Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to Company or Lenders.
D. DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS". Company shall
not designate any Indebtedness as "Designated Senior Indebtedness" (as defined
in the Senior Subordinated Note Indenture) for purposes of the Senior
Subordinated Note Indenture without the prior written consent of Requisite
Lenders.
7.15 FISCAL YEAR.
-----------
No Loan Party shall change its Fiscal Year-end from the last Thursday
in September; provided that Loan Parties may change their Fiscal Year-end once
--------
after giving Administrative Agent not less than 30 days' prior written notice of
such change.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
---------------------------------
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit (it being understood that the payment of such amount
with the proceeds of Revolving Loans in accordance with subsection 3.3B hereof
shall not be a failure by Company to pay when due such amount); or failure by
Company to pay any interest on any Loan or any fee or any other amount due under
this Agreement within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
---------------------------
(i) Failure of Company or any of its Restricted Subsidiaries to pay
when due any principal of or interest on or any other amount payable in respect
of one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1) or Contingent Obligations with an aggregate principal amount of
$5,000,000 or more, in each case beyond the end of any grace period provided
therefor; or (ii) breach or default by Company or any of its Restricted
Subsidiaries with respect to any other material term of (a) one or more items of
Indebtedness or Contingent Obligations in the aggregate principal amounts
referred to in clause (i) above or (b) any loan agreement, mortgage, indenture
or other agreement relating to such item(s) of Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to permit
the holder or holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders)
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to cause, that Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
---------------------------
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
------------------
Any representation, warranty, certification or other statement made by
Company or any of its Restricted Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its Restricted
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
-----------------------------------
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within 30 days after the
earlier of (i) an officer of Company or such Loan Party becoming aware of such
default or (ii) receipt by Company and such Loan Party of notice from any
Administrative Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Restricted Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Restricted Subsidiaries under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Company or any of its
Restricted Subsidiaries, or over all or a substantial part of its property,
shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of Company or any
of its Restricted Subsidiaries for all or a substantial part of its property; or
a warrant of attachment, execution or similar process
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shall have been issued against any substantial part of the property of Company
or any of its Restricted Subsidiaries, and any such event described in this
clause (ii) shall continue for 60 days unless dismissed, bonded or discharged;
or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
---------------------------------------------------
(i) Company or any of its Restricted Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Restricted
Subsidiaries shall make any assignment for the benefit of creditors; or (ii)
Company or any of its Restricted Subsidiaries shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the Board of Directors of Company or any of its Restricted
Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to in clause (i)
above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving in the aggregate at any time an amount in excess of $5,000,000 (not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has acknowledged coverage) shall be entered or filed against Company or
any of its Restricted Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9 DISSOLUTION.
-----------
Any order, judgment or decree shall be entered against Company or any
of its Restricted Subsidiaries decreeing the dissolution or split up of Company
or that Restricted Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
----------------------
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Company, any of its Restricted Subsidiaries or any of their respective ERISA
Affiliates in excess of $1,000,000 during the term of this Agreement; or there
shall exist an amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the
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aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), which
exceeds $1,000,000; or
8.11 CHANGE IN CONTROL.
-----------------
(i) Freeman Spogli shall cease to beneficially own and control at least
a majority of the issued and outstanding shares of capital stock of Company
entitled (without regard to the occurrence of any contingency) to vote for the
election of members of the Board of Directors of Company, (ii) Freeman Spogli
shall cease to have the ability to elect a majority of the members of the Board
of Directors of Company, (iii) Company shall cease to beneficially own and
control 100% of capital stock of Lil' Champ or Company shall cease to have the
ability to elect all of the Board of Directors of Lil' Champ, or (iv) a "Change
of Control" as defined in the Subordinated Note Indenture, the Senior Note
Indenture or the agreement governing refinancing Indebtedness with respect to
the Senior Notes incurred pursuant to subsection 7.1(vi) shall occur; or
8.12 INVALIDITY OF SUBSIDIARY GUARANTY; FAILURE OF SECURITY; REPUDIATION OF
----------------------------------------------------------------------
OBLIGATIONS.
