EXHIBIT 10.1
EXECUTION COPY
CREDIT AGREEMENT
dated as of April 7, 1998
among
HUDSON RESPIRATORY CARE INC.,
RIVER HOLDING CORP.,
The Lenders Party Hereto,
SALOMON BROTHERS INC,
as Arranger, Advisor and Syndication Agent,
and
BANKERS TRUST COMPANY,
as Administrative Agent and Collateral Agent
TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms.......................................... 1
SECTION 1.02. Terms Generally........................................ 27
ARTICLE II
The Credits
SECTION 2.01. Commitments............................................ 27
SECTION 2.02. Loans.................................................. 28
SECTION 2.03. Borrowing Procedure.................................... 29
SECTION 2.04. Notes and Records...................................... 29
SECTION 2.05. Fees................................................... 30
SECTION 2.06. Interest on Loans...................................... 31
SECTION 2.07. Default Interest....................................... 31
SECTION 2.08. Alternate Rate of Interest............................. 32
SECTION 2.09. Termination and Reduction of Commitments............... 32
SECTION 2.10. Conversion and Continuation of Borrowings.............. 33
SECTION 2.11. Repayment of Term Borrowings........................... 34
SECTION 2.12. Prepayment............................................. 34
SECTION 2.13. Mandatory Prepayments.................................. 35
SECTION 2.14. Reserve Requirements................................... 37
SECTION 2.15. Change in Legality..................................... 38
SECTION 2.16 Indemnity.............................................. 39
SECTION 2.17. Pro Rata Treatment..................................... 39
SECTION 2.18. Sharing of Setoffs..................................... 39
SECTION 2.19. Payment................................................ 40
SECTION 2.20. Taxes.................................................. 40
SECTION 2.21. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate........................ 42
SECTION 2.22. Swingline Loans........................................ 43
SECTION 2.23. Letters of Credit...................................... 45
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers................................... 48
SECTION 3.02. Authorization.......................................... 48
SECTION 3.03. Enforceability......................................... 49
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SECTION 3.04. Governmental Approvals and Licenses.................... 49
SECTION 3.05. Financial Statements................................... 49
SECTION 3.06. No Material Adverse Change............................. 50
SECTION 3.07. Title to Properties; Possession Under Leases........... 50
SECTION 3.08. Subsidiaries........................................... 50
SECTION 3.09. Litigation; Compliance with Laws....................... 50
SECTION 3.10. Default in Material Agreements......................... 51
SECTION 3.11. Federal Reserve Regulations............................ 51
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act............................................ 51
SECTION 3.13. Use of Proceeds........................................ 51
SECTION 3.14. Tax Returns............................................ 51
SECTION 3.15. No Material Misstatements.............................. 52
SECTION 3.16. Employee Benefit Plans................................. 52
SECTION 3.17. Environmental Matters.................................. 52
SECTION 3.18. Insurance.............................................. 53
SECTION 3.19. Security Documents..................................... 53
SECTION 3.20. Location of Real Property and Leased Premises.......... 54
SECTION 3.21. Labor Matters.......................................... 54
SECTION 3.22. Solvency............................................... 54
SECTION 3.23. Year 2000.............................................. 54
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events...................................... 54
SECTION 4.02. First Credit Event..................................... 55
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties................... 58
SECTION 5.02. Insurance.............................................. 59
SECTION 5.03. Payment of Taxes....................................... 60
SECTION 5.04. Financial Statements, Reports, etc..................... 61
SECTION 5.05. Litigation and Other Notices........................... 62
SECTION 5.06. Employee Benefits...................................... 62
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections............................................ 62
SECTION 5.08. Use of Proceeds........................................ 63
SECTION 5.09. Compliance with Environmental Laws..................... 63
SECTION 5.10. Preparation of Environmental Reports................... 63
SECTION 5.11. Further Assurances..................................... 63
SECTION 5.12. Mortgaged Property Casualty and Condemnation........... 64
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ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness........................................... 67
SECTION 6.02. Liens.................................................. 68
SECTION 6.03. Investments, Loans and Advances........................ 69
SECTION 6.04. Mergers, Consolidations, Sales of Assets and
Acquisitions........................................... 70
SECTION 6.05. Dividends and Distributions; Restrictions on Ability
of Subsidiaries to Pay Dividends....................... 70
SECTION 6.06. Transactions with Affiliates........................... 72
SECTION 6.07. Business of Holding, Borrower and Subsidiaries......... 72
SECTION 6.08. Capital Expenditures................................... 72
SECTION 6.09. Debt/Adjusted EBITDA Ratio............................. 73
SECTION 6.10. Minimum EBITDA......................................... 73
SECTION 6.11. Interest Coverage Ratio................................ 73
SECTION 6.12. Fixed Charge Coverage Ratio............................ 74
SECTION 6.13. Modification of Certain Agreements..................... 74
ARTICLE VII
Defaults and Remedies
SECTION 7.01. Events of Default...................................... 75
ARTICLE VIII
The Agents
SECTION 8.01. Appointment of Administrative and Collateral Agent..... 77
SECTION 8.02. Limitations on Liabilities............................. 77
SECTION 8.03. Acting at the Direction of the Required Lenders........ 78
SECTION 8.04. Resignation of the Administrative Agent or the
Collateral Agent....................................... 78
SECTION 8.05. Other Transactions..................................... 78
SECTION 8.06. Reimbursement and Indemnity............................ 78
SECTION 8.07. No Reliance............................................ 79
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices................................................ 79
SECTION 9.02. Survival of Agreement.................................. 80
SECTION 9.03. Effectiveness; Termination............................. 80
SECTION 9.04. Successors and Assigns................................. 80
SECTION 9.05. Expenses; Indemnity.................................... 83
SECTION 9.06. Right of Setoff........................................ 84
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SECTION 9.07. Applicable Law......................................... 84
SECTION 9.08. Waivers; Amendment..................................... 84
SECTION 9.09. Interest Rate Limitation............................... 86
SECTION 9.10. Entire Agreement....................................... 86
SECTION 9.11. WAIVER OF JURY TRIAL................................... 86
SECTION 9.13. Counterparts........................................... 87
SECTION 9.14. Headings............................................... 87
SECTION 9.15. Jurisdiction; Consent to Service of Process............ 87
SECTION 9.16. Confidentiality........................................ 87
Annexes
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Annex 1 - Initial Loan Commitments and Term Loan Commitments
Annex 2 - Administrative Information
Annex 3 - Description of the Recapitalization
Schedules
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Schedule 1.01(a) - Existing Letters of Credit
Schedule 1.01(b) - Mortgaged Properties
Schedule 1.01(c) - Subsidiary Guarantors
Schedule 3.07(b) - Exceptions to Compliance with Leases
Schedule 3.07(c) - Condemnation Proceedings
Schedule 3.08 - Subsidiaries
Schedule 3.09 - Litigation
Schedule 3.17 - Environmental Matters
Schedule 3.18 - Insurance
Schedule 3.19(d) - Mortgage Filing Offices
Schedule 3.20(a) - Owned Real Properties
Schedule 3.20(b) - Leased Real Properties
Schedule 4.02(b) - Local Counsel
Schedule 6.01(a) - Indebtedness to be Paid
Schedule 6.02(a) - Existing Liens
Exhibits
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Exhibit A - Administrative Questionnaire
Exhibit B - Form of Term Note
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Swingline Note
Exhibit E - Form of Borrowing Request
Exhibit F - Form of Continuation/Conversion Request
Exhibit G - Form of Letter of Credit Request
Exhibit H - Form of Assignment and Acceptance
Exhibit I - Form of Security Agreement
Exhibit J - Form of Pledge Agreement
Exhibit K - Form of Mortgage
Exhibit L - Form of Holding Guarantee Agreement
Exhibit M - Form of Subsidiary Guarantee Agreement
Exhibit N - Form of Indemnity, Subrogation and Contribution
Agreement
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Exhibit O - Form of Pricing Adjustment Certificate
Exhibit P - Form of Riordan & McKinzie, special California counsel
to Holding and the Borrower
Exhibit Q - Form of Opinion of Richards & O'Neil, special New York
counsel for Holding and Borrower
Exhibit R - Form of Opinion of Borrower's Local Counsel
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EXHIBIT 10.1
CREDIT AGREEMENT dated as of April 7, 1998, among HUDSON
RESPIRATORY CARE INC., a California corporation (the "Borrower"),
RIVER HOLDING CORP., a Delaware corporation ("Holding"), the
Lenders (as defined in Article I), SALOMON BROTHERS INC, as
Arranger, Advisor and Syndication Agent (in such capacity, the
"Syndication Agent"), and BANKERS TRUST COMPANY, a New York
banking corporation, as swingline lender (in such capacity, the
"Swingline Lender"), and as issuing bank (in such capacity, the
"Issuing Bank"), and as administrative agent (in such capacity,
the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders.
The Borrower has requested the Lenders to extend credit in the form of (a)
Term Loans (such term and each other capitalized term used but not defined
herein having the meaning given it in Article I) on the Closing Date, in an
aggregate principal amount not in excess of $40,000,000, and (b) Revolving Loans
at any time and from time to time prior to the Revolving Credit Maturity Date,
in an aggregate principal amount at any time outstanding not in excess of
$60,000,000. The Borrower has requested the Swingline Lender to extend credit,
at any time and from time to time prior to the Revolving Credit Maturity Date,
in the form of Swingline Loans. The Borrower has requested the Issuing Bank to
issue letters of credit, in an aggregate face amount at any time outstanding not
in excess of $7,500,000, to support obligations incurred in the ordinary course
of business by the Borrower and its Subsidiaries. The proceeds of the Loans are
to be used solely as set forth in Section 3.13.
The Lenders and the Swingline Lender are willing to extend such credit to
the Borrower and the Issuing Bank is willing to issue letters of credit for the
account of the Borrower on the terms and subject to the conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" means a Borrowing comprised of ABR Loans.
"ABR Loan" means any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" means any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" means a Borrowing comprised of ABR Term Loans.
"ABR Term Loan" means any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition Agreement" means the Amended and Restated Merger
Agreement, dated as of March 15, 1998, among Holding, River Acquisition Corp.,
the Borrower and the Sellers, as amended and otherwise modified from time to
time with the consent of the Agents.
"Adjusted EBITDA" means, with respect to the Borrower and its
Subsidiaries for the four most recently completed fiscal quarters for which
financial statements are available, EBITDA on a consolidated basis after giving
effect to all Asset Acquisitions or Stock Acquisitions consummated during such
period on a pro forma basis (as if such acquisitions were made on the first day
of such period), plus the pro forma cost savings for such period calculated,
without duplication (a) in accordance with Regulation S-X under the Securities
Exchange Act of 1934, as amended, and (b) good faith estimates by management and
approved by the Agents of the results of determined events which have been
notified to the Agents in writing in reasonable detail and do not exceed 20% of
the reported EBITDA of the acquired business for previous four quarters.
"Adjusted Eurodollar Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the Eurodollar
Rate in effect for such Interest Period and (b) Statutory Reserves.
"Adjusted Working Capital" means, for any date, current assets (other
than cash and cash equivalent investments) less current liabilities (other than
current maturities of long-term debt).
"Administrative Agent" has the meaning assigned thereto in the
Preamble hereto.
"Administrative Agent Fees" has the meaning assigned thereto in
Section 2.05(b).
"Administrative Questionnaire" means an Administrative Questionnaire
in the form of Exhibit A.
"Affiliate" means, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Affiliate Transactions" has the meaning assigned thereto in Section
6.06.
"Aggregate Revolving Credit Exposure" means the aggregate amount of
the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) or (c),
or both, of the preceding sentence, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
The term "Prime Rate" means the rate of interest per
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annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as being effective. The term "Base CD Rate" means the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate. The term "Federal Funds Effective Rate" means, for any day, 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 on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Applicable Percentage" of any Revolving Credit Lender at any time
means the percentage of the Total Revolving Credit Commitment represented by
such Lender's Revolving Credit Commitment. In the event the Revolving Credit
Commitments shall have expired or been terminated, the Applicable Percentages
shall be determined on the basis of the Revolving Credit Commitments most
recently in effect.
"Assessment Rate" means for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor thereto) for insurance
by such Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Asset Acquisition" means a purchase, lease or other acquisition of
all or substantially all of the Assets of any person or of a division or
business of any person.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions) by Holding, the Borrower or any Restricted Subsidiary, including
any disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition"), of (a) any
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares) or (b) any other Assets of the Borrower or any Restricted
Subsidiary outside of the ordinary course of business of the Borrower or such
Restricted Subsidiary (other than, in the case of clauses (a) and (b) above, (i)
any disposition by a Restricted Subsidiary to the Borrower or by the Borrower or
a Restricted Subsidiary to a wholly owned Subsidiary, (ii) any disposition
effected in compliance with Section 6.04). "Asset Disposition" shall not
include any Sale/Leaseback Transaction.
"Assets" means property of any person other than capital stock, or
warrants, instruments or rights convertible into capital stock, of any person.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit or such other form as shall be approved by the
Administrative Agent.
"Average Life" means, as of any date of determination, with respect to
any Debt or Preferred Stock, the quotient obtained by dividing (a) the sum of
the product of the numbers of years (rounded to the nearest one-twelfth of one
year) from the date of determination to the dates of each successive scheduled
principal payment of such Debt or redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by (b) the sum of
all such payments.
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"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" has the meaning assigned thereto in the Preamble hereto.
"Borrowing" means a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower in accordance with
the terms of Section 2.03 or Section 2.22(b), as the case may be, and
substantially in the form of Exhibit E.
"Business Day" means any day other than a Saturday, Sunday or day on
which banks in New York City and Los Angeles are authorized or required by law
to close.
"Capital Expenditures" means capital expenditures of the Borrower and
its Subsidiaries determined in accordance with GAAP.
"Capital Lease Obligations" of any person means the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" mean, with respect to any person, any shares or other
equivalents (however designated) of corporate stock, partnership interests or
any other participants, rights, warrants, options or other interests in the
nature of any equity interest in such person, including Preferred Stock, but
excluding any debt security convertible or exchangeable into such equity
interest.
"Casualty" has the meaning assigned thereto in Section 5.12(a).
"Casualty Proceeds" has the meaning assigned thereto in Section
5.12(a).
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the first Public Equity Offering that results in a Public
Market, the Permitted Holders cease to be the "beneficial owners" (as defined in
Rule 13d-3 under the Exchange Act, except that a person will be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of a majority of the voting power of the
Voting Stock of the Borrower, whether as a result of the issuance of securities
of the Borrower, any merger, consolidation, liquidation or dissolution of the
Borrower, any direct or indirect transfer of securities by the Permitted Holders
or otherwise (for purposes of this clause, the Permitted Holders will be deemed
to beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent corporation") so long
as the Permitted Holders beneficially own, directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of such parent
corporation); or
(b) after the first Public Equity Offering that results in a Public
Market, any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act or any successor provisions to either of the
foregoing), including any group acting for the
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purpose of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one or more
of the Permitted Holders, becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, except that a person will be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 25% or more of the voting power of the
Voting Stock of the Borrower; provided, however, that the Permitted Holders are
the "beneficial owners" (as defined in Rule 13d-3 under the Exchange Act, except
that a person will be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, in the
aggregate of a lesser percentage of the total voting power of all classes of the
Voting Stock of the Borrower than such other person or group (for purposes of
this clause, such person or group shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation so long as such
person or group beneficially owns, directly or indirectly, in the aggregate a
majority of the voting power of the Voting Stock of such parent corporation); or
(c) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets of
the Borrower and the Restricted Subsidiaries, considered as a whole (other than
a disposition of such assets as an entirety or virtually as an entirety to a
wholly owned Subsidiary or one or more Permitted Holders) shall have occurred,
or the Borrower merges, consolidates or amalgamates with or into any other
person (other than one or more Permitted Holders) or any other person (other
than one or more Permitted Holders) merges, consolidates or amalgamates with or
into the Borrower, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Borrower is reclassified into or exchanged for
cash, securities or other Property, other than any such transaction where (i)
the outstanding Voting Stock of the Borrower is reclassified into or exchanged
for Voting Stock of the surviving corporation and (ii) the holders of the Voting
Stock of the Borrower immediately prior to such transaction own, directly or
indirectly, not less than a majority of the Voting Stock of the surviving
corporation immediately after such transaction and in substantially the same
proportion as before the transaction; or
(d) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election or appointment by such Board or whose nomination
for election by the shareholders of the Borrower was approved by a vote of 66-
2/3% of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office;
(e) the shareholders of the Borrower shall have approved any plan of
liquidation or dissolution of the Borrower; or
(d) any transaction or series of related transactions constituting a
"change of control" or other similar occurrence under documentation evidencing
or governing any Indebtedness of the Borrower or its Restricted Subsidiaries of
$2,500,000 or more which results in an obligation of the Borrower or any
Restricted Subsidiary to prepay, purchase, offer to purchase, redeem or defease
such Indebtedness.
"Closing Date" means the date (which shall be on or prior to April 16,
1998) of the first Credit Event.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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"Collateral" means all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Collateral Agent" has the meaning assigned thereto in the Preamble
hereto.
"Commitment" means, with respect to any Lender, such Lender's
Revolving Credit Commitment, Term Loan Commitment and Swingline Commitment.
"Commitment Fee" has the meaning assigned thereto in Section 2.05(a).