-----------
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby, in each case for any reason other than the
failure of Administrative Agent or any Lender to take any action within its
control, or (iii) any Loan Party shall contest the validity or enforceability of
any Loan Document in writing or deny in writing that it has any further
liability, including with respect to future advances by Lenders, under any Loan
Document to which it is a party; or
8.13 FAILURE TO CONSUMMATE LIL' CHAMP ACQUISITION AND OTHER TRANSACTIONS.
-------------------------------------------------------------------
Any of the Lil' Champ Acquisition, the Offer and Consent Solicitation,
the Equity Contribution and the issuance of the Senior Subordinated Notes shall
not be consummated in accordance with this Agreement and the applicable Related
Agreements concurrently with the making of the initial Loans, or the Lil' Champ
Acquisition, the Offer and Consent Solicitation, the Equity Contribution or the
issuance of the Senior Subordinated Notes shall be unwound, reversed or
otherwise rescinded in whole or in part for any reason:
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THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Issuing Lender to issue any Letter of Credit and the right of any
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
--------
foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1A(iii).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude any Agent or Lenders from
exercising any of the rights or remedies available to them under any of the Loan
Documents, even if the conditions set forth in this paragraph are met.
127
SECTION 9. AGENTS
9.1 APPOINTMENT.
-----------
A. APPOINTMENT OF AGENTS. First Union is hereby appointed as
Administrative Agent and CIBC is hereby appointed as Syndication Agent, each so
appointed hereunder and under the other Loan Documents and each Lender hereby
authorizes such Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. Each Agent agrees to act upon the
express conditions contained in this Agreement and the other Loan Documents, as
applicable. The provisions of this Section 9 are solely for the benefit of each
Agent and each Lender and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Administrative Agent deems that by
reason of any present or future law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that Administrative Agent appoint an
additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "SUPPLEMENTAL COLLATERAL
AGENT" and collectively as "SUPPLEMENTAL COLLATERAL AGENTS").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of
128
such Supplemental Collateral Agent and all references therein to Administrative
Agent shall be deemed to be references to Administrative Agent and/or such
Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
-----------------------------------
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Each Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. No Agent shall have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon any Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or delivered by such Agent to Lenders or by or on
behalf of Company to such Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall such Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or
129
Potential Event of Default. Anything contained in this Agreement to the contrary
notwithstanding, no Agent shall have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.
C. EXCULPATORY PROVISIONS. None of the Agents nor any of their
respective officers, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any such Agent under or in connection with
any of the Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 10.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may be),
such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. AGENTS ENTITLED TO ACT AS LENDERS. The agency hereby created shall
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Each Agent and their respective Affiliates may
accept deposits from, lend money to and generally engage in any kind of banking,
trust, financial advisory or other business with Company or any of its
Affiliates as if it were not performing the duties specified herein, and may
accept fees and other consideration from Company for services in connection with
this Agreement and otherwise without having to account for the same to Lenders.
130
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
------------------------------------------------------------------
CREDITWORTHINESS.
----------------
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 RIGHT TO INDEMNITY.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Syndication Agent or Administrative Agent, as the case may be, in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from any Agent's gross negligence or willful
misconduct. If any indemnity furnished to any Agent for any purpose shall, in
the opinion of such Agent, be insufficient or become impaired, such Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
9.5 SUCCESSOR ADMINISTRATIVE AGENT AND SWING LINE LENDER.
----------------------------------------------------
A. SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may resign
at any time by giving 30 days' prior written notice thereof to the other Agents,
Lenders and Company. Upon any such notice of resignation of Administrative
Agent, Requisite Lenders shall have the right, upon the consent of Company
(which approval shall not be unreasonably withheld), to appoint a successor
Administrative Agent; provided that in the event that Company withholds such
--------
consent with respect to any successor Administrative Agent, such successor
Administrative Agent may nevertheless be appointed as successor Administrative
Agent by the Requisite Lenders if Company shall not have identified a successor
Administrative Agent approved by the Requisite Lenders (which approval shall not
be unreasonably withheld) within 60 days. Upon the acceptance of any
appointment as
131
Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent, under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation of Administrative
Agent pursuant to subsection 9.5A shall also constitute the resignation of First
Union or its successor as Swing Line Lender, and any successor Administrative
Agent appointed pursuant to subsection 9.5A shall, upon its acceptance of such
appointment, become the successor Swing Line Lender for all purposes hereunder.