"Condemnation" has the meaning assigned thereto in Section 5.12(b).
"Condemnation Proceeds" has the meaning assigned thereto in Section
5.12(b).
"Confidential Information Memorandum" means the Confidential
Information Memorandum of the Borrower dated February 16, 1998.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Borrower and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such total interest expense, and to the
extent Incurred by the Borrower or its Restricted Subsidiaries, (a) interest
expense attributable to capital leases, (b) amortization of Indebtedness
discount and debt issuance cost, including commitment fees, (c) capitalized
interest, (d) non-cash interest expenses, (e) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (f) net costs associated with Hedging Obligations (including
amortization of fees), (g) dividends and other distributions on Disqualified
Stock, (h) Preferred Stock dividends in respect of all Preferred Stock of
Restricted Subsidiaries held by persons other than the Borrower or a wholly
owned Subsidiary (to the extent paid in cash), (i) interest Incurred in
connection with Investments in discontinued operations, (j) interest accruing on
any Indebtedness of any other person to the extent such Indebtedness is
Guaranteed by the Borrower or any Restricted Subsidiary and (k) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any person (other than the Borrower) in connection with Indebtedness Incurred
by such plan or trust.
"Consolidated Net Income" means, for any period, the net income (loss)
of the Borrower and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income (a) any net income (loss)
of any person (other than the Borrower) if such person is not a Restricted
Subsidiary, except that (i) subject to the exclusion contained in clause (d),
the Borrower's equity in the net income of any such person for such period shall
be included in such Consolidated Net Income up to the aggregate amount of cash
distributed by such person during such period to the Borrower or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution to a Restricted Subsidiary, to the limitations
contained in clause (c)) and (ii) the Borrower's equity in a net loss of any
such person other than an Unrestricted Subsidiary for such period shall be
included in determining such Consolidated Net Income, (b) for the purposes of
Section 6.06 only, any net income (loss) of any person acquired by the Borrower
or any of its consolidated Subsidiaries in a pooling of interests transaction
for any period prior to the date of such acquisition, (c) any net income (but
not loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions, directly or indirectly, to the Borrower, except that
subject to the exclusion contained in clause (d), the Borrower's equity in the
net income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash distributed
by such Restricted Subsidiary during such period to the Borrower or another
Restricted Subsidiary
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as a dividend or other distribution (subject, in the case of a dividend or other
distribution to another Restricted Subsidiary, to the limitation contained in
this clause), (d) any gain (but not loss) realized upon the sale or other
disposition of any Property of the Borrower or any of its consolidated
Subsidiaries (including pursuant to any Sale and Leaseback Transaction) which is
not sold or otherwise disposed of in the ordinary course of business; provided,
that any tax benefit or tax liability resulting therefrom shall be excluded in
calculated such Consolidated Net Income, (e) any extraordinary gain or loss;
provided, that any tax benefit or tax liability resulting therefrom shall be
excluded in calculated such Consolidated Net Income, (f) the cumulative effect
of a change in accounting principles, (g) any non-cash compensation expense
realized for grants of performance shares, stock options or other stock awards
to officers, directors and employees of the Borrower or any Restricted
Subsidiary, (h) compensation expense realized with respect to periods prior to
the Closing Date in respect of payments under the Borrower's 1994 Amended and
Restated Equity Participation Plan, and (i) Contingent Acquisition-Related
Payments.
"Contingent Acquisition-Related Payments" means
(a) payments to the Sellers pursuant to the Acquisition Agreement in
an aggregate amount not to exceed $1,100,000 in any fiscal year or
$3,300,000 in the aggregate after the Closing Date while any Loans are
outstanding (plus, in each case, interest due on the unpaid portion of such
required payment in accordance with the Acquisition Agreement); and
(b) compensation expense, to the extent accrued in 1998, related to
contingent payments to existing managers of the Borrower pursuant to the
Acquisition Agreement in an aggregate amount not in excess of $2,400,000.
"Continuation/Conversion Request" means a continuation/conversion
request delivered by the Borrower to the Administrative Agent, in the form of
Exhibit or such other form as shall be approved by the Administrative Agent.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Credit Documents" means this Agreement, the Letters of Credit, the
Notes, the Subsidiary Guarantee Agreement, Holding Guarantee Agreement, the
Security Documents and the Indemnity, Subrogation and Contribution Agreement.
"Credit Event" has the meaning assigned thereto in Section 4.01.
"Credit Parties" means the Borrower and the Guarantors.
"Debt" means, with respect to any person, all Indebtedness of such
person of the types referred to in clauses (a), (b), (c), (d), (e), (f) and (h)
of the definition of "Indebtedness".
"Debt/Adjusted EBITDA Ratio" means, as of any date with respect to the
Borrower and its consolidated Restricted Subsidiaries, (a) the total amount of
Debt of the Borrower and its consolidated Restricted Subsidiaries as of such
date, to (b) Adjusted EBITDA of the Borrower and its consolidated subsidiaries
for the period of four fiscal quarters most recently ended for which financial
statements are available.
7
"Default" means any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Disqualified Stock" means, with respect to any person, Redeemable
Stock of such person as to which (i) the maturity, (ii) mandatory redemption or
(iii) redemption, repurchase, conversion or exchange at the option of the holder
thereof occurs, or may occur, on or prior to the first anniversary of the Term
Loan Maturity Date; provided, however, that Redeemable Stock of such person that
-------- -------
would not otherwise be characterized as Disqualified Stock under this definition
shall not constitute Disqualified Stock (a) if such Redeemable Stock is
convertible or exchangeable into Debt or Disqualified Stock solely at the option
of the issuer thereof or (b) solely as a result of provisions thereof giving
holders thereof the right to require such person to repurchase or redeem such
Redeemable Stock upon the occurrence of a "change of control" occurring prior to
the first anniversary of the Term Loan Maturity Date, if (x) such repurchase
obligation may not be triggered in respect of such Redeemable Stock unless a
mandatory prepayment obligation also arises with respect to the Loans and (y) no
such repurchase or redemption is permitted to be consummated unless and until
such person shall have satisfied all mandatory prepayment obligations with
respect to the Loans.
"dollars" or "$" means lawful money of the United States of America.
"Domestic Subsidiaries" means all Restricted Subsidiaries incorporated
or organized under the laws of the United States of America, any State thereof
or the District of Columbia.
"EBITDA" means, for any period, an amount equal to, for the Borrower
and its consolidated Restricted Subsidiaries, (a) the sum of Consolidated Net
Income for such period, plus the following to the extent reducing Consolidated
Net Income for such period: (i) the provision for taxes based on income or
profits or utilized in computing net loss, (ii) Consolidated Interest Expense,
(iii) depreciation, (iv) amortization and (v) any other non-cash items (other
than any such non-cash item to the extent that it represents an accrual of or
reserve for cash expenditures in any future period), minus (b) all non-cash
items increasing Consolidated Net Income for such period (other than any such
non-cash item to the extent that it will result in the receipt of cash payments
in any future period). Notwithstanding the foregoing, the provision for taxes
based on the income or profits of, and the depreciation and amortization of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Borrower by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its shareholders.
"Employee Notes" means promissory notes of employees of the Borrower,
Holding or their Subsidiaries payable to the Borrower or Holding and received in
connection with the substantially concurrent purchase of Capital Stock of the
Borrower or Holding by such employees.
"environment" means ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" means any written accusation, allegation, notice
of violation, claim, demand, order, directive, cost recovery action or other
cause of action by, or on
8
behalf of, any Governmental Authority or any person for damages, injunctive or
equitable relief, personal injury (including sickness, disease or death),
Remedial Action costs, tangible or intangible property damage, natural resource
damages, nuisance, pollution, any adverse effect on the environment caused by
any Hazardous Material, or for fines, penalties or restrictions, resulting from
or based upon (a) the existence, or the continuation of the existence, of a
Release (including sudden or non-sudden, accidental or non-accidental Releases),
(b) exposure to any Hazardous Material, (c) the presence, use, handling,
transportation, storage, treatment or disposal of any Hazardous Material or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Law" means any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. (S)(S) 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. (S)(S) 6901 et seq., the Federal Water Pollution Control Act, as amended
by the Clean Water Act of 1977, 33 U.S.C. (S)(S) 1251 et seq., the Clean Air Act
of 1970, as amended 42 U.S.C. (S)(S) 7401 et seq., the Toxic Substances Control
Act of 1976, 15 U.S.C. (S)(S) 2601 et seq., the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. (S)(S) 651 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S) 11001 et seq., the
Safe Drinking Water Act of 1974, as amended, 42 U.S.C. (S)(S) 300(f) et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 5101 et seq., and
any similar or implementing state or local law, and all amendments or
regulations promulgated under any of the foregoing.
"Environmental Permit" means any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Environmental Property" has the meaning assigned thereto in Section
3.17(a).
"Equity Issuance" means the issuance by Holding or the Borrower of
any equity interests therein, or the issuance or sale by Holding or the Borrower
of any instrument or obligation convertible into or exchangeable for, or giving
any person any right, option or warrant to acquire from Holding or the Borrower
any equity interests therein or any such convertible or exchangeable instrument
or obligation, but excluding the Excluded Shares.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of
9
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence of any liability
under Title IV of ERISA with respect to the termination of any Plan or the
withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; (f) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
the intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (g) the receipt by the Borrower or any ERISA Affiliate of
any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a
"prohibited transaction" with respect to which the Borrower or any of its
Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) or with respect to which the Borrower or any such Subsidiary could
otherwise be liable; and (i) any other event or condition with respect to a Plan
or Multiemployer Plan that could reasonably be expected to result in liability
of the Borrower.
"Eurodollar Borrowing" means a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" means any Eurodollar Revolving Loan or Eurodollar
Term Loan.
"Eurodollar Rate" means, with respect to any Eurodollar Borrowing, the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits approximately equal in principal amount to the Administrative Agent's
portion of such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal New York office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 10:00 a.m., New York time, two Business Days prior to
the commencement of such Interest Period.
"Eurodollar Revolving Loan" means any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted Eurodollar Rate in accordance
with the provisions of Article II.
"Eurodollar Term Borrowing" means a Borrowing comprised of Eurodollar
Term Loans.
"Eurodollar Term Loan" means any Term Loan bearing interest at a rate
determined by reference to the Adjusted Eurodollar Rate in accordance with the
provisions of Article II.
"Event of Default" has the meaning assigned thereto in Section 7.01.
"Excess Cash Flow" for any period, means EBITDA for such period, less
the sum of
(a) (i) permitted Capital Expenditures, (ii) Taxes, (iii) cash
consideration paid for Permitted Acquisitions (but excluding cash
consideration funded by a Borrowing under the Revolving Credit
Commitments), (iv) Consolidated Interest Expense, (v) increases in Adjusted
Working Capital for such period, (vi) scheduled and mandatory payments of
Debt, (vii) payments pursuant to Section 6.05(a)(i)(A) in connection with
purchases of Excluded Shares, (viii) Contingent Acquisition-Related
Payments, (ix) compensation payments made in such period in respect of
amounts excluded from the definition of "Consolidated Net Income" by virtue
of clause (h) thereof, and (x) dividends paid with
10
respect to the Borrower's Exchangeable Preferred Stock to the extent
permitted by Section 6.05(a)(ii), in each case to the extent made in cash
during such period;
plus the sum of
(b) (i) decreases in Adjusted Working Capital for such period, (ii)
refunds of taxes paid in prior periods, and (iii) proceeds to the Borrower
or any Restricted Subsidiary of any Indebtedness referred to in Section
6.01(f), in each case to the extent received in cash or cash equivalents
during such period.
"Exchangeable Preferred Stock" means (a) with respect to the Borrower,
300,000 shares of the Borrower's 11 1/2% Senior PIK Preferred Stock due 2010,
liquidation preference $100 per share, and (b) with respect to Holding, 300,000
Shares of Holding's 11 1/2% Senior Exchangeable PIK Preferred Stock Due 2010
(Liquidation Preference $100 Per Share).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Shares" means Capital Stock of Holding or the Borrower
issued to a Subsidiary of the Borrower or to an employee stock ownership plan or
trust established by the Borrower or any of its Subsidiaries for the benefit of
their employees.
"Existing Letters of Credit" means each Letter of Credit previously
issued for the account of the Borrower that (a) is outstanding on the Closing
Date and (b) is listed on Schedule 1.01(a).
"Fair Market Value" means, with respect to any Property, the price
which could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.
"Fee Letter" means the Fee Letter dated February 3, 1998, among the
Borrower, the Administrative Agent and the Syndication Agent.
"Fees" means the Commitment Fees, the fees described in Section
2.05(c), the Administrative Agent's Fees, the L/C Participation Fees and the
Issuing Bank Fees.
"Financial Officer" means the Chief Executive Officer or the Chief
Financial Officer of the Borrower.
"Fixed Charge Coverage Ratio" means, with respect to the Borrower and
its Restricted Subsidiaries for any period of four consecutive fiscal quarters,
the ratio of (a) EBITDA for such period, to (b) the sum of Capital Expenditures
paid in cash, Consolidated Interest Expense, scheduled amortizations of Debt,
taxes paid or due and payable, and dividends or other distributions on the
Capital Stock of such person paid in cash (other than to the Borrower or another
Restricted Subsidiary), in each case for such period.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"Freeman Spogli" means Freeman Spogli & Co. Incorporated, a Delaware
corporation.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
11
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" of or by any person means any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantee Agreements" means Holding Guarantee Agreement and the
Subsidiary Guarantee Agreement.
"Guarantors" means Holding and the Subsidiary Guarantors.
"Hazardous Materials" means all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or PCB-
containing materials or equipment, radon gas, infectious or medical wastes and
all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Obligations" means, with respect to any person, all
obligations of such person in respect of Interest Rate Agreements, foreign
currency exchange agreements or other interest or exchange rate hedging
arrangements.
"Holding" has the meaning assigned thereto in the Preamble hereto.
"Holding Guarantee Agreement" means Holding Guarantee Agreement,
substantially in the form of Exhibit , made by Holding in favor of the
Collateral Agent for the benefit of the Secured Parties.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
person existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. Any Indebtedness issued at a
discount (including Indebtedness on which interest is payable through the
issuance of additional Indebtedness) shall be deemed incurred at the time of
original issuance of the Indebtedness at the initial accreted amount thereof.
"Indebtedness" of any person means, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind held by it, (b) all obligations of such person evidenced by
bonds, debentures, notes or similar instruments, (c) financings of accounts
receivable, (d) all obligations of such person under other title retention
agreements relating to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business), (f) all
12
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed (measured as the fair market value of such
property, (g) all Guarantees by such person of Indebtedness of others (measured
by the amount for which such person would be liable), (h) all Capital Lease
Obligations of such person , (i) all net Hedging Obligations of such person and
(j) all obligations of such person as an account party in respect of letters of
credit and bankers' acceptances (other than trade letters of credit and trade
bankers' acceptances). The Indebtedness of any person shall include the
Indebtedness of any partnership in which such person is a general partner.
"Indebtedness to be Paid" has the meaning assigned thereto in Section
6.01(b).
"Indemnitee" has the meaning assigned thereto in Section 9.05(b).
"Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit , among the Borrower, the Subsidiary Guarantors and the Collateral
Agent.
"Interest Payment Date" means, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months' duration, each day that would have been an Interest Payment Date
had successive Interest Periods of three months' duration been applicable to
such Borrowing, and, in addition, the date of any prepayment of such Borrowing
or conversion of such Borrowing to a Borrowing of a different Type.
"Interest Period" means
(a) as to any Eurodollar Borrowing, the period commencing on the date
of such Borrowing and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months (or, if Interest Periods of such duration
shall be available from each Lender, 9 or 12 months) thereafter, as the
Borrower may elect and
(b) as to any ABR Borrowing, the period commencing on the date of such
Borrowing and ending on the earlier of (i) the next succeeding March 31,
June 30, September 30 or December 31, and (ii) the Revolving Credit
Maturity Date or the Term Loan Maturity Date, as applicable,
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day.
"Interest Rate Agreement" means, for any person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect against fluctuations in interest
rates.
"Investment" by any person means any direct or indirect loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation
of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence
13
of Indebtedness issued by, any other person. In determining the amount of any
Investment made by transfer of any Property other than cash, such Property shall
be valued at its Fair Market Value at the time of such Investment.
"Issuing Bank" has the meaning assigned thereto in the Preamble hereto
and Section 2.23(i).
"Issuing Bank Fees" has the meaning assigned thereto in Section
2.05(d).
"L/C Commitment" means the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.23.
"L/C Disbursement" means a payment or disbursement made by the Issuing
Bank pursuant to a Letter of Credit.
"L/C Exposure" means at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
principal amount of all L/C Disbursements that have not yet been reimbursed at
such time. The L/C Exposure of any Revolving Credit Lender at any time means
its Applicable Percentage of the aggregate L/C Exposure at such time.
"L/C Participation Fee" has the meaning assigned thereto in Section
2.05(c).
"Lenders" means (a) the financial institutions listed on Annex 2
(other than any such financial institution that has ceased to be a party hereto
pursuant to an Assignment and Acceptance) and (b) any financial institution that
has become a party hereto pursuant to an Assignment and Acceptance. Unless the
context clearly indicates otherwise, the term "Lenders" shall include the
Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.23 and any Existing Letter of Credit.
"Letter of Credit Request" means a letter of credit issuance,
extension or amendment request delivered by the Borrower to the Administrative
Agent, in the form of Exhibit or such other form as shall be approved by the
Administrative Agent and the applicable Issuing Bank.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loans" means the Revolving Loans, the Term Loans and the Swingline
Loans.
"Margin Stock" has the meaning assigned thereto in Regulation U.
"Material Adverse Effect" means (a) a materially adverse effect on the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries, taken as a whole, (b) impairment of the
ability of the Borrower or any other Credit Party to perform any of its
obligations under any Credit Document to which it is or will be a party, which
impairment is material with respect to the Borrower and the other Credit Parties
14
taken as a whole, or (c) impairment of the rights of or benefits available to
the Lenders under any Credit Document, which impairment is material with respect
to the Borrower and the other Credit Parties taken as a whole, to the Borrower,
or to a Material Subsidiary.
"Material Subsidiary" means a Restricted Subsidiary that, as of the
end of the most recent fiscal quarter for which financial statements are
available accounted for 10% or more of the Borrower's consolidated (i) total
assets, (ii) shareholders' equity,(iii) operating income (calculated for the
four most recently completed fiscal quarters for which financial statements are
available), or (iv) revenues (calculated for the four most recently completed
fiscal quarters for which financial statements are available), determined in
each case in accordance with GAAP.
"Moody's" means Moody's Investors Service, Inc.
"Mortgaged Properties" means the owned real properties and leasehold
and subleasehold interests of the Credit Parties specified on Schedule 1.01(b).
"Mortgages" means the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, modifications and other security documents
delivered pursuant to clause (i) of Section 4.02(k) or pursuant to Section 5.11,
each substantially in the form of Exhibit K.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Prepayment Event,
(a) all cash or readily marketable cash equivalents received
(including by way of sale, discounting or payment of a note, installment
receivable or other instrument or obligation, but excluding any other
consideration received in the form of assumption by the acquiree of Indebtedness
or other obligations relating to such properties or assets or received in any
other noncash form) therefrom by such person, as part of the consideration for
such Prepayment Event, if applicable) received by or on behalf of Holding, the
Borrower or any Restricted Subsidiary in respect of such Prepayment Event, less
(b) the sum of
(i) the amount, if any, of all taxes (other than taxes based on
income) payable by Holding, the Borrower or any Restricted Subsidiary
in connection with such Prepayment Event and the Borrower's good-faith
best estimate of the amount of all taxes based on income payable in
connection with such Prepayment Event,
(ii) in the case of a Prepayment Event that is a Restricted
Asset Disposition, (A) the amount of any expense or reasonable reserve
established in accordance with GAAP against any liabilities associated
with the assets sold or disposed of and retained by the Borrower or
any Restricted Subsidiary (including (1) liabilities under any
indemnification obligations to the acquiror, (2) liabilities with
respect to representations and warranties, (3) liabilities retained
by the Borrower or such Restricted Subsidiary, and (4) employee
termination and similar costs relating to such disposition), provided
that the amount of any subsequent reduction of such reserve (other
than in connection with a payment in respect of any such liability)
shall be deemed to be Net Cash Proceeds of a Prepayment Event
occurring on the date of such reduction, and (B) the amount applied to
15
repay any Indebtedness (other than the Loans) to the extent such
Indebtedness is required by its terms to be repaid as a result of such
Prepayment Event,
(iii) fees, commissions and expenses (including, in the case of
Casualty Proceeds and Condemnation Proceeds, the costs of adjustment
and condemnation proceedings) and other costs paid by Holding, the
Borrower or any Restricted Subsidiary in connection with such
Prepayment Event (other than those payable to the Borrower or any
Affiliate of the Borrower), in each case only to the extent not
already deducted in arriving at the amount referred to in clause (a);
and
(iv) all distributions and other payments made to minority
interest holders in Subsidiaries of such person or joint ventures as a
result of such Prepayment Event.
Notwithstanding the foregoing,
(a) no proceeds of any Restricted Asset Disposition of fixed or
capital assets, no Casualty Proceeds and no Condemnation Proceeds shall
constitute Net Cash Proceeds, to the extent that such proceeds held by the
Borrower or any Restricted Subsidiary to be reinvested, or are reinvested,
in other fixed or capital assets within one year of such Restricted Asset
Disposition; provided, that (i) at any time when the aggregate amount of
such proceeds from Restricted Asset Disposition held for reinvestment
exceeds $10,000,000 at any one time, such excess shall immediately
constitute Net Cash Proceeds, and (ii) at any time when an Event of Default
of type described in Section 7.01(b) or (c) shall have occurred and be
continuing, such proceeds shall immediately constitute Net Cash Proceeds to
the extent that the Borrower has not entered into binding agreements to
acquire assets with such proceeds, and
(b) there shall be excluded from Net Cash Proceeds up to $200,000 of
net proceeds of a single Equity Issuance to be made no more than 90 days
after the Closing Date.
"New Lending Office" has the meaning assigned thereto in Section
2.20(e).
"Non-U.S. Lender" has the meaning assigned thereto in Section 2.20(e).
"Notes" means the Term Notes, the Revolving Credit Notes and the
Swingline Notes.
"Obligations" means all obligations defined as "Obligations" in the
Guarantee Agreements and the Security Documents.
"Other Taxes" has the meaning assigned thereto in Section 2.20(b).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Perfection Certificate" means the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Acquisition" means an Asset Acquisition or a Stock
Acquisition not in the ordinary course of the Borrower's business which in
either case satisfies each of the following conditions:
16
(a) the Administrative Agent shall receive at least 15 days prior
written notice of such proposed Permitted Acquisition, which notice shall
include a detailed description of such proposed Permitted Acquisition and
the business rationale for such acquisition, and including, in the case of
a Stock Acquisition, financial statements of the Target;
(b) in the case of an Asset Acquisition, such assets shall comprise a
business, or assets of a business, of a type which is the same line of
business as the Borrower, or which is a related or complementary business
to that of the Borrower; and in the case of a Stock Acquisition, the
business of the Target shall be of a type which is the same line of
business as a the Borrower, or which is a related or complementary business
to that of the Borrower; provided, however, that (i) no such acquisition
would require the Administrative Agent or any Lender to obtain regulatory
or third party approvals in connection with the exercise of its rights and
remedies under this Agreement or any other Credit Documents other than
approvals required for the exercise of such rights and remedies with
respect to the Borrower prior to such Permitted Acquisition; and (ii) no
such acquisition would result in a material increase in the regulatory
burdens and obligations of the Borrower and its Subsidiaries taken as a
whole;
(c) in the case of a Stock Acquisition, after giving effect thereto,
the Target will either be merged with and into the Borrower, or shall be a
wholly owned Subsidiary of the Borrower;
(d) in the case of a Stock Acquisition, such Permitted Acquisition
shall be consensual and shall have been approved by the Target's board of
directors;
(e) no additional Indebtedness or Guarantees, and no other material
liabilities outside the ordinary course of business, shall be incurred,
assumed or otherwise be reflected on a consolidated balance sheet of the
Borrower after giving effect to such Permitted Acquisition, except (i)
Indebtedness permitted under Section 6.01 and operating leases, and (ii)
Debt Incurred in contemplation of such acquisition for the purposed of
financing such acquisitions consisting of:
(A) Revolving Loans, the aggregate principal amount of which,
when added to the aggregate outstanding principal amount of all other
Revolving Loans made to finance Permitted Acquisitions, shall not to
exceed $40,000,000 at any one time outstanding; and
(B) unsecured subordinated Debt, in form and substance
satisfactory to the Syndication Agent in all respects which is
permitted pursuant to Section 6.01(h);
(f) the sum of all amounts paid or payable in connection with any
single Permitted Acquisition (including all transaction costs and all
Indebtedness, liabilities and Guarantees and other contingent obligations
incurred or assumed in connection therewith (whether or not reflected on a
consolidated balance sheet of the Borrower) after giving effect to the
Permitted Acquisition) shall not exceed $30,000,000;
(g) in the case of
(i) a Stock Acquisition, the Target shall not have, and
17
(ii) in the case of an Asset Acquisition for which the
consideration paid is $5,000,000 or more, the acquired assets if
considered as a stand-alone entity on a pro forma basis would not
have,
reported negative EBITDA for the four most recently completed fiscal quarters
for which financial statements are available preceding the date of the Permitted
Acquisition, as determined based upon the Target's audited financial statements
for its most recently completed fiscal year and its most recent interim
financial period completed within 60 days prior to the date of consummation of
such Permitted Acquisition;
(h) the business and assets acquired in such Permitted Acquisition
shall be free and clear of all Liens (other than Permitted Encumbrances);
(i) promptly following the closing of any Permitted Acquisition, the
Collateral Agent will be granted a first priority perfected Lien (subject
to Liens permitted pursuant to Section 6.02) in all assets acquired
pursuant thereto, and the Borrower (and, in the case of a Stock
Acquisition, the Target) shall have executed such documents and taken such
actions as may be required by the Collateral Agent in connection therewith;
(j) concurrently with delivery of the notice referred to in clause
(a), the Borrower shall have delivered to the Administrative Agent, a pro
forma consolidated balance sheet of the Borrower and its Subsidiaries (the
"Acquisition Pro Forma"), based on recent financial data, which shall be
complete and shall accurately and fairly represent the assets, liabilities,
financial condition and results of operations of the Borrower and its
Subsidiaries in accordance with GAAP consistently applied, but taking into
account such Permitted Acquisition and the funding of all Loans in
connection therewith, and such Acquisition Pro Forma shall reflect that;
(i) the Pro Forma Debt/Pro Forma EBITDA Ratio shall not exceed
the following amounts as of the date of such acquisition:
- ----------------------------------------------------------------------------------------------------
ACQUISITION PRO FORMA DEBT/PRO FORMA EBITDA RATIO
OCCURRING IN
FISCAL
QUARTER
ENDING
NEAREST TO
- ----------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
- ----------------------------------------------------------------------------------------------------
March 31 5.75:1.00 5.00:1.00 4.25:1.00 3.50:1.00 3.25:1.00 3.25:1.00
- ----------------------------------------------------------------------------------------------------
June 30 6.00:1:00 5.75:1.00 4.75:1.00 4.00:1.00 3.50:1.00 3.25:1.00
- ----------------------------------------------------------------------------------------------------
September 30 6.00:1:00 5.75:1.00 4.75:1.00 4.00:1.00 3.50:1.00 3.25:1.00
- ----------------------------------------------------------------------------------------------------
December 31 5.75:1.00 5.00:1.00 4.25:1.00 3.50:1.00 3.25:1.00 3.25:1.00
- ----------------------------------------------------------------------------------------------------
and thereafter, 3.25:1.00.
(ii) on a pro forma basis, no Event of Default shall have
occurred and be continuing or would result after giving effect to such
Permitted Acquisition and the Borrower would have been in compliance
with the financial covenants set forth in Section 6.09 through Section
6.12 with a look-back for pro-forma compliance (the "Acquisition
Projections");
(k) the Borrower shall have delivered financial projections covering
the 5-year period commencing on the date of such Permitted Acquisition
based upon historical
18
financial data of a recent date, taking into account such Permitted
Acquisition prepared in a manner consistent with the financial projections
delivered to the Agents in connection with the closing of this Agreement
(the "Closing Projections");
(l) the Borrower shall have delivered a certificate of a Financial
Officer of the Borrower to the effect that: (i) the Borrower will be
solvent upon the consummation of the Permitted Acquisition; (ii) the
Acquisition Pro Forma fairly presents the financial condition of the
Borrower and its Subsidiaries (on a consolidated basis) as of the date
thereof after giving effect to the Permitted Acquisition; and (iii) the
Acquisition Projections are reasonable estimates of the future financial
performance of the Borrower subsequent to the date thereof prepared in a
manner consistent with the Closing Projections of the Borrower (and, in
the case of a Stock Acquisition, the Target) and show that the Borrower
shall continue to be in compliance with the financial covenants set forth
in Section 6.09 through Section 6.12 for the 5-year period thereafter;
(m) except where substantially all of the consideration for such
acquisition consists of Capital Stock of the Borrower, on or prior to the
date of such Permitted Acquisition, the Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent,
all opinions, certificates, lien search results and other documents
reasonably requested by the Administrative Agent;
(n) the Administrative Agent and the Lenders shall have received Phase
I reports (reasonably satisfactory in scope and substance to the Agents)
with respect to any owned property to be acquired; and
(o) at the time of such Permitted Acquisition and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing.
"Permitted Holder" means Helen Hudson Lovaas, any member of senior
management of the Borrower or Holding on the Closing Date, Freeman Spogli or any
successor entity thereof controlled by the principals of Freeman Spogli and any
entity controlled by, or under common control with, Freeman Spogli.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a
rating of A1/P1 from S&P and from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof that
has a combined capital and surplus and undivided profits of not less than
$250,000,000;
19
(d) other investment instruments approved in writing by the Required
Lenders and offered by financial institutions which have a combined capital
and surplus and undivided profits of not less than $250,000,000; and
(e) interests in mutual funds which invest primarily in instruments
described in clauses (a), (b) and (c).
"Permitted Purchase Money Lien" means (a) purchase money and similar
Liens existing on the Closing Date or (b) Liens applicable to real property,
improvements thereto or equipment or other Property acquired or constructed
after the Closing Date by the Borrower or any Restricted Subsidiary; provided
that (i) such security interests are incurred, and the Indebtedness secured
thereby is created, no later than 12 months after such acquisition (or
completion of construction), and (ii) such security interests do not apply to
any other property or assets of the Borrower or any Subsidiary.
"person" means any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the
form of Exhibit , between the Borrower, Holding, the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Preferred Stock" means any Capital Stock of a person, however
designated, which entitles the holder thereof to a preference with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such person, over shares of any
other class of Capital Stock issued by such person.
"Prepayment Event" means any Incurrence of Debt of the Borrower or any
Subsidiary, any Equity Issuance, any Restricted Asset Disposition, any
Restricted Sale/Leaseback Transaction, any Casualty or any Condemnation.
"Pricing Adjustment" shall mean, for any day, with respect to any Loan
or with respect to the Commitment Fees, as the case may be, the Pricing
Adjustment set forth below, based upon the Debt/Adjusted EBITDA Ratio as of the
date of determination:
CATEGORY 2
CATEGORY 1 DEBT/ADJUSTED EBITDA CATEGORY 3
DEBT/ADJUSTED EBITDA RATIO DEBT/ADJUSTED
RATIO LESS THAN 4.0:1.0 AND EBITDA RATIO
GREATER THAN OR EQUAL TO GREATER THAN OR EQUAL TO LESS THAN 3.5:1.0
4.0:1.0 3.5:1.0
------------------------ ------------------------ -----------------
Commitment Fees 0% .0625% .125%
ABR Loans 0% .250% .500%
Eurodollar Loans 0% .250% .500%
Each change in the Pricing Adjustment resulting from a change in the
Debt/Adjusted EBITDA Ratio shall become effective with respect to all
outstanding Loans and Commitments
20
on the Business Day after the date of receipt by the Administrative Agent of the
financial statements and certificates required by Section 5.04(a) or (b)
indicating such change until the date immediately preceding the next date of
delivery of such financial statements and certificates indicating another such
change. Notwithstanding the foregoing,
(i) the Pricing Adjustment shall be 0% for 12 months after the
Closing Date,
(ii) at any time during which the Borrower has failed to deliver the
financial statements and certificates required by Section 5.04(a) or (b),
the Debt/Adjusted EBITDA Ratio shall be deemed to be in Category 1 for
purposes of determining the Pricing Adjustment; and
(iii) at any time after the occurrence and during the continuance of
an Event of Default relating to Section 7.01(b), (c), or (d) (but only with
respect to breaches of the covenants contained in Section 6.09 through
Section 6.12), the Debt/Adjusted EBITDA Ratio shall be deemed to be in
Category 1 for purposes of determining the Pricing Adjustment.
"Pricing Adjustment Certificate" means an pricing adjustment
certificate delivered by the Borrower to the Administrative Agent, in the form
of Exhibit or such other form as shall be approved by the Administrative Agent.
"Pro Forma Debt/Pro Forma EBITDA Ratio" means, as of any date with
respect to the Borrower and its consolidated Restricted Subsidiaries, (a) the
total amount of Debt of the Borrower and its consolidated Restricted
Subsidiaries as of such date (after giving effect to any Debt assumed or
Incurred in connection with a proposed acquisition), to (b) Pro Forma EBITDA of
the Borrower and its consolidated subsidiaries for the four most recently
completed fiscal quarters for which financial statements are available.
"Pro Forma EBITDA" means, with respect to the Borrower and its
Subsidiaries for the most recently completed period of four fiscal quarters for
which financial statements are available, EBITDA on a consolidated basis after
giving effect to
(a) a proposed Asset Acquisition or Stock Acquisition on a pro forma
basis (as if such acquisition has been made on the first day of such
period), and
(b) all Asset Acquisitions or Stock Acquisitions consummated during
such period on a pro forma basis (as if such acquisitions were made on the
first day of such period),
plus the pro forma cost savings for such period calculated, without duplication
(a) in accordance with Regulation S-X under the Securities Exchange Act of 1934,
as amended, and (b) good faith estimates by management and approved by the
Agents of the results of determined events which have been notified to the
Agents in writing in reasonable detail and do not exceed 20% of the reported
EBITDA of the acquired business for previous four quarters.