In such event (i) Company shall prepay any outstanding Swing Line Loans made by
the retiring or removed Administrative Agent in its capacity as Swing Line
Lender, (ii) upon such prepayment, the retiring Administrative Agent and Swing
Line Lender shall surrender the Swing Line Note held by it to Company for
cancellation, and (iii) Company shall issue a new Swing Line Note to the
successor Administrative Agent and Swing Line Lender substantially in the form
of Exhibit VI annexed hereto, in the principal amount of the Swing Line Loan
----------
Commitment then in effect and with other appropriate insertions.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
-----------------------------------
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under the
Subsidiary Guaranty, and each Lender agrees to be bound by the terms of each
Collateral Document and the Subsidiary Guaranty; provided that Administrative
--------
Agent shall not (i) enter into or consent to any material amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or the Subsidiary Guaranty or (ii) release any Collateral (except as
otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all
Lenders); provided further, however, that, without further written consent or
-------- ------- -------
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Company,
Agents and each Lender hereby agree that (X) no Lender shall have any right
individually to realize upon any of
132
the Collateral under any Collateral Document or to enforce the Subsidiary
Guaranty, it being understood and agreed that all powers, rights and remedies
under the Collateral Documents and the Subsidiary Guaranty may be exercised
solely by Administrative Agent for the benefit of Lenders in accordance with the
terms thereof, and (Y) in the event of a foreclosure by Administrative Agent on
any of the Collateral pursuant to a public or private sale, any Agent or any
Lender may be the purchaser of any or all of such Collateral at any such sale
and Administrative Agent, as agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price for
any collateral payable by Administrative Agent at such sale.
SECTION 10 MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
-------------------------------------------------------------
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed to it; provided
--------
that no such sale, assignment, transfer or participation shall, without the
consent of Company, require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state; provided,
--------
further that no such sale, assignment or transfer described in clause (i) above
- -------
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided, further
-------- -------
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided, further that, anything
-------- -------
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender.
133
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of
--------------------------------
Credit or participation therein, or other Obligation may (a) be assigned in any
amount to another Lender, or to an Affiliate of the assigning Lender or another
Lender, with the giving of notice to Company and Administrative Agent or (b) be
assigned in an aggregate amount of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments, Loans,
Letters of Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of Company and
Administrative Agent (which consent of Company and such Agents shall not be
unreasonably withheld or delayed). To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender shall be
relieved of its obligations with respect to its Commitments, Loans, Letters of
Credit or participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of $3,500
and such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent pursuant
to subsection 2.7B(iii)(a); provided, however, that Administrative Agent may
-------- -------
waive such $3,500 recordation fee in connection with assignments between any
Lender and any of their Affiliates or between any Lenders party to this
Agreement as of the Closing Date. Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such Assignment
Agreement, (y) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto; provided that, anything contained in any of the Loan Documents to the
--------
contrary notwithstanding, if such Lender is the Issuing Lender with respect to
any outstanding Letters of Credit such Lender shall continue to have all rights
and obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments hereunder shall
be modified to reflect the Commitment of such assignee and any remaining
Commitment of such assigning Lender and, if any such assignment occurs after the
issuance of the Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
134
practicable, surrender its applicable Notes to Administrative Agent for
cancellation, and thereupon new Notes shall be issued to the assignee and, if
applicable, to the assigning Lender, substantially in the form of Exhibit IV or
----------
Exhibit V annexed hereto, as the case may be, with appropriate insertions, to
- ---------
reflect the new Commitments and/or outstanding Acquisition Term Loans, as the
case may be, of the assignee and, if applicable, the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
-----------------------------------------------------------
Upon its receipt of an Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent
shall, if Administrative Agent and Company have consented to the assignment
evidenced thereby (in each case to the extent such consent is required pursuant
to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence any
required consent of Administrative Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt notice
thereof to Company. Administrative Agent shall maintain a copy of each
Assignment Agreement delivered to and accepted by it as provided in this
subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
and all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve
Bank as collateral security pursuant to Regulation A of the Board of Governors
of the Federal Reserve System and any operating circular issued by such Federal
Reserve Bank; provided that (i) no Lender shall, as between Company and such
--------
Lender, be relieved of any of its obligations hereunder as a result of any such
assignment and pledge and (ii) in no event shall such Federal Reserve
135
Bank be considered to be a "Lender" or be entitled to require the assigning
Lender to take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including any opinions requested
by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Loan Documents
including with respect to confirming compliance with environmental, insurance
and solvency requirements; (iii) the reasonable fees, expenses and disbursements
of counsel to Agents, CIBC WG and First Union CMC (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Company; (iv) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Administrative Agent on behalf of Lenders pursuant
to any Collateral Document, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance premiums, and