"Property" means, with respect to any person, any interest of such
person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including Capital Stock in, and other securities of, any
other person.
"Public Equity Offering" means an underwritten public offering of
common stock of the Borrower pursuant to an effective registration statement
under the Securities Act.
21
"Recapitalization" has the meaning specified in Annex 3, and includes
any other transactions incidental thereto.
"Recapitalization Agreements" means the Acquisition Agreement, and any
other agreement, instrument or other document to be entered into or delivered
by, between or among the Borrower, the Sellers and any of their respective
Affiliates in connection with the Recapitalization, as each such agreement,
instrument or document may be amended, modified or supplemented from time to
time in accordance with the terms thereof and hereof.
"Redeemable Dividend" means, for any dividend with respect to
Redeemable Stock, the quotient of the dividend divided by the difference between
one and the maximum statutory federal income tax rate (expressed as a decimal
number between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means, with respect to any person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in either case at the option of the
holder thereof,) or otherwise (a) matures or is mandatorily redeemable pursuant
to a sinking fund obligation or otherwise, (b) is or may become redeemable or
repurchaseable at the option of the holder thereof, in whole or in part, or (c)
is convertible or exchangeable, in either case at the option of the holder
thereof, for Debt or Disqualified Stock.
"Redemption Amount" has the meaning given such term in Section
4.02(t).
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the Closing Date
or Incurred in compliance with this Agreement ((including (a) Indebtedness of
the Borrower that refinances Indebtedness of any Restricted Subsidiary (to the
extent permitted in this Agreement), (b) Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted Subsidiary, and
(c) Indebtedness that refinances Refinancing Indebtedness); provided, however,
that (i) the Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced and (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being refinanced, plus fees, underwriting
discounts and other costs and expenses incurred in connection with such
Refinancing Indebtedness; provided further, however, that Refinancing
Indebtedness shall not include (x) Indebtedness of a Restricted Subsidiary that
is not a Subsidiary Guarantor that refinances Indebtedness of the Borrower or
(y) Indebtedness of the Borrower or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Register" has the meaning given such term in Section 9.04(d).
"Regulation G" means Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
22
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulatory Shares" means, with respect to any person, shares of such
person required to be issued as qualifying shares to directors or persons
similarly situated or shares issued to persons other than the Borrower or a
wholly owned subsidiary of the Borrower in response to regulatory requirements
of foreign jurisdictions pursuant to a resolution of the Board of Directors of
such person, so long as such shares do not exceed 1% of the total outstanding
shares of Capital Stock of such person and any owners of such shares irrevocably
waive or agree to remit to the Borrower any dividends or distributions payable
in respect of such shares.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" means (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat,
abate or in any other way address any Hazardous Material in the environment;
(ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, clause (i) or (ii).
"Repayment Date" has the meaning given such term in Section 2.11.
"Required Lenders" means, at any time, Lenders having Loans (excluding
Swingline Loans), L/C Exposure, Swingline Exposure and unused Revolving Credit
Commitments and Term Loan Commitments representing at least a majority of the
sum of all Loans outstanding (excluding Swingline Loans), L/C Exposure,
Swingline Exposure and unused Revolving Credit Commitments and Term Loan
Commitments at such time.
"Responsible Officer" of any corporation means any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"Restricted Asset Disposition" means any sale, transfer, lease or
other disposition of any asset of the Borrower or any Subsidiary other than an
Unrestricted Asset Disposition.
"Restricted Payment" has the meaning assigned thereto in Section
6.05(a).
"Restricted Sale/Leaseback Transaction" means any Sale/Leaseback
Transaction other than an Unrestricted Sale/Leaseback Transaction.
"Restricted Subsidiary" means any Subsidiary of the Borrower other
than an Unrestricted Subsidiary.
"Revolving Credit Borrowing" means a Borrowing comprised of Revolving
Loans.
"Revolving Credit Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans hereunder as set forth on
Annex I, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to
23
Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Lender, plus the aggregate amount at such time of such Lender's
L/C Exposure, plus the aggregate amount at such time of such Lender's Swingline
Exposure.
"Revolving Credit Lender" means a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" means March 31, 2004.
"Revolving Credit Note" means a promissory note of the Borrower,
substantially in the form of Exhibit C, evidencing Revolving Loans.
"Revolving Loans" means the revolving loans made by the Lenders to the
Borrower pursuant to clause (b) of Section 2.01. Each Revolving Loan shall be a
Eurodollar Revolving Loan or an ABR Revolving Loan.
"S&P" means Standard & Poor's Ratings Service.
"Sale/Leaseback Transactions" means any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, and thereafter rent or lease such
property or other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
"Secured Parties" has the meaning assigned thereto in the Security
Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security Agreement, substantially in
the form of Exhibit I, between the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" means the Mortgages, the Security Agreement, the
Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
"Sellers" means Helen Hudson Lovaas and the other shareholders of the
Borrower immediately before the Recapitalization.
"Senior Subordinated Notes" means the Borrower's 9 1/8% Senior
Subordinated Notes due 2008.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Statutory Reserves" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of
24
the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority, domestic or foreign, to which the Administrative Agent
or any Lender (including any branch, Affiliate, or other fronting office making
or holding a Loan) is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months, and (b) with respect to the Adjusted
Eurodollar Rate, for Eurocurrency Liabilities (as defined in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Stock Acquisition" means an acquisition of Capital Stock of any
person other than in the ordinary course of the Borrower's business.
"Subordinated Obligation" means any Indebtedness of the Borrower or
any Subsidiary (whether outstanding on the Closing Date or thereafter Incurred)
which is subordinate or junior in right of payment to the Notes or the
applicable Guarantee pursuant to a written agreement to that effect.
"subsidiary" means, with respect to any person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by Holding or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" means the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit , made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" means each Subsidiary listed on Schedule
1.01(c), and each other Subsidiary that is or becomes a party to a Subsidiary
Guarantee Agreement.
"Swingline Commitment" means the commitment of the Swingline Lender to
make loans pursuant to Section 2.22, as the same may be reduced from time to
time pursuant to Section 2.09 .
"Swingline Exposure" means at any time the aggregate principal amount
at such time of all outstanding Swingline Loans. The Swingline Exposure of any
Revolving Credit Lender at any time shall equal its Applicable Percentage of the
aggregate Swingline Exposure at such time.
"Swingline Lender" has the meaning assigned thereto in the Preamble
hereto.
"Swingline Loan" means any loan made by the Swingline Lender pursuant
to Section 2.22.
25
"Swingline Note" means a promissory note evidencing Swingline Loans,
executed and delivered as provided in Section 2.22 in substantially the form of
Exhibit .
"Syndication Agent" has the meaning assigned thereto in the Preamble.
"Target" means a person whose Capital Stock is the subject of a
proposed Permitted Acquisition.
"Taxes" has the meaning assigned thereto in Section 2.20(a).
"Term Borrowing" means a Borrowing comprised of Term Loans.
"Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on Annex 1,
or in the Assignment and Acceptance pursuant to which such Lender assumed its
Term Loan Commitment, as applicable, as the same may be (a) reduced from time to
time pursuant to Section 2.09 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04.
"Term Loan Maturity Date" means March 31, 2004.
"Term Loans" means the term loans made by the Lenders to the Borrower
pursuant to Section 2.01. Each Term Loan shall be a Eurodollar Term Loan or an
ABR Term Loan.
"Term Note" means a promissory note of the Borrower, substantially in
the form of Exhibit , evidencing Term Loans.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Total Revolving Credit Commitment" means, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time.
"Transaction Costs" means commitment fees, financing fees, advisory
fees, underwriting fees and discounts, and other out-of-pocket fees and expenses
relating to the Recapitalization, excluding any expenses of the Sellers which
are deducted from the Redemption Amount.
"Transactions" has the meaning assigned thereto in Section 3.02.
"Transferee" has the meaning assigned thereto in Section 2.20(a).
26
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall
include the Adjusted Eurodollar Rate and the Alternate Base Rate.
"Unrestricted Asset Disposition" means, on a consolidated basis with
respect to the Borrower or any wholly owned Restricted Subsidiary, any sale,
transfer, lease or other disposition of any inventory, cash, Permitted
Investment, or obsolete or unusable Property of the Borrower or any Subsidiary
in the ordinary course of business and not otherwise in violation of this
Agreement.
"Unrestricted Sale/Leaseback Transaction" mean any Sale/Leaseback
Transaction which does not involve a sale or transfer of property which is owned
by the Borrower or its Restricted Subsidiaries on the Closing Date (or any
replacements thereof).
"Unrestricted Subsidiary" means (i) any Subsidiary of the Borrower
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors of the Borrower in the manner provided below and (ii)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Borrower may designate any Subsidiary of the Borrower (including any newly
acquired or newly formed Subsidiary of the Borrower) to be an Unrestricted
Subsidiary; provided, however, that (A) such Subsidiary and none of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Borrower or any other Subsidiary of the Borrower
that is not a Subsidiary of the Subsidiary to be so designated, and (B) the
Subsidiary to be so designated has total consolidated assets of $1,000 or less.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.
"wholly owned Subsidiary" of any person means a Restricted Subsidiary
of which securities (except for Regulatory Shares) or other ownership interests
representing 100% of the equity or 100% of the ordinary voting power or 100% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the Borrower or one or more wholly owned
Subsidiaries of the Borrower or by the Borrower and one or more wholly owned
Subsidiaries of the Borrower.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Work" has the meaning assigned thereto in Section 5.12(e).
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Annexes, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Annexes, Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, (a) any reference in this
Agreement to any Credit Document means such document as amended, restated,
supplemented or otherwise modified from time to time and (b) all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
27
in effect from time to time; provided, however, that for purposes of determining
compliance with the covenants contained in Article VI, all accounting terms
herein shall be interpreted and all accounting determinations hereunder shall be
made in accordance with GAAP as in effect on the date of this Agreement and
applied on a basis consistent with the application used in the financial
statements referred to in Section 3.05(a).
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a single Term Loan to the
Borrower on the Closing Date in a principal amount not to exceed its Term Loan
Commitment, and (b) to make Revolving Loans to the Borrower, at any time and
from time to time on or after the date hereof, and until the earlier of the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitment of such Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (i) such
Lender's Revolving Credit Exposure exceeding (ii) such Lender's Revolving Credit
Commitment. Within the limits set forth in clause (b) of the preceding sentence
and subject to the terms, conditions and limitations set forth herein, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid
or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their applicable Revolving Credit Commitments; provided,
however, that the failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender). Except
for Loans deemed made pursuant to Section 2.02(e) or pursuant to Section
2.22(e)), the Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) in the case of Eurodollar Loans, an integral multiple of
$1,000,000 and not less than $3,500,000, (ii) in the case of ABR Loans, an
integral multiple of $100,000 and not less than $1,000,000 or (ii) equal to the
remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement and the applicable Note. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that the Borrower shall not be
entitled to request any Borrowing that, if made, would result in more than five
Eurodollar Borrowings outstanding hereunder at any time. For purposes of the
foregoing, Borrowings having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(e),
each Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 11:00 a.m.,
New York City time, and the Administrative Agent shall by 12:00 (noon), New York
City time, credit the amounts so received to an account in the name of
28
the Borrower and designated by the Borrower in the applicable Borrowing Request
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with clause (c) and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower on such date a corresponding
amount. If the Administrative Agent shall have so made funds available then, to
the extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative Agent
at (i) in the case of the Borrower, the interest rate applicable at the time to
the Loans comprising such Borrowing and (ii) in the case of such Lender, for the
first such day, the Federal Funds Effective Rate, and for each day thereafter,
the Alternate Base Rate. If such Lender shall repay to the Administrative Agent
such corresponding amount, such amount shall constitute such Lender's Loan as
part of such Borrowing for purposes of this Agreement.
(e) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.23(e) within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent of the
L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement and its Applicable Percentage
thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Revolving Credit Lender shall have received
such notice later than 12:00 (noon), New York City time, on any day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day),
an amount equal to such Lender's Applicable Percentage of such L/C Disbursement
(it being understood that such amount shall be deemed to constitute an ABR
Revolving Loan of such Lender and such payment shall be deemed to have reduced
the L/C Exposure), and the Administrative Agent will promptly pay to the Issuing
Bank amounts so received by it from the Revolving Credit Lenders. The
Administrative Agent will promptly pay to the Issuing Bank any amounts received
by it from the Borrower pursuant to Section 2.23(e) prior to the time that any
Revolving Credit Lender makes any payment pursuant to this clause; any such
amounts received by the Administrative Agent thereafter will be promptly
remitted by the Administrative Agent to the Revolving Credit Lenders that shall
have made such payments and to the Issuing Bank, as their interests may appear.
If any Revolving Credit Lender shall not have made its Applicable Percentage of
such L/C Disbursement available to the Administrative Agent as provided above,
such Lender and the Borrower severally agree to pay interest on such amount, for
each day from and including the date such amount is required to be paid in
accordance with this clause to but excluding the date such amount is paid, to
the Administrative Agent for the account of the Issuing Bank at (i) in the case
of the Borrower, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such
Lender, for the first such day, the Federal Funds Effective Rate, and for each
day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan or a deemed Borrowing pursuant to Section 2.02(e),
as to which this Section shall not apply), the Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Borrowing Request (a) in
the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before a proposed Borrowing, and (b) in
29
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before a proposed Borrowing. Each Borrowing Request shall be
irrevocable, shall be signed by or on behalf of the Borrower and shall specify
the following information: (i) whether the Borrowing then being requested is to
be a Term Borrowing or a Revolving Credit Borrowing, and whether such Borrowing
is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such
Borrowing (which shall be a Business Day), (iii) the number and location of the
account to which funds are to be disbursed (which shall be an account that
complies with the requirements of Section 2.02(c)); (iv) the amount of such
Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02. The initial
Borrowing shall be an ABR Borrowing. If no election as to the Type of Borrowing
is specified in any such notice, then the requested Borrowing shall be an ABR
Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration. The Administrative Agent shall
promptly advise the applicable Lenders of any notice given pursuant to this
Section, and of each Lender's portion of the requested Borrowing.
SECTION 2.04 Notes and Records. (a) The Revolving Loans, Term Loans
and Swingline Loans made by each Lender shall be evidenced by a Revolving Credit
Note, Term Note and Swingline Note, respectively, duly executed on behalf of the
Borrower, dated the Closing Date, payable to the order of such Lender in a
principal amount equal to such Lender's Revolving Credit Commitment, in the case
of its Revolving Credit Note, such Lender's Term Commitment, in the case of its
Term Note or such Lender's Swingline Commitment, in the case of its Swingline
Note. The outstanding principal balance of each Loan, as evidenced by such a
Note, shall be payable (i) in the case of a Swingline Loan, on the last day of
the Interest Period applicable to such Loan and on the Revolving Credit Maturity
Date, (ii) in the case of a Revolving Loan, on the Revolving Credit Maturity
Date and (iii) in the case of a Term Loan, as provided in Section 2.11.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid such Lender from time to
time under this Agreement. Each Lender shall, and is hereby authorized by the
Borrower to, endorse on the schedule attached to each Note delivered to such
Lender (or on a continuation of such schedule attached to such Note and made a
part thereof), or otherwise to record in such Lender's internal records, an
appropriate notation evidencing the date and amount of each Loan from such
Lender, each payment and prepayment of principal of any such Loan, each payment
of interest on any such Loan and the other information provided for on such
schedule; provided, however, that the failure of any Lender to make such a
notation or any error therein shall not in any manner affect the obligation of
the Borrower to repay the Loans made by such Lender in accordance with the terms
of this Agreement and the applicable Note.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to clauses
(b) and (c) shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such
30
accounts or any error therein shall not in any manner affect the obligations of
the Borrower to repay the Loans in accordance with their terms.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on March 31, June 30, September 30 and
December 31 (beginning on June 30, 1998) and on each date on which any
Commitment of such Lender shall expire or be terminated as provided herein, a
commitment fee (a "Commitment Fee") of 0.50% per annum less the applicable
Pricing Adjustment on the average daily excess of the aggregate amount of the
Revolving Credit Commitments over the aggregate amount of the Revolving Credit
Exposures during the preceding quarter (or other period commencing with the date
of acceptance by the Borrower of the Commitment of such Lender or ending with
the Revolving Credit Maturity Date or the date on which the Commitments of such
Lender shall expire or be terminated). All Commitment Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. The
Commitment Fee due to each Lender shall begin to accrue on the date of execution
of this Agreement and shall cease to accrue on the date on which the Commitment
of such Lender shall expire or be terminated as provided herein. For purposes
of calculating Commitment Fees only, no portion of the Revolving Credit
Commitments shall be deemed utilized under Section 2.17 as a result of
outstanding Swingline Loans.
(b) The Borrower agrees to pay to the Administrative Agent, for its
own account, the administrative fees set forth in the Fee Letter at the times
and in the amounts specified therein (the "Administrative Agent Fees").
(c) The Borrower agrees to pay to the Administrative Agent, for
payment to the other Lenders (to the extent applicable), on the Closing Date,
the other fees specified in the Fee Letter, and the Administrative Agent shall
pay to each Lender on the Closing Date that portion of such fees that shall be
owing to such Lender.
(d) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on March 31, June 30, September 30 and
December 31 of each year and on the date on which the Revolving Credit
Commitment of such Lender shall be terminated as provided herein, a fee (an "L/C
Participation Fee") calculated on such Lender's Applicable Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been cancelled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate equal to the applicable margin from time to time used to
determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank with
respect to each Letter of Credit an administrative fee payable to the Issuing
Bank equal to the greater of (a) for the period from and after the date of
issuance thereof (or, with respect to Existing Letters of Credit, for the period
from and after the Closing Date), 1/4 of 1% per annum of the maximum amount
available from time to time to be drawn under such Letter of Credit, in each
case calculated in arrears on and through the last day of each Fiscal Quarter
and on the basis of a 360-day year and the actual number of days elapsed and (b)
$500, and payable on the Business Day immediately succeeding such date of
calculation in immediately available funds, and (iii) the standard issuance,
drawing and amendment fees specified from time to time by the Issuing Bank (the
"Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the
31
Issuing Bank Fees shall be paid directly to the Issuing Bank. Once paid, none of
the Fees shall be refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base Rate
plus 1.25% less the applicable Pricing Adjustment.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted Eurodollar Rate for the Interest Period in effect for such
Borrowing plus 2.25% less the applicable Pricing Adjustment.
(c) Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period. Interest
on each Loan shall be payable on the Interest Payment Dates applicable to such
Loan except as otherwise provided in this Agreement. The applicable Alternate
Base Rate or Adjusted Eurodollar Rate for each Interest Period or day within an
Interest Period, as the case may be, shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Credit Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06(a) plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the sum of the Alternate Base Rate plus
2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing any Lender shall have determined that
dollar deposits in the principal amounts of the Loans comprising such Borrowing
are not generally available to it in the Eurodollar interbank market, or that
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to such Lender of making or maintaining its
Eurodollar Loan during such Interest Period, or that the Administrative Agent
shall have determined that reasonable means do not exist for ascertaining the
Adjusted Eurodollar Rate as soon as practicable thereafter, the affected Lender
shall give written or telecopy notice thereof to the Administrative Agent,
and/or the Administrative Agent shall, give written or telecopy notice thereof
to the Borrower and the Lenders. In the event of any such determination, until
the affected Lender or the Administrative Agent, as the case may be, shall have
given notice that the circumstances giving rise to such notice no longer exist,
any request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03
or 2.10, from the affected Lender or the Lenders, as the case may be, shall be
deemed to be a request for an ABR Borrowing. Each determination by such Lender
or the Administrative Agent hereunder shall be conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term
Loan Commitments hereunder shall terminate on the earliest of (i) the date on
which the
32
Borrower informs the Lenders that it has decided not to proceed with the
Recapitalization, (ii) the date on which the Acquisition Agreement is terminated
in accordance with its terms or (iii) 5:00 p.m., New York City Time, April 30,
1998, if the initial Credit Event is not made on or before such date. The
Revolving Credit Commitments, the Swingline Commitment and the L/C Commitment
shall automatically terminate on the earliest of (i) the Revolving Credit
Termination Date, (ii) the date on which the Borrower informs the Lenders that
it has decided not to proceed with the Recapitalization, (iii) the date on which
the Acquisition Agreement is terminated in accordance with its terms or (iv)
5:00 p.m., New York City Time, April 16, 1998, if the initial Credit Event shall
not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Term Loan Commitments or the Revolving Credit Commitments; provided,
however, that (i) each partial reduction of the Term Loan Commitments or the
Revolving Credit Commitments shall be in (1) an integral multiple of $1,000,000
and in a minimum amount of $1,000,000 or (2) in the full remaining amount of the
Term Loan Commitments or the Revolving Credit Commitments, as the case may be,
and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount
that is less than the sum of the Aggregate Revolving Credit Exposure at the
time. In addition, if no Term Loans are outstanding, the Revolving Credit
Commitments shall automatically be reduced by the amount of any mandatory
prepayment that would otherwise have been applied to the prepayment of Term
Loans pursuant to Section 2.13(g).
(c) Each reduction in the Term Loan Commitments or the Revolving
Credit Commitments hereunder shall be made ratably among the Lenders in
accordance with their respective applicable Commitments. The Borrower shall pay
to the Administrative Agent for the account of the applicable Lenders, on the
date of each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time by delivery of a Continuation/Conversion
Request (or by telephonic notice promptly confirmed by delivery of a
Continuation/Conversion Request) to the Administrative Agent (a) not later than
11:00 a.m., New York City time, one Business Day prior to conversion, to convert
any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 11:00 a.m.,
New York City time, three Business Days prior to conversion or continuation, to
convert any ABR Borrowing into a Eurodollar Borrowing or to continue any
Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest
Period, and (c) not later than 11:00 a.m., New York City time, three Business
Days prior to conversion, to convert the Interest Period with respect to any
Eurodollar Borrowing to another permissible Interest Period, subject in each
case to the following:
(i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b)
regarding the principal amount and maximum number of Borrowings of the
relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new
Loan of such Lender resulting
33
from such conversion and reducing the Loan (or portion thereof) of such
Lender being converted by an equivalent principal amount; accrued interest
on any Eurodollar Loan (or portion thereof) being converted shall be paid
by the Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower shall pay,
upon demand, any amounts due to the Lenders pursuant to Section 2.16;
(v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be converted
into or continued as a Eurodollar Borrowing by reason of the immediately
preceding clause shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing;
(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than a Repayment Date occurring on or after
the first day of such Interest Period if, after giving effect to such
selection, the aggregate outstanding amount of (A) the Eurodollar Term
Borrowings with Interest Periods ending on or prior to such Repayment Date
and (B) the ABR Term Borrowings would not be at least equal to the
principal amount of Term Borrowings to be paid on such Repayment Date;
(viii) no Interest Period applicable to a Revolving Loan may end
later than the Revolving Credit Maturity Date, and no Interest Period
applicable to a Term Loan may end later than the Term Loan Maturity Date;
and
(ix) upon notice to the Borrower from the Administrative Agent given
at the request of the Required Lenders, after the occurrence and during the
continuance of a Default or Event of Default, no outstanding Loan may be
converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section shall be irrevocable and shall refer
to this Agreement and specify (A) the identity and amount of the Borrowing that
the Borrower requests be converted or continued, (B) whether such Borrowing is
to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing,
(C) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (D) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto.
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Borrowing, the Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall advise the Lenders of any notice given pursuant to
this Section and of each Lender's portion of any converted or continued
Borrowing. If the Borrower shall not have given notice in accordance with this
Section to continue any Borrowing into a subsequent Interest Period (and shall
not otherwise have given notice in accordance with this Section to convert such
Borrowing), such Borrowing shall, at the end of the Interest Period applicable
thereto (unless repaid pursuant to the terms hereof), automatically be continued
into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) The principal of the
Term Borrowings shall be payable in quarterly installments on the following
dates (each such date being called a "Repayment Date") in the following amounts:
34
- ---------------------------------------------------------------------------------------------
DATE AMOUNT OF REPAYMENT
- ---------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
- ---------------------------------------------------------------------------------------------
March 31 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000
- ---------------------------------------------------------------------------------------------
June 30 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000
- ---------------------------------------------------------------------------------------------
September 30 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000
- ---------------------------------------------------------------------------------------------
December 31 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000
- ---------------------------------------------------------------------------------------------
(b) Each payment of Term Borrowings pursuant to this Section shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of payment.
SECTION 2.12. Prepayment. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent before 11:00 a.m., New York City time; provided, however,
that each partial prepayment shall be in an amount that is an integral multiple
of $1,000,000 and not less than $1,000,000.
(b) Optional prepayments of Term Loans shall be applied (i) first, to
scheduled amortization payments due within 12 calendar months thereafter, and
(ii) second, pro rata against the remaining scheduled installments of principal
due in respect of the Term Loans.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower to prepay such Borrowing by the
amount stated therein on the date stated therein. All prepayments under this
Section shall be subject to Section 2.16 but otherwise without premium or
penalty. All prepayments under this Section shall be accompanied by accrued
interest on the principal amount being prepaid to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay or
prepay all its outstanding Revolving Credit Borrowings and all outstanding
Swingline Loans on the date of such termination. In the event of any partial
reduction of the Revolving Credit Commitments, then (i) at or prior to the
effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Revolving Credit Lenders of the Aggregate Revolving Credit
Exposure after giving effect thereto and (ii) if the Aggregate Revolving Credit
Exposure would exceed the Total Revolving Credit Commitment after giving effect
to such reduction or termination, then the Borrower shall, on the date of such
reduction or termination, repay or prepay Revolving Credit Borrowings or
Swingline Loans (or a combination thereof) in an amount sufficient to eliminate
such excess.
(b) With respect to any Restricted Asset Disposition, not later than
the earliest of (i) the third Business Day following the completion of any
Restricted Asset Disposition if the Borrower does not intend to reinvest the Net
Cash Proceeds thereof, as set forth in the definition of Net Cash Proceeds, (ii)
promptly after the date on which the Borrower determines not to reinvest the Net
Cash Proceeds thereof as set forth in the definition of Net Cash Proceeds, and
(iii) the first anniversary of the date thereof, the Borrower shall apply 100%
of the Net Cash Proceeds, if any, received with respect thereto to prepay
outstanding Term Loans and/or reduce the Revolving Credit Commitment in
accordance with Section 2.13(g).
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(c) In the event and on each occasion that
(i) an Equity Issuance occurs as part of an initial public
offering of the Capital Stock of the Borrower, the Borrower shall,
substantially simultaneously with (and in any event not later than the
third Business Day next following) the occurrence of such Equity
Issuance, apply Net Cash Proceeds therefrom in an amount equal to 50%
of the net cash proceeds of the Capital Stock sold in such initial
public offering (whether or not all such Capital Stock is offered by
the Borrower) to prepay outstanding Term Loans and/or reduce the
Revolving Credit Commitment in accordance with Section 2.13(g);
provided, however, that the remaining portion of such Net Cash
Proceeds shall be applied either (A) pursuant to Section 6.05(a)(iii)
for the redemption of Exchangeable Preferred Stock (including accreted
PIK liquidation preference) or (B) to prepay outstanding Term Loans
and/or reduce the Revolving Credit Commitment in accordance with
Section 2.13(g); and
(ii) an Equity Issuance occurs other than as part of an initial
public offering of the Capital Stock of the Borrower, the Borrower
shall, substantially simultaneously with (and in any event not later
than the third Business Day next following) the occurrence of such
Equity Issuance, apply 100% of the Net Cash Proceeds therefrom to
prepay outstanding Term Loans and/or reduce the Revolving Credit
Commitment in accordance with Section 2.13(g).
(d) Beginning with the fiscal year ending nearest to December 31,
1999, no later than the earlier of (i) 90 days after the end of each fiscal year
of the Borrower, and (ii) the date on which the financial statements with
respect to such period are delivered pursuant to Section 5.04(a), the Borrower
shall prepay outstanding Term Loans in accordance with Section 2.13(g) in an
aggregate principal amount equal to 75% (or 50%, for fiscal years for which the
Debt/Adjusted EBITDA Ratio for such fiscal year is less than 5:1) of Excess Cash
Flow for the fiscal year then ended.
(e) In the event that any Credit Party or any subsidiary of a Credit
Party shall receive Net Cash Proceeds from the Incurrence of Debt of the
Borrower or any of its Subsidiaries (other than any proceeds of Debt permitted
pursuant to Section 6.01), the Borrower shall, substantially simultaneously with
(and in any event not later than the third Business Day next following) the
receipt of such Net Cash Proceeds by the Borrower or such Subsidiary, apply an
amount equal to 100% of such Net Cash Proceeds to prepay outstanding Term Loans
and/or reduce the Revolving Credit Commitment in accordance with Section
2.13(g).
(f) In the event that there shall occur any Casualty or Condemnation
and, pursuant to Section 5.12, the Casualty Proceeds or Condemnation Proceeds,
as the case may be, are required to be used to prepay the Term Loans, then the
Borrower shall apply an amount equal to 100% of such Casualty Proceeds or
Condemnation Proceeds, as the case may be, to prepay outstanding Term Loans
and/or reduce the Revolving Credit Commitment in accordance with Section
2.13(g).
(g) Mandatory prepayments under this Agreement shall be applied pro
rata against the remaining scheduled installments of principal due in respect of
the Term Loans under Section 2.11. If no Term Loans are outstanding, the
Revolving Credit Commitments shall be permanently reduced by an amount equal to
the amount of such mandatory prepayment and, if required by Section 2.13(a), to
prepay Revolving Loans.
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(h) The Borrower shall deliver to the Administrative Agent, at the
time of each prepayment required under this Section, (i) a certificate signed by
a Responsible Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
(i) Amounts to be applied pursuant to this Section to the prepayment
of Term Loans and Revolving Loans shall be applied, as applicable, first to
reduce outstanding ABR Term Loans and ABR Revolving Loans. Any amounts
remaining after each such application shall, at the option of the Borrower, be
applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as the
case may be, immediately and/or shall be deposited in the Prepayment Account (as
defined below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of the Borrower, on any earlier date) until all outstanding Term Loans
or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" means an account
established by the Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this clause.
The Administrative Agent will, at the request of the Borrower, invest amounts on
deposit in the Prepayment Account in Permitted Investments that mature prior to
the last day of the applicable Interest Periods of the Eurodollar Term
Borrowings or Eurodollar Revolving Borrowings to be prepaid, as the case may be;
provided, however, that (i) the Administrative Agent shall not be required to
make any investment that, in its sole judgment, would require or cause the
Administrative Agent to be in, or would result in any, violation of any law,
statute, rule or regulation and (ii) the Administrative Agent shall have no
obligation to invest amounts on deposit in the Prepayment Account if a Default
or Event of Default shall have occurred and be continuing. The Borrower shall
indemnify the Administrative Agent for any losses relating to the investments so
that the amount available to prepay Eurodollar Borrowings on the last day of the
applicable Interest Period is not less than the amount that would have been
available had no investments been made pursuant thereto. Other than any
interest earned on such investments, the Prepayment Account shall not bear
interest. Interest or profits, if any, on such investments shall be deposited
in the Prepayment Account and reinvested and disbursed as specified above. If
the maturity of the Loans has been accelerated pursuant to Article VII, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Prepayment Account to satisfy any of the Obligations. The Borrower
hereby grants to the Administrative Agent, for its benefit and the benefit of
the Issuing Bank, the Swingline Lender and the Lenders, a security interest in
the Prepayment Account to secure the Obligations.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any Eurodollar Loan made by such Lender
or any Fees or other amounts payable hereunder (other than changes in respect of
taxes based on the overall net income of such Lender or the Issuing Bank by the
jurisdiction in which such Lender or the Issuing Bank has its principal office
or by any political subdivision or taxing authority therein), or shall impose,
modify or deem applicable any reserve, special deposit or similar
37
requirement against assets of, deposits with or for the account of or credit
extended by any Lender or the Issuing Bank (except any such reserve requirement
which is reflected in the Adjusted Eurodollar Rate) or shall impose on such
Lender or the Issuing Bank or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender or any Letter
of Credit or participation therein, and the result of any of the foregoing shall
be to increase the cost to such Lender or the Issuing Bank of making or
maintaining any Eurodollar Loan or increase the cost to any Lender of issuing or
maintaining any Letter of Credit or purchasing or maintaining a participation
therein or to reduce the amount of any sum received or receivable by such Lender
or the Issuing Bank hereunder or under the Notes (whether of principal, interest
or otherwise) by an amount deemed by such Lender or the Issuing Bank to be
material, then the Borrower will pay to such Lender or the Issuing Bank, as the
case may be, upon demand such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's or the
Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Lender or the Issuing Bank to be material, then from time to time the Borrower
shall pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as applicable, as specified in clause (a) or (b), and showing
the method of calculation in reasonable detail, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender or the Issuing Bank the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and the Issuing
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed. If such Lender receives a refund of
any such amount, such Lender will promptly pay such amount over to the Borrower.
38
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not thereafter
(for the duration of such unlawfulness) be made by such Lender hereunder
(or be continued for additional Interest Periods and ABR Loans will not
thereafter (for such duration) be converted into Eurodollar Loans),
whereupon any request for a Eurodollar Borrowing (or to convert an ABR
Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing
for an additional Interest Period) shall, as to such Lender only, be deemed
a request for an ABR Loan (or a request to continue an ABR Loan as such for
an additional Interest Period or to convert a Eurodollar Loan into an ABR
Loan, as the case may be), unless such declaration shall be subsequently
withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans made
by it be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date of
such notice as provided in clause (b).
In the event any Lender shall exercise its rights under clause (i) or (ii), all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause being called a "Breakage Event") or (b)
any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section with calculations in
reasonable detail shall be delivered to the Borrower and shall be conclusive
absent manifest error.
39
SECTION 2.17. Pro Rata Treatment. Except as provided below in this
Section with respect to Swingline Loans and as required under Section 2.15,
each Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and
each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans and participations in unreimbursed
drawings under Letters of Credit). For purposes of determining the available
Revolving Credit Commitments of the Lenders at any time, each outstanding
Swingline Loan shall be deemed to have utilized the Revolving Credit Commitments
of the Lenders (including those Lenders which shall not have made Swingline
Loans) pro rata in accordance with such respective Revolving Credit Commitments.