reasonable fees, expenses and disbursements of counsel to Agents, CIBC WG and
First Union CMC and of counsel providing any opinions that Agents, CIBC WG,
First Union CMC or Requisite Lenders may request in respect of the Collateral
Documents or the Liens created pursuant thereto; (v) all the actual costs and
reasonable expenses (including the reasonable fees, expenses and disbursements
of any auditors, accountants or appraisers and any environmental or other
consultants, advisors and agents employed or retained by
136
Agents, CIBC WG and First Union CMC or their respective counsel) of obtaining
and reviewing any environmental audits or reports provided for under subsection
4.1K or 6.9(v); (vi) the custody or preservation of any of the Collateral; (vii)
all other actual and reasonable costs and expenses incurred by Agents, CIBC WG
and First Union CMC in connection with the syndication of the Commitments and
the negotiation, preparation and execution of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (viii) after the occurrence of an Event
of Default, all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement,
incurred by Agents, CIBC WG, First Union CMC and Lenders in enforcing any
Obligations of or in collecting any payments due from any Loan Party hereunder
or under the other Loan Documents by reason of such Event of Default (including
in connection with the sale of, collection from, or other realization upon any
of the Collateral or the enforcement of the Subsidiary Guaranty) or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agents, Lenders, CIBC WG and First Union CMC
and the officers, directors, employees, agents and affiliates of Agents,
Lenders, CIBC WG and First Union CMC (collectively called the "INDEMNITEES"),
from and against any and all Indemnified Liabilities (as hereinafter defined);
provided that Company shall not have any obligation to any Indemnitee hereunder
- --------
with respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or
137
asserted against any such Indemnitee, in any manner relating to or arising out
of (i) this Agreement or the other Loan Documents or the Related Agreements or
the transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranty), (ii) the statements contained in the
commitment letter delivered by any Lender to Company with respect thereto, or
(iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Company or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
----------------------------------------------
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 any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to 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 Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the account of Company against and on account of the
obligations and liabilities of Company to that Lender under this Agreement, the
Letters of Credit and participations therein and the other Loan Documents,
including all claims of any nature or description arising out of or connected
with this Agreement, the Letters of Credit and participations therein or any
other Loan Document, irrespective of whether or not (i) that Lender shall have
made any demand hereunder or (ii) the principal of or the interest on the Loans
or any amounts in respect of the Letters of Credit or any other amounts due
hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured. Company hereby further grants to Administrative Agent and each
Lender a security interest in all deposits and accounts maintained with
Administrative Agent or such Lender as security for the Obligations.
138
10.5 RATABLE SHARING.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
--------
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
10.6 AMENDMENTS AND WAIVERS.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
--------
waiver or consent shall, without the consent of each Lender (with Obligations
directly affected in the case of the following clause (i)): (i) extend the
scheduled final maturity of any Loan or Note, or extend the stated expiration
date of any Letter of Credit beyond the Revolving Loan Commitment Termination
Date, or reduce the rate of interest (other than any waiver of any increase in
the interest rate applicable to any of the Loans pursuant to subsection 2.2E) or
fees thereon, or extend the time of payment of interest, principal or fees
thereon, or reduce the principal amount thereof, (ii) release a material portion
of the Collateral, release all or substantially all of the Loan Parties that are
party to the Subsidiary Guaranty from the
139
Subsidiary Guaranty except as expressly provided in the Loan Documents, (iii)
amend, modify, terminate or waive any provision of this subsection 10.6, (iv)
reduce the percentage specified in the definition of Requisite Lenders (it being
understood that, with the consent of the Requisite Lenders, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Requisite Lenders on substantially the same basis as the
Acquisition Term Loan Commitment or the Revolving Loan Commitments are
included), (v) amend, modify or waive any provision of subsection 2.4B(iii)(d)
or (vi) consent to the assignment or transfer by Company of any of its
respective rights and obligations under this Agreement; provided further that no
-------- -------
such amendment, modification, terminatin or waiver shall (1) increase the
Commitments of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that amendments, modifications or
waivers of conditions precedent, covenants, Potential Events of Default or
Events of Default or of a mandatory reduction in the Commitments shall not
constitute an increase of the Commitment of any Lender, and that an increase in
the available portion of any Commitment of any Lender shall not constitute an
increase in the Commitment of such Lender), (2) no amendment, modification,
termination or waiver of any provision of subsection 2.1A(iii) or any other
provision of this Agreement relating to the Swing Line Loan Commitment or the
Swing Line Loans shall be effective without the written concurrence of Swing
Line Lender, (3) no amendment, modification, termination or waiver relating to
the obligations of Lenders relating to the purchase or participation in Letters
of Credit shall be effective without the written concurrence of each Issuing
Lender having a Letter of Credit then outstanding or which has not been
reimbursed for a drawing under a Letter of Credit issued by it and of
Administrative Agent, and (4) no amendment, modification, termination or waiver
of any provision of Section 9 or of any provision of this Agreement which, by
its terms, expressly requires the approval or concurrence of any Agent shall be
effective without the written concurrence of such Agent. Administrative Agent
may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on Company
in any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 10.6 shall be binding
upon each Lender at the time outstanding, each future Lender and, if signed by
Company, on Company.