Each Lender agrees that in computing such Lender's portion of any Borrowing to
be made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.18 Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Credit Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Term Loans and Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Term Loans and Revolving Loans and participations in L/C Disbursements of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Term Loans and Revolving Loans and
L/C Exposure, as the case may be of such other Lender, so that the aggregate
unpaid principal amount of the Term Loans and Revolving Loans and L/C Exposure
and participations in Term Loans and Revolving Loans and L/C Exposure held by
each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Term Loans and Revolving Loans and L/C Exposure then outstanding
as the principal amount of its Term Loans and Revolving Loans and L/C Exposure
prior to such exercise of banker's lien, setoff or counterclaim or other event
was to the principal amount of all Term Loans and Revolving Loans and L/C
Exposure outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section and the payment
giving rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower and
Holding consent to the foregoing arrangements and agree that any Lender holding
a participation in a Term Loan or Revolving Loan or L/C Disbursement deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrower and
Holding to such Lender by reason thereof as fully as if such Lender had made a
Loan directly to the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Credit Document not
later than 12:00 (noon), New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than (i) Issuing Bank Fees, which shall be paid directly to the Issuing
Bank, and (ii) principal of and interest on Swingline Loans, which shall be paid
40
directly to the Swingline Lender except as otherwise provided in Section
2.21(e)) shall be made to the Administrative Agent at its offices at identified
in Annex 2.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Credit
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on behalf of the
Borrower or any Credit Party hereunder and under any other Credit Document shall
be made, in accordance with Section 2.19, free and clear of and without
deduction for any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
(i) taxes imposed on the net income of the Administrative Agent, any Lender or
the Issuing Bank (or any transferee or assignee thereof, including a
participation holder (any such entity a "Transferee")) and (ii) franchise taxes
imposed on the net income of the Administrative Agent, any Lender or the Issuing
Bank (or Transferee), in each case by the jurisdiction under the laws of which
the Administrative Agent, such Lender or the Issuing Bank (or Transferee) is
organized (or where its lending office is located) or any political subdivision
thereof (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively or individually, being called
"Taxes"). If the Borrower or any Credit Party shall be required to deduct any
Taxes from or in respect of any sum payable hereunder or under any other Credit
Document to the Administrative Agent, any Lender or the Issuing Bank (or any
Transferee), (i) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, such Lender or the Issuing Bank (or Transferee), as
the case may be, shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower or such Credit Party shall
make such deductions and (iii) the Borrower or such Credit Party shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp, documentary, excise, transfer, sales, property taxes, charges or similar
levies (including mortgage recording taxes and similar fees) that arise from any
payment made hereunder or under any other Credit Document or from the execution,
delivery, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Credit Document ("Other Taxes").
(c) The Borrower will indemnify the Administrative Agent, each Lender
and the Issuing Bank (or Transferee) for the full amount of Taxes and Other
Taxes paid by the Administrative Agent, such Lender or the Issuing Bank (or
Transferee), as the case may be, and any liability (including penalties,
interest and expenses (including reasonable attorney's fees and expenses
(including the allocated costs of in-house legal counsel))) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability prepared by the Administrative Agent, a
Lender or the Issuing Bank (or Transferee), or the Administrative Agent on its
behalf showing calculations in reasonable detail, absent manifest error, shall
be final, conclusive and binding for all purposes. Such indemnification shall
be made within 30 days after the date the Administrative Agent, any Lender or
the Issuing Bank (or Transferee), as the case may be, makes written demand
therefor.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower or any other Credit Party to the relevant
Governmental Authority, the Borrower
41
or such other Credit Party will deliver to the Administrative Agent, at its
address referred to in Section 9.01, the original or a certified copy of a
receipt issued by such Governmental Authority evidencing payment thereof.
(e) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement and the
other Credit Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.20(e), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.20(e) that
such Non-U.S. Lender is not legally able to deliver.
(f) The Borrower shall not be required to indemnify any Non-U.S.
Lender or to pay any additional amounts to any Non-U.S. Lender, in respect of
United States Federal withholding tax pursuant to clause (a) or (c) to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed and would apply to payments made to such Non-
U.S. Lender on the date such Non-U.S. Lender became a party to this Agreement
(or, in the case of a Transferee that is a participation holder, on the date
such participation holder became a Transferee hereunder) or, with respect to
payments to a New Lending Office, the date such Non-U.S. Lender designated such
New Lending Office with respect to a Loan; provided, however, that this clause
shall not apply (x) to any Transferee or New Lending Office that becomes a
Transferee or New Lending Office as a result of an assignment, participation,
transfer or designation made at the request of the Borrower and (y) to the
extent the indemnity payment or additional amounts any Transferee, or any Lender
(or Transferee), acting through a New Lending Office, would be entitled to
receive (without regard to this clause) do not exceed the indemnity payment or
additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender (or Transferee) making the designation of
such New Lending Office, would have been entitled to receive in the absence of
such assignment, participation, transfer or designation or (ii) the obligation
to pay such additional amounts would not have arisen but for a failure by such
Non-U.S. Lender to comply with the provisions of clause (e).
(g) Nothing contained in this Section shall require any Lender or the
Issuing Bank (or any Transferee) or the Administrative Agent to make available
any of its tax returns (or any other information that it deems to be
confidential or proprietary). If any Lender receives a refund of any additional
amount or any taxes paid by or on behalf of such Lender, such Lender will
promptly pay such amount over to the Borrower.
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SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers
a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender
or the Issuing Bank delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or the Issuing
Bank or any Governmental Authority on account of any Lender or the Issuing Bank
pursuant to Section 2.20, the Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or the Issuing Bank and the
Administrative Agent, require such Lender or the Issuing Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing
Bank and the Swingline Lender), which consent shall not unreasonably be
withheld, and (z) the Borrower or such assignee shall have paid to the affected
Lender or the Issuing Bank in immediately available funds an amount equal to the
sum of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or the Issuing Bank,
respectively, plus all Fees and other amounts accrued for the account of such
Lender or the Issuing Bank hereunder (including any amounts under Section 2.14
and Section 2.16); provided further that, if prior to any such transfer and
assignment the circumstances or event that resulted in such Lender's or the
Issuing Bank's claim for compensation under Section 2.14 or notice under Section
2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to
cause such Lender or the Issuing Bank to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.15, or cease to result in amounts
being payable under Section 2.20, as the case may be (including as a result of
any action taken by such Lender or the Issuing Bank pursuant to clause (b)), or
if such Lender or the Issuing Bank shall waive its right to claim further
compensation under Section 2.14 in respect of such circumstances or event or
shall withdraw its notice under Section 2.15 or shall waive its right to further
payments under Section 2.20 in respect of such circumstances or event, as the
case may be, then such Lender or the Issuing Bank shall not thereafter be
required to make any such transfer and assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would materially reduce its claims for compensation under Section 2.14 or enable
it to withdraw its notice pursuant to Section 2.15 or would materially reduce
amounts payable pursuant to Section 2.20, as the case may be, in the future.
The Borrower hereby agrees to pay all reasonable costs and expenses incurred by
any Lender or the Issuing Bank in connection with any such filing or assignment,
delegation and transfer.
SECTION 2.21. Swingline Loans. (a) Swingline Commitment. Subject to
the terms and conditions and relying upon the representations and warranties
herein set forth, the
43
Swingline Lender agrees to make loans to the Borrower at any time and from time
to time on and after the Closing Date and until the earlier of the Revolving
Credit Maturity Date and the termination of the Revolving Credit Commitments in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of all
Swingline Loans exceeding $5,000,000 in the aggregate or (ii) the Aggregate
Revolving Credit Exposure, after giving effect to any Swingline Loan, exceeding
the Total Revolving Credit Commitment. Each Swingline Loan shall be in a
principal amount that is an integral multiple of $100,000. The Swingline
Commitment may be terminated or reduced from time to time as provided herein.
Within the foregoing limits, the Borrower may borrow, pay or prepay and reborrow
Swingline Loans hereunder, subject to the terms, conditions and limitations set
forth herein.
(b) Swingline Loans. The Borrower shall notify the Administrative
Agent by telecopy or by telephone, not later than 1:00 p.m., New York City time,
on the day of a proposed Swingline Loan. Such notice shall be delivered on a
Business Day, shall be irrevocable and shall refer to this Agreement. Promptly
after such notification, the Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Borrowing Request confirming such
notification. Each such Borrowing Request shall be signed by or on behalf of
the Borrower and shall specify: (i) that the Borrower is requesting a Swingline
Loan, (ii) the requested date of such Swingline Loan (which shall be a Business
Day), (iii) the number and location of the account to which funds are to be
disbursed (which shall be an account that complies with the requirements of
Section 2.02(c)), and (iv) the amount of such Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any notice
received from the Borrower pursuant to this clause. The Swingline Lender shall
make each Swingline Loan available to the Borrower by means of a credit to the
account specified in the Borrowing Request by 4:00 p.m., New York City time, on
the date such Swingline Loan is so requested.
(c) Prepayment. The Borrower shall have the right at any time and
from time to time to prepay any Swingline Loan, in whole or in part, upon giving
written or telecopy notice (or telephone notice promptly confirmed by written,
or telecopy notice) to the Swingline Lender and to the Administrative Agent
before 12:00 (noon), New York City time on the date of prepayment at the
Swingline Lender's address for notices specified on Annex 2.
(d) Interest. Each Swingline Loan shall be an ABR Loan and, subject
to the provisions of Section 2.07, shall bear interest as provided in Section
2.06(a).
(e) Conversion to Revolving Loans. With respect to any Swingline
Loans, the Swingline Lender may, at any time in its sole and absolute
discretion, deliver to Administrative Agent (with a copy to the Borrower ) no
later than 11:00 a.m. (New York City time) on the first Business Day in advance
of the proposed Funding Date, a notice (which shall be deemed to be a Borrowing
Request given by the Borrower) requesting the Lenders to make Revolving Loans
that are ABR Loans on such Funding Date in an amount equal to the amount of such
Swing Line Loans outstanding on the date such notice is given which Swing Line
Lender requests the Lenders to prepay; provided, however, that the obligations
of the Lenders to fund such Borrowing shall not be subject to Section 4.01.
(f) Participations. Upon the Borrowing of a Swingline Loan, each
Revolving Credit Lender shall be deemed to have automatically acquired a
unfunded participation in such Swingline Loan proportional to its Applicable
Percentage. Upon demand by the Swingline Lender, or automatically upon the
occurrence of an Event of Default under Section 7.01(g) or (h), each Revolving
Credit Lender shall fund such participation by paying to the Administrative
Agent, for the account of the Swingline Lender, such Revolving Credit Lender's
Applicable Percentage of such Swingline Loan, together with interest accruing on
such participation amount
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from the date of such Event of Default or such demand, as the case may be, at
the Federal Funds Effective Rate for the first day, and for each day thereafter,
the rate of interest then applicable to ABR Revolving Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this clause is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Lender shall comply with its obligation under this clause by
wire transfer of immediately available funds, in the same manner as provided in
Section 2.02(c) with respect to Loans made by such Lender and the Administrative
Agent shall promptly pay to the Swingline Lender the amounts so received by it
from the Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this clause and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Lenders that
shall have made their payments pursuant to this clause and to the Swingline
Lender, as their interests may appear. The purchase of participations in a
Swingline Loan pursuant to this clause shall not relieve the Borrower (or other
party liable for obligations of the Borrower) of any default in the payment
thereof.
If for any reason the Revolving Credit Commitments are terminated at a time
when any Swing Line Loans are outstanding, each Lender shall be deemed to have
purchased, and hereby agrees to purchase, a participation in such outstanding
Swing Line Loans in an amount equal to its Applicable Percentage calculated
immediately prior to such termination of the Revolving Credit Commitments ) of
the unpaid amount of such Swing Line Loans together with accrued interest
thereon. Upon one Business Day's notice from the Swingline Lender, each Lender
shall deliver to the Swingline Lender an amount equal to its respective
participation in same day funds to the Administrative Agent at its offices
identified in Annex 2. In order to further evidence such participation (and
without prejudice to the effectiveness of the participation provisions set
forth above), each Lender shall enter into a separate participation agreement at
the request of the Swingline Lender in form and substance reasonably
satisfactory to such Lender and the Swingline Lender. If any Lender fails to
make available to the Swingline Lender the amount of such Lender's participation
as provided in this paragraph, the Swingline Lender shall be entitled to recover
such amount of demand from such Lender together with interest thereon at the
Federal Funds Effective Rate for one Business Day and thereafter at the rate
applicable to ABR Revolving Loans. If the Swingline Lender receives a payment
of any amount in which other Lenders have purchased participations as provided
in the Paragraph, the Swingline Lender shall promptly distribute to each such
other Lender its Applicable Percentage of such payment.
SECTION 2.23. Letters of Credit. (a) General. The Borrower may
request the issuance of a Letter of Credit for its own account, by delivering a
Letter of Credit Request at any time and from time to time while the Revolving
Credit Commitments remain in effect. This Section shall not be construed to
impose an obligation upon the Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to
amend, renew or extend an existing Letter of Credit), the Borrower shall hand
deliver or telecopy to the Issuing Bank and the Administrative Agent (reasonably
in advance of the requested date of issuance,
45
amendment, renewal or extension) a Letter of Credit Request requesting the
issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, the date of issuance, amendment, renewal or
extension, the date on which such Letter of Credit is to expire (which shall
comply with clause (c)), the amount of such Letter of Credit, the name and
address of the beneficiary thereof and such other information as shall be
necessary to prepare such Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if, and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that, after giving effect to such issuance, amendment, renewal or
extension (A) the L/C Exposure shall not exceed $7,500,000 and (B) the Aggregate
Revolving Credit Exposure shall not exceed the Total Revolving Credit
Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close
of business no later than the first anniversary of the date of the issuance of
such Letter of Credit, unless such Letter of Credit expires by its terms on an
earlier date; provided, however, that this clause shall not prevent any Issuing
Bank from agreeing that a Letter of Credit will automatically be extended for
one or more successive periods not to exceed one year each unless such Issuing
Bank elects not to extend for any such additional period. Notwithstanding the
foregoing, no Letter of Credit shall expire later than the fifth Business Days
prior to the Revolving Credit Maturity Date.
(d) Participations. By the issuance of a Letter of Credit and
without any further action on the part of the Issuing Bank or the Lenders, the
Issuing Bank hereby grants to each Revolving Credit Lender, and each such Lender
hereby acquires from the applicable Issuing Bank, a participation in such Letter
of Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the Issuing Bank, such Lender's
Applicable Percentage of each L/C Disbursement made by the Issuing Bank and not
reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Credit Document) forthwith on the date due as
provided in Section 2.02(e). Each Revolving Credit Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this clause in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the Borrower shall pay to the
Issuing Bank an amount equal to such L/C Disbursement on the same Business Day
on which the Borrower shall have received notice from the Issuing Bank that
payment of such draft will be made, or, if the Borrower shall have received such
notice later than 12:00 noon, New York City time, on any Business Day, not later
than 11:00 a.m., New York City time, on the immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse
L/C Disbursements as provided in clause (e) shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or
any Credit Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Letter of Credit or any Credit Document;
46
(iii) the existence of any claim, setoff, defense or other right that
the Borrower, any other party guaranteeing, or otherwise obligated with,
the Borrower, any Subsidiary or other Affiliate thereof or any other person
may at any time have against the beneficiary under any Letter of Credit,
the Issuing Bank, the Administrative Agent or any Lender or any other
person, whether in connection with this Agreement, any other Credit
Document or any other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
Issuing Bank, the Lenders, the Administrative Agent or any other person or
any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of the Borrower's obligations
hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) the Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute wilful
misconduct or gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall as promptly
as possible give telephonic notification, confirmed by telecopy, to the
Administrative Agent and the Borrower of such demand for payment and whether the
Issuing Bank has made or will make an L/C Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement. The Administrative
Agent shall promptly give each Revolving Credit Lender notice thereof.
47
(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(e), at the rate per annum that would
apply to such amount if such amount were an ABR Loan.
(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders, to be effective only upon the appointment of a successor Issuing
Bank pursuant to the following sentence. Subject to the next succeeding clause,
upon the acceptance of any appointment as the Issuing Bank hereunder by a Lender
that shall agree to serve as successor Issuing Bank, such successor shall
succeed to and become vested with all the interests, rights and obligations of
the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from
its obligations to issue additional Letters of Credit hereunder. At the time
such removal or resignation shall become effective, the Borrower shall pay all
accrued and unpaid fees pursuant to Section 2.05(d)(ii). The acceptance of any
appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Administrative Agent, and, from and after the effective
date of such agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other
Credit Documents and (ii) references herein and in the other Credit Documents to
the term "Issuing Bank" shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the resignation or removal of the Issuing Bank
hereunder, the retiring Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement and the other Credit Documents with respect to Letters of Credit
issued by it prior to such resignation or removal, but shall not be required to
issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
be continuing, the Borrower shall, on the Business Day it receives notice from
the Administrative Agent or the Required Lenders (or, if the maturity of the
Loans has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) thereof and of the amount
to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C
Exposure as of such date. Such deposits shall be held by the Collateral Agent
as collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Such deposits shall be invested in Permitted
Investments, to be selected by the Issuing Bank in its sole discretion, and
interest earned on such deposits shall be deposited in such account as
additional collateral for the payment and performance of the Obligations.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall (i) automatically be applied by the
Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for
which it has not been reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of the Borrower for the L/C Exposure at such time and
(iii) if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Credit Lenders holding participations in outstanding
Letters of Credit representing greater than 50% of the aggregate undrawn amount
of all outstanding Letters of Credit), be applied to satisfy the Obligations.
If the Borrower is required to provide an amount of cash collateral hereunder as
a result of the occurrence of an
48
Event of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default
have been cured or waived.
(k) Additional Issuing Banks. The Borrower may, at any time and from
time to time with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and such Lender, designate one or more additional
Lenders to act as an issuing bank under the terms of the Agreement. Any Lender
designated as an issuing bank pursuant to this clause shall be deemed to be an
"Issuing Bank" (in addition to being a Lender) in respect of Letters of Credit
issued or to be issued by such Lender, and, with respect to such Letters of
Credit, such term shall thereafter apply to the other Issuing Bank and such
Lender.
ARTICLE III
Representations and Warranties
Each of Holding and the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent, the Issuing Bank and each of the
Lenders that:
SECTION 3.01. Organization; Powers. Each of Holding, the Borrower and
each of the Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure so to qualify
could not reasonably be expected to result in a Material Adverse Effect, and (d)
has the corporate power and authority to execute, deliver and perform its
obligations under each of the Credit Documents and each other agreement or
instrument contemplated hereby to which it is or will be a party and, in the
case of the Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance
by each Credit Party of each of the Credit Documents and the borrowings
hereunder (collectively, the "Transactions") and the Recapitalization (a) have
been duly authorized by all requisite corporate and, if required, stockholder
action and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of Holding, the Borrower or any Subsidiary
other than any violation which will not have a Material Adverse Effect or the
effect (if any) of Chapter 5 of the California Corporations Code, (B) any order
of any Governmental Authority or (C) any provision of any indenture, agreement
or other instrument to which Holding, the Borrower or any Subsidiary is a party
or by which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Holding, the Borrower or any
Subsidiary (other than any Lien created hereunder or under the Security
Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by Holding and the Borrower and constitutes, and each other Credit
Document when executed and delivered by the each Credit Party party thereto will
constitute, a legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with its terms.
49
SECTION 3.04. Governmental Approvals and Licenses. No action, consent
or approval of, registration or filing with or any other action by any
Governmental Authority is or will be required in connection with the
Transactions and the Recapitalization, except for (a) the filing of Uniform
Commercial Code financing statements and filings with the United States Patent
and Trademark Office and the United States Copyright Office, (b) recordation of
the Mortgages and (c) such as have been made or obtained and are in full force
and effect. The Borrower and its Subsidiaries have all licenses, permits,
approvals, qualifications, consents, certificates of needs and accreditations
(where such are required) and other authorizations necessary for the lawful
conduct of their respective businesses or operations wherever now conducted and
as planned to be conducted, pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all Governmental Authorities having,
asserting or claiming jurisdiction over the Borrower and its Subsidiaries on a
consolidated basis, except where such failure would not have a Material Adverse
Effect. Copies of all such licenses, permits, approvals, qualifications,
consents and other authorizations shall be provided to the Administrative Agent
upon request. The Borrower and its Subsidiaries are not in default under any of
such licenses, permits, approvals, consents, qualifications or authorizations
and no event has occurred, and no condition exists, which, with the giving of
notice, the passage of time, or both, would constitute a default thereunder or
would result in the suspension, revocation, impairment, forfeiture or non-
renewal of any such permit, license, authorization or accreditation, except
where such failure would not have a Material Adverse Effect. The continuation,
validity and effectiveness of all such licenses, permits, approvals, consents,
qualifications and authorizations will in no way be adversely affected by the
transactions contemplated by this Agreement, except where such a failure of
continuation, validly or effectiveness would not have a Material Adverse Effect.
The Borrower and its Subsidiaries know of no reason why they will not be able to
maintain after the Closing Date all licenses, permits, approvals, consents,
qualifications, accreditations and other authorizations necessary or appropriate
to own and operate their respective current businesses and to obtain such
licenses, permits, approvals, consents, qualifications and other authorizations
necessary to own and operate their respective current businesses, and otherwise
conduct the business of the Borrower and its Subsidiaries as now conducted and
presently proposed to be conducted.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders its consolidated and consolidating balance sheets and
statements of income and changes in financial condition as of and for the fiscal
year ended December 26, 1997, audited by and accompanied by the opinion of
Arthur Andersen LLP, independent public accountants. Such financial statements
present fairly the financial condition and results of operations and cash flows
of the Borrower and its consolidated Subsidiaries as of such dates and for such
periods. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the dates thereof. Such financial statements were prepared
in accordance with GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders its
unaudited pro forma consolidated balance sheet as of December 26, 1997 and
monthly operating statements for January and February 1998, prepared giving
effect to the Recapitalization as if it had occurred on such date. Such pro
forma balance sheet and monthly operating statements has been prepared in good
faith by the Borrower, based on the assumptions used to prepare the pro forma
financial information contained in the Confidential Information Memorandum
(which assumptions are believed by the Borrower on the date hereof and on the
Closing Date to be reasonable), is based on the best information available to
the Borrower as of the date of delivery thereof, accurately reflects all
adjustments required to be made to give effect to the Recapitalization and
presents fairly on a pro forma basis the estimated consolidated financial
position of the Borrower and its consolidated Subsidiaries as of such date,
assuming that the Recapitalization had actually occurred at such date.
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SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, or material agreements of Holding, the Borrower and the
Subsidiaries, taken as a whole, since January 1, 1997.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each
of Holding, the Borrower and the Subsidiaries has good and marketable title to,
or valid leasehold interests in, all its material properties and assets
(including all Mortgaged Property), except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or
to utilize such properties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens, other than Liens
expressly permitted by Section 6.02.
(b) Except as set forth on Schedule 3.07(b), each of Holding, the
Borrower and the Subsidiaries has complied in all material respects with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect. Each of Holding, the Borrower and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases, except where failure to have such possession will not have a Material
Adverse Effect.
(c) Except as set forth on Schedule 3.07(c), neither Holding nor the
Borrower has received any written notice of, nor has any knowledge of, any
pending or contemplated condemnation proceeding affecting the Mortgaged
Properties or any sale or disposition thereof in lieu of condemnation.
(d) None of Holding, the Borrower or any of the Subsidiaries is
obligated under any right of first refusal, option or other contractual right to
sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of Holding
or the Borrower therein. The shares of capital stock or other ownership
interests so indicated on Schedule 3.08 are fully paid and non-assessable and
are owned by Holding or the Borrower, directly or indirectly, free and clear of
all Liens.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
forth on Schedule 3.09, there are not any actions, suits or proceedings at law
or in equity or by or before any Governmental Authority now pending or, to the
knowledge of Holding or the Borrower, threatened against or affecting Holding or
the Borrower or any Subsidiary or any business, property or rights of any such
person (i) that involve any Credit Document, the Transactions or the
Recapitalization, or that purport to affect the ability of the parties to
consummate the Transactions or the Recapitalization, or (ii) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) None of Holding, the Borrower or any of the Subsidiaries or any
of their respective material properties or assets is in violation of, nor will
the continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Mortgaged Property, or is in
default with respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
51
SECTION 3.10. Default in Material Agreements. None of Holding, the
Borrower or any of the Subsidiaries is in default in any manner under any
provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of Holding, the
Borrower or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately, incidentally
or ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. None of Holding, the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. (a) The proceeds of the Term Loans
shall be used solely to pay a portion of the Redemption Amount in connection
with the Recapitalization, to repay the Indebtedness to be Paid, and pay a
portion of the Transaction Costs.
(b) The proceeds of the Revolving Loans may be used for working
capital and general corporate purposes of the Borrower (including Permitted
Acquisitions); provided, however, that (i) no more than$0 of Revolving Loans may
be borrowed on the Closing Date, and (ii) the proceeds of any Revolving Loan
made pursuant to Section 2.22(e) shall be applied only to repay Swingline Loans.
(c) The proceeds of the Swingline Loans may be used for working
capital and general corporate purposes of the Borrower; provided, however, that
no Swingline Loans may be borrowed on the Closing Date.
(d) The Letters of Credit may be used for general corporate purposes.
SECTION 3.14. Tax Returns. Each of Holding, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns or materials required to have been filed by it and has paid
or caused to be paid all taxes due and payable by it and all assessments
received by it, except taxes that are being contested in good faith by
appropriate proceedings and for which Holding, the Borrower or such Subsidiary,
as applicable, shall have set aside on its books adequate reserves in accordance
with GAAP.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Holding or the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Credit Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, each of Holding and the Borrower
52
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such information, report, financial
statement, exhibit or schedule.
SECTION 3.16. Employee Benefit Plans. Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any of its ERISA Affiliates. The present value of all benefit liabilities under
each Plan (based on those assumptions used to fund such Plan) did not, as of the
last annual valuation date applicable thereto, exceed by more than $1,000,000
the fair market value of the assets of such Plan, and the present value of all
benefit liabilities of all underfunded Plans (based on those assumptions used to
fund each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed by more than $1,000,000 the fair market value of the assets of
all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) The real properties owned or operated by Holding, the Borrower and
the Subsidiaries (the "Environmental Properties") do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute, or constituted a
violation of, (ii) require Remedial Action under, or (iii) could give rise to
liability under, Environmental Laws, which violations, Remedial Actions and
liabilities, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect;
(b) The Environmental Properties and all operations of the Borrower
and the Subsidiaries are in compliance, and in the last five years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such non-
compliance or failure to obtain any necessary permits, in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Environmental Properties or otherwise in connection with the
operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect;
(d) None of Holding, the Borrower or any of the Subsidiaries has
received any Environmental Claim in connection with the Environmental Properties
or the operations of the Borrower or the Subsidiaries or with regard to any
person whose liabilities for environmental matters Holding, the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, nor do Holding, the Borrower or
the Subsidiaries have reason to believe that any such notice will be received or
is being threatened; and
(e) Hazardous Materials have not been transported from the
Environmental Properties, nor have Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of the Environmental Properties in a
manner that could give rise to liability under any Environmental Law, nor have
the Borrower or the Subsidiaries retained or assumed any liability,
contractually, by operation of law or otherwise, with respect to the generation,
treatment, storage or disposal of Hazardous Materials, which transportation,
generation, treatment, storage or disposal, or retained or assumed liabilities,
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
53
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As of
each such date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement), in
each case to the extent such security interests can be so perfected by such
filings, and prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case to the extent such
security interests can be so perfected by such filings, and prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof).
(d) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Credit Parties' right, title and interest in and
to the Mortgaged Property thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Credit Parties in such Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other person,
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02.
SECTION 3.20. Location of Real Property and Leased Premises. (a)
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries and the addresses thereof.
The Borrower and the Subsidiaries own in fee all the real property set forth on
Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the Closing
Date all real property leased by the Borrower and the Subsidiaries and the
addresses thereof. The Borrower and the Subsidiaries have valid leases in all
the real property set forth on Schedule 3.20(b).
54
SECTION 3.21. Labor Matters. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against Holding, the Borrower
or any Subsidiary pending or, to the knowledge of Holding or the Borrower,
threatened. The hours worked by and payments made to employees of Holding, the
Borrower and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters except where such a violation would not have a
Material Adverse Effect. All payments due from Holding, the Borrower or any
Subsidiary, or for which any claim may be made against Holding, the Borrower or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
Holding, the Borrower or such Subsidiary. The consummation of the Transactions
and the Recapitalization will not give rise to any right of termination or right
of renegotiation on the part of any union under any collective bargaining
agreement to which Holding, the Borrower or any Subsidiary is bound.
SECTION 3.22. Solvency. (a) Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan made on the Closing Date and after giving effect to the application
of the proceeds of such Loans, (i) the fair value of the assets of each Credit
Party, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the property of
each Credit Party will be greater than the amount that will be required to pay
the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) each Credit Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Credit Party will not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.
SECTION 3.23. Year 2000. The Borrower does not expect that its
information system capabilities will encounter any material "Year 2000"
problems.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans (other than a Borrowing
pursuant to Section 2.2(e)) and of the Issuing Bank to issue Letters of Credit
hereunder are subject to the satisfaction of the following conditions (it being
understood for purposes of this Section that making a Loan or Borrowing does not
include a change or continuation of the Type of, or a duration of the Interest
Period applicable to, a previously outstanding Borrowing pursuant to Section
2.10):
SECTION 4.01. All Credit Events. On the date of each Borrowing (other
than a Borrowing pursuant to Section 2.02(e)), including each Borrowing of a
Swingline Loan and on the date of each issuance of a Letter of Credit (each such
event being called a "Credit Event"):
(a) Borrowing Request. The Administrative Agent shall have received
a notice of such Borrowing as required by Section 2.03 or, in the case of the
issuance of a Letter of Credit, the Issuing Bank and the Administrative Agent
shall have received a notice requesting the issuance of such Letter of Credit as
required by Section 2.23(b) or, in the case of the Borrowing of a Swingline
Loan, the Swingline Lender and the Administrative Agent shall have received a
notice requesting such Swingline Loan as required by Section 2.22(b).
55
(b) Representations and Warranties. Except in the case of a
Borrowing that does not increase the aggregate principal amount of Loans
outstanding of any Lender, the representations and warranties set forth in
Article III hereof shall be true and correct in all material respects on and as
of the date of such Credit Event with the same effect as though made on and as
of such date, except to the extent such representations and warranties expressly
relate to an earlier date.
(c) No Default. The Borrower and each other Credit Party shall be in
compliance with all the terms and provisions set forth herein and in each other
Credit Document on its part to be observed or performed, and at the time of and
immediately after such Credit Event, no Event of Default or Default shall have
occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by
the Borrower and Holding on the date of such Credit Event as to the matters
specified in clauses (b) (except as aforesaid) and (c) of this Section.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) Notes. Each Lender shall have received its duly executed Notes
complying with the provisions of Section 2.04.
(b) Opinions. The Syndication Agent shall have received, on behalf
of itself, the Lenders and the Issuing Bank, a favorable written opinion of
(i) Riordan & McKinzie, special California counsel for Holding and the
Borrower, substantially to the effect set forth in Exhibit , (ii) Richards
& O'Neil, special New York counsel for Holding and the Borrower,
substantially to the effect set forth in Exhibit , and (iii) each local
counsel listed on Schedule 4.02(b), substantially to the effect set forth
in Exhibit , in each case (A) dated the Closing Date, (B) addressed to the
Syndication Agent, the Issuing Bank, the Administrative Agent and the
Lenders, and (C) covering such other matters relating to the Credit
Documents and the Transactions as the Syndication Agent shall reasonably
request, and each of Holding and the Borrower hereby requests such counsel
to deliver such opinions.
(c) Legal Matters. All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Credit
Documents shall be satisfactory to the Lenders, to the Issuing Bank and to
Cravath, Swaine & Moore, counsel for the Syndication Agent.
(d) Organizational Documents. The Syndication Agent shall have
received (i) a copy of the certificate or articles of incorporation,
including all amendments thereto, of each Credit Party, certified as of a
recent date by the Secretary of State of the state of its organization, and
a certificate as to the good standing of each Credit Party as of a recent
date, from such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Credit Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the by-
laws of such Credit Party as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause (B),
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Credit Party authorizing the
execution, delivery and performance of the Credit Documents to which such
person is a party and, in the case of the Borrower, the borrowings
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that the certificate or
articles of incorporation of such Credit Party have not been amended since
the date of the last amendment thereto shown on the certificate of good
standing furnished pursuant to
56
clause (i), and (D) as to the incumbency and specimen signature of each
officer executing any Credit Document or any other document delivered in
connection herewith on behalf of such Credit Party; (iii) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
clause (ii); and (iv) such other documents as the Lenders, the Issuing Bank
or Cravath, Swaine & Moore, counsel for the Administrative Agent, may
reasonably request.
(e) Officer's Certificate. The Syndication Agent shall have received
a certificate, dated the Closing Date and signed by a Responsible Officer
of the Borrower, confirming compliance with the conditions precedent set
forth in clauses (b) and (c) of Section 4.01.
(f) Payment of Fees, Etc. The Administrative Agent shall have
received all Fees and other amounts due and payable on or prior to the
Closing Date, including, to the extent invoiced, reimbursement or payment
of all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Credit Document and fees under
Section 9.05(a).
(g) Pledge Agreement. The Pledge Agreement shall have been duly
executed by the parties thereto and delivered to the Collateral Agent and
shall be in full force and effect, and all the outstanding capital stock of
the Borrower and the Subsidiaries shall have been duly and validly pledged
thereunder to the Collateral Agent for the ratable benefit of the Secured
Parties and certificates representing such shares, accompanied by
instruments of transfer and stock powers endorsed in blank, shall be in the
actual possession of the Collateral Agent; provided that to the extent to
do so would cause adverse tax consequences to the Borrower, (i) neither the
Borrower nor any Domestic Subsidiary shall be required to pledge more than
65% of the capital stock of any Foreign Subsidiary and (ii) no Foreign
Subsidiary shall be required to pledge the capital stock of any of its
Foreign Subsidiaries.
(h) Security Agreement. The Security Agreement shall have been duly
executed by the Credit Parties party thereto and shall have been delivered
to the Collateral Agent and shall be in full force and effect on such date
and each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of
the Collateral Agent for the benefit of the Secured Parties a valid, legal
and perfected first-priority security interest in and lien on the
Collateral (subject to any Lien expressly permitted by Section 6.02)
described in such agreement shall have been delivered to the Collateral
Agent.