10.7 INDEPENDENCE OF COVENANTS.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
140
10.8 NOTICES.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Agents shall not be effective
--------
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Agents, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of any Agent, any Lender, CIBC WG
and/or First Union CMC in the exercise of any power, right or privilege
hereunder or under any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement and the other
Loan Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
-------------------------------
None of Agents nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to any Agent or
141
Lenders (or to any Agent for the benefit of Lenders), or any Agent or Lenders
enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, any other state or federal law, common law or any
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.
10.12 SEVERABILITY.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
142
10.16 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER
143
NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 CONFIDENTIALITY.
---------------
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant or any
proposed assignee, transferee or participant in connection with the contemplated
assignment or transfer by such Lender of any Loans or any participations therein
(so long as such proposed assignee, transferee or participant agrees to hold all
non-public information obtained from such Lender and which has been identified
as confidential by Company in accordance with such Person's customary procedures
for handling confidential information of this nature and in accordance with safe
and sound
144
banking practices) or disclosures required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
-------
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated or required to
- -------- -------
return any materials furnished by Company or any of its Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Agents of written or telephonic notification of such execution and authorization
of delivery thereof.
[Remainder of page intentionally left blank]
145
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
THE PANTRY, INC.
By: /s/ WILLIAM T. FLYG
--------------------------------
Title: Senior Vice President, Finance
and Chief Financial Officer
-------------------------------
Notice Address:
1801 Douglas Drive
------------------------------
Post Office Box 1410
------------------------------
Sanford, NC 27330
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Attention: Corporate Secretary
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Telephone: 919-774-6700
Telecopy: 919-774-3329
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S-1
LENDERS:
FIRST UNION NATIONAL BANK,
individually and as Administrative Agent
By: /s/ MARK FELKER
---------------------------------
Title: Sr. V.P.
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Notice Address:
Leveraged Finance Division
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First Union Center
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301 South College Street DC-5
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Charlotte, NC 28288
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Attention: Mark Felker
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Telephone: 704-374-7074
Telecopy: 704-374-3300
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CANADIAN IMPERIAL BANK OF COMMERCE,
individually and as Syndication Agent
By: /s/
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Title: Authorized Signatory
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Notice Address:
____________________________
____________________________
____________________________
____________________________
S-3
AMSOUTH BANK
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By: /s/ ALAN LOTT
--------------------------------
Title: Vice President
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Notice Address:
1900 5th Avenue North
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7th Floor
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Birmingham, AL 35203
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Attention: Alan Lott
----------------------------
Telephone: 205-583-4474
Telecopy: 205-583-4436
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S-4
BHF-BANK AKTIENGESELLSCHAFT
-----------------------------------
By: /s/
--------------------------------
Title: VP
-----------------------------
By: /s/
--------------------------------
Title: Assistant Vice President
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Notice Address:
590 Madison Avenue
----------------------------
New York, NY 10022-2540
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Attention: Renate Boston
----------------------------
Telephone: 212-756-5543
Telecopy: 212-756-5536
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CREDIT LYONNAIS NEW YORK BRANCH
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By: /s/ MARK KONEVAL
--------------------------------
Title: VP
-----------------------------
Notice Address:
1301 Avenue of the Americas
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12th Floor
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New York, NY 10019-6022
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Attention: Mark Koneval
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Telephone: 212-261-7867
Telecopy: 212-459-3176
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ROYAL BANK OF CANADA
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By: /s/ STEVEN YOON
--------------------------------
Title: Senior Manager
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Notice Address:
Financial Square
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32 Old Slip
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23rd Floor
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New York, NY 10005-3521
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Attention: Steven Yoon
----------------------------
Telephone: 212-428-6429
Telecopy: 212-428-2319
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S-8