(i) Lien Search. The Collateral Agent shall have received the
results of a search of the Uniform Commercial Code (or equivalent filings)
filings made with respect to the Credit Parties in the states (or other
jurisdictions) in which the chief executive office of each such person is
located, any offices of such persons in which records have been kept
relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant to
the preceding clause, together with copies of the financing statements (or
similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Collateral Agent that the Liens indicated in any such
financing statement (or similar document) would be permitted under Section
6.02 or have been released.
57
(j) Perfection Certificate. The Collateral Agent shall have received
a Perfection Certificate with respect to the Credit Parties dated the
Closing Date and duly executed by a Responsible Officer of the Borrower.
(k) Mortgages. (i) Each of the Security Documents, in form and
substance satisfactory to the Lenders, relating to each of the Mortgaged
Properties shall have been duly executed by the parties thereto and
delivered to the Collateral Agent and shall be in full force and effect,
(ii) each of such Mortgaged Properties shall not be subject to any Lien
other than those permitted under Section 6.02, (iii) each of such Security
Documents shall be in proper form for filing and recordation in the
recording office as specified on Schedule 3.19(d), and (iv) the Collateral
Agent shall have received such other documents, including a commitment,
policy or policies of title insurance issued by a nationally recognized
title insurance company, together with such endorsements, coinsurance and
reinsurance as may be requested by the Collateral Agent and the Lenders,
insuring the Mortgages as valid first liens on the Mortgaged Properties,
free of Liens other than those permitted under Section 6.02, together with
such surveys, abstracts, appraisals and legal opinions required to be
furnished pursuant to the terms of the Mortgages or as reasonably requested
by the Collateral Agent or the Lenders.
(l) Guarantee Agreements. Each of Holding Guarantee Agreement and
the Subsidiary Guarantee Agreement shall have been duly executed by the
parties thereto, shall have been delivered to the Collateral Agent and
shall be in full force and effect.
(m) Indemnity, Subrogation and Contribution Agreement. The
Indemnity, Subrogation and Contribution Agreement shall have been duly
executed by the parties thereto, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
(n) Insurance Policies. The Syndication Agent shall have received a
copy of, or a certificate as to coverage under, the insurance policies
required by Section 5.02 and the applicable provisions of the Security
Documents, each of which shall be endorsed or otherwise amended to include
a "standard" or "New York" lender's loss payable endorsement and to name
the Collateral Agent as additional insured, in form and substance
satisfactory to the Administrative Agent.
(o) Environmental and Employment Matters. The Lenders shall be
satisfied as to the amount and nature of any environmental and employee
health and safety exposures to which the Borrower and the Subsidiaries may
be subject and the plans of the Borrower with respect thereto.
(p) Environmental Reports. The Syndication Agent shall have received
a Phase I environmental assessment report in form, scope and substance
reasonably satisfactory to the Lenders, from Dames & Moore as to any
environmental hazards, liabilities or Remedial Action to which the Borrower
or any of the Subsidiaries may be subject and the Lenders shall be
reasonably satisfied with the nature and cost of any such hazards,
liabilities or Remedial Action and with the Borrower's plans with respect
thereto.
(q) Recapitalization Documents. The Syndication Agent shall have
received, with a copy for each Lender, a copy of the Acquisition Agreement
and any of the other Recapitalization Documents reasonably requested by the
Syndication Agent, certified by a Responsible Officer of the Borrower.
58
(r) Recapitalization. The Recapitalization shall be concurrently
consummated as set forth in Annex 3, and the capital structure of the
Borrower shall be as set forth in Annex 3. The terms and conditions, and
documentation, of any material Indebtedness and all equity securities of
the Borrower or any of its Subsidiaries to be outstanding at or after the
Closing Date, the certificate of incorporation, by-laws, other governing
documents and the corporate and capital structure of the Borrower and its
Subsidiaries, in each case after giving effect to the consummation of the
Recapitalization, shall be in form and substance satisfactory to the
Administrative Agent. The Recapitalization shall have been consummated for
an aggregate Redemption Amount in cash equal to $225,000,000 (the
"Redemption Amount"), pursuant to the Acquisition Agreement. All of the
conditions precedent set forth in the Acquisition Agreement shall have been
satisfied or waived, and no material provision of the Acquisition Agreement
shall have been amended, supplemented, waived or otherwise modified without
the prior written consent of the Required Lenders, which consent shall not
be unreasonably withheld. The Administrative Agent shall be satisfied with
the Acquisition Agreement in all respects. The Borrower and its
Subsidiaries shall have outstanding no indebtedness other than the term
loans or revolving credit loans (including letters of credit) under this
Agreement, the Notes or Loans hereunder, as applicable, and other
indebtedness as set forth on Schedule 6.01(a) hereto.
(s) Transaction Costs. The Transaction Costs shall have been paid
(or made provision reasonably satisfactory to the Syndication Agent for the
payment thereof) in an amount not in excess of $15,000,000.
(t) Senior Subordinated Notes. The Senior Subordinated Notes shall
have been executed, authenticated and issued in form and substance
satisfactory to the Lenders; and the Borrower shall have received proceeds
(before deductions for underwriting and placement fees) pursuant thereto of
approximately $115,000,000.
(u) Exchangeable Preferred Stock. The Exchangeable Preferred Stock
shall have been duly authorized and issued in form and substance
satisfactory to the Lenders; and the Borrower shall have received proceeds
(before deductions for underwriting and placement fees) pursuant thereto of
approximately $30,000,000.
(v) Solvency Certificate. The Administrative Agent shall have
received a certificate of the Borrower's chief financial officer, in form
and substance satisfactory to the Administrative Agent, to the effect of
the representations set forth in Section 3.22.
(w) EBITDA Certificate. The Administrative Agent shall have received
a written certification of the Borrower's accountants that the EBITDA of
the Borrower and its Subsidiaries on a consolidated basis for the
immediately preceding fiscal year was at least $26,200,000, on a pro forma
basis computed, in accordance with Regulation S-X.
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties. (a) Holding and
the Borrower shall, and the Borrower shall cause each Restricted Subsidiary to,
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except as otherwise expressly permitted
under Section 6.04.
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(b) Holding and the Borrower shall, and the Borrower shall cause each
Restricted Subsidiary to, do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; comply in all material respects
with all applicable laws, rules, regulations (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Mortgaged Properties) and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted, except where the failure to do so will not have a Material
Adverse Effect; and at all times maintain and preserve all property material to
the conduct of such business and keep such property in good repair, working
order and condition and from time to time make renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.02. Insurance. The Borrower shall, and shall cause each
Restricted Subsidiary to,
(a) keep its insurable properties adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
(b) cause all such policies to be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement, in
form and substance satisfactory to the Administrative Agent and the
Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice
from the Administrative Agent or the Collateral Agent of the occurrence of
an Event of Default, the insurance carrier shall pay all proceeds otherwise
payable to the Borrower or the Credit Parties under such policies directly
to the Collateral Agent; cause all such policies to provide that neither
the Borrower, the Administrative Agent, the Collateral Agent nor any other
party shall be a coinsurer thereunder and to contain a "Replacement Cost
Endorsement", without any deduction for depreciation, and such other
provisions as the Administrative Agent or the Collateral Agent may
reasonably require from time to time to protect their interests; deliver
original or certified copies of all such policies to the Collateral Agent;
cause each such policy to provide that it shall not be cancelled, modified
or not renewed (i) by reason of nonpayment of premium upon not less than 10
days' prior written notice thereof by the insurer to the Administrative
Agent and the Collateral Agent (giving the Administrative Agent and the
Collateral Agent the right to cure defaults in the payment of premiums) or
(ii) for any other reason upon not less than 30 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral
Agent; deliver to the Administrative Agent and the Collateral Agent, prior
to the cancellation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously delivered to the Administrative Agent and
the Collateral Agent) together with evidence satisfactory to the
Administrative Agent and the Collateral Agent of payment of the premium
therefor.
(c) if at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published
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by the Federal Emergency Management Agency (or any successor agency),
obtain flood insurance in such total amount as the Syndication Agent, the
Collateral Agent or the Required Lenders may from time to time require, and
otherwise comply with the National Flood Insurance Program as set forth in
the Flood Disaster Protection Act of 1973, as it may be amended from time
to time, or (ii) a "Zone 1" area, obtain earthquake insurance in such total
amount as the Administrative Agent, the Collateral Agent or the Required
Lenders may from time to time require.
(d) with respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $10,000,000, naming the Collateral Agent
as an additional insured, on forms satisfactory to the Collateral Agent.
(e) notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under
this Section is taken out by the Borrower; and promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original copy of
such policy or policies.
(f) in connection with the covenants set forth in this Section, it is
understood and agreed that:
(i) none of the Administrative Agent, the Lenders, the Issuing Bank,
or their respective agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained under
this Section, it being understood that (A) the Borrower and the other
Credit Parties shall look solely to their insurance companies or any other
parties other than the aforesaid parties for the recovery of such loss or
damage and (B) such insurance companies shall have no rights of subrogation
against the Administrative Agent, the Collateral Agent, the Lenders, the
Issuing Bank or their agents or employees. If, however, the insurance
policies do not provide waiver of subrogation rights against such parties,
as required above, then the Borrower hereby agrees, to the extent permitted
by law, to waive its right of recovery, if any, against the Administrative
Agent, the Collateral Agent, the Lenders, the Issuing Bank and their agents
and employees; and
(ii) the designation of any form, type or amount of insurance coverage
by the Administrative Agent, the Collateral Agent or the Required Lenders
under this Section shall in no event be deemed a representation, warranty
or advice by the Administrative Agent, the Collateral Agent or the Lenders
that such insurance is adequate for the purposes of the business of the
Borrower and the Subsidiaries or the protection of their properties and the
Administrative Agent, the Collateral Agent and the Required Lenders shall
have the right from time to time to require the Borrower and the other
Credit Parties to keep other insurance in such form and amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may
reasonably request, provided that such insurance shall be obtainable on
commercially reasonable terms.
SECTION 5.03. Payment of Taxes. Holding and the Borrower shall, and
the Borrower shall cause each Restricted Subsidiary to, pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
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that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
SECTION 5.04. Financial Statements, Reports, etc. The Borrower shall
furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its consolidated
and consolidating balance sheets and related statements of operations,
stockholders' equity and cash flows showing the financial condition of
Holding and the Borrower and its consolidated Subsidiaries as of the close
of such fiscal year and the results of its operations and the operations of
such Subsidiaries during such year, all audited by Arthur Andersen LLP or
other independent public accountants of recognized national standing and
accompanied by (i) an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results of
operations of Holding and the Borrower and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, and
(ii) any management letter issued by such accountants to the board of
directors or finance committee of Holding or the Borrower;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated and consolidating balance
sheets and related statements of operations, stockholders' equity and cash
flows showing the financial condition of the Borrower and its consolidated
Subsidiaries as of the close of such fiscal quarter and the results of its
operations and the operations of such Subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal year, all certified by
one of its Financial Officers as fairly presenting the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied,
subject to the absence of footnotes and normal year-end audit adjustments;
(c) within 30 days after the end of each of month, its consolidated
balance sheets and related statements of operations, stockholders' equity
and cash flows showing the financial condition of the Borrower and its
consolidated Subsidiaries as of the close of such month and the results of
its operations and the operations of such Subsidiaries during such month
and the then elapsed portion of the fiscal year, all certified by one of
its Financial Officers as fairly presenting the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject
to the absence of footnotes and normal year-end audit adjustments;
(d) concurrently with any delivery of financial statements under
clause (a), (b) or (c), a certificate of the accounting firm or a Financial
Officer opining on or certifying such statements (which certificate, when
furnished by an accounting firm, may be limited to accounting matters and
disclaim responsibility for legal interpretations) (i) certifying that no
Event of Default or Default has occurred or, if such an Event of Default or
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and
(ii) setting forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants contained
in Section 6.09 through Section 6.12;
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(d) concurrently with any delivery of financial statements under
clause (a) or (b), a Pricing Adjustment Certificate;
(e) not later than January 31 of each year, (i) copies of the
Borrower's annual consolidated budget for the current fiscal year, in the
form presented by management to the Borrower's Board of Directors; and (ii)
copies of the Borrower's consolidated financial projections for the current
fiscal year and the next 3 fiscal years prepared in a manner consistent
with the financial projections delivered to the Syndication Agent in
connection with the closing of this Agreement;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
to its shareholders, as the case may be; and
(g) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Holding, the
Borrower or any Subsidiary, or compliance with the terms of any Credit
Document, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. The Borrower shall,
promptly after a Responsible Officer becomes aware thereof, furnish to the
Administrative Agent, the Issuing Bank and each Lender prompt written notice of
the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Affiliate thereof that could
reasonably be expected to result in a Material Adverse Effect; and (c) any
development that has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. Holding and the Borrower shall, and
the Borrower shall cause each Restricted Subsidiary to, (a) comply in all
material respects with the applicable provisions of ERISA and the Code and (b)
furnish to the Administrative Agent (i) as soon as possible after, and in any
event within 10 days after any Responsible Officer of the Borrower or any ERISA
Affiliate knows or has reason to know that, any ERISA Event has occurred that,
alone or together with any other ERISA Event could reasonably be expected to
result in liability of the Borrower in an aggregate amount exceeding $1,000,000
or requiring payments exceeding $500,000 in any year, a statement of a Financial
Officer of the Borrower setting forth details as to such ERISA Event and the
action, if any, that the Borrower proposes to take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. (a) The Borrower shall, and shall cause each Restricted Subsidiary
to, keep proper books of record and account, in a manner consistent with
requirements of law and with sound business practice so as to permit the
preparation of financial statements in conformity with GAAP, and in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities.
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(b) Each Credit Party will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Syndication Agent or any Lender to
visit and inspect the financial records and the properties of Holding, the
Borrower or any Subsidiary at reasonable times and as often as reasonably
requested and to make extracts from and copies of such financial records, and
permit any representatives designated by the Syndication Agent or any Lender to
discuss the affairs, finances and condition of Holding, the Borrower or any
Subsidiary with the officers thereof and independent accountants therefor;
provided, however, that (i) so long as no Event of Default has occurred and is
continuing, the Syndication Agent and the Lenders shall be limited to visits on
four occasions per year, and the Syndication Agent shall use it best efforts to
coordinate such visits, and (ii) the Syndication Agent shall give the Borrower
reasonable notice of a proposed discussions with such independent accountants,
and representatives of the Borrower may at the Borrower's option participate in
such discussions.
SECTION 5.08. Use of Proceeds. The Borrower shall, and shall cause
each Restricted Subsidiary to, use the proceeds of the Loans and request the
issuance of Letters of Credit only for the purposes set forth in Section 3.13.
SECTION 5.09. Compliance with Environmental Laws. The Borrower shall,
and shall cause each Restricted Subsidiary to, comply, and cause all lessees and
other persons occupying its Environmental Properties to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to its
operations and Environmental Properties; obtain and renew all material
Environmental Permits necessary for its operations and Environmental Properties;
and conduct any Remedial Action in accordance with Environmental Laws, except to
the extent to do the same could not be reasonably be expected to have a Material
Adverse Effect; provided, however, that none of Holding, the Borrower or any of
the Subsidiaries shall be required to undertake any Remedial Action to the
extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances.
SECTION 5.10. Preparation of Environmental Reports. The Borrower
shall, and shall cause each Restricted Subsidiary to, if a Default caused by
reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, at the expense
of the Borrower, an environmental site assessment report for the Environmental
Properties which are the subject of such default prepared by an environmental
consulting firm acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance or Remedial Action in connection with such Environmental Properties.
SECTION 5.11. Further Assurances. Holding and the Borrower shall, and
the Borrower shall cause each Restricted Subsidiary to, execute any and all
further documents, financing statements, agreements and instruments, and take
all further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Credit Documents and in order to grant, preserve, protect
and perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. The Borrower will cause any
subsequently acquired or organized Domestic Subsidiary to execute a Subsidiary
Guarantee Agreement, Indemnity Subrogation and Contribution Agreement and each
applicable Security Document in favor of the Collateral Agent. In addition, from
time to time, the Borrower will, at its cost and expense, promptly secure the
Obligations by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties
as the Administrative Agent or the Required Lenders shall designate (it
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being understood that it is the intent of the parties that the Obligations
shall be secured by, among other things, substantially all the assets of the
Borrower (including real and other properties acquired subsequent to the Closing
Date)). Such security interests and Liens will be created under the Security
Documents and other security agreements, mortgages, deeds of trust and other
instruments and documents in form and substance satisfactory to the Collateral
Agent, and the Borrower shall deliver or cause to be delivered to the Lenders
all such instruments and documents (including legal opinions, title insurance
policies and lien searches) as the Collateral Agent shall reasonably request to
evidence compliance with this Section. The Borrower agrees to provide such
evidence as the Collateral Agent shall reasonably request as to the perfection
and priority status of each such security interest and Lien.
SECTION 5.12. Mortgaged Property Casualty and Condemnation. (a)
Notwithstanding any other provision of this Agreement or the Security Documents,
the Collateral Agent is authorized, at its option (for the benefit of the
Secured Parties), to collect and receive, to the extent payable to the Borrower
or any other Credit Party, all insurance proceeds, damages, claims and rights of
action under any insurance policies with respect to any casualty or other
insured damage ("Casualty") to any portion of any Mortgaged Property
(collectively, "Casualty Proceeds"), unless the amount of the related Casualty
Proceeds is less than $1,000,000 and an Event of Default shall not have occurred
and be continuing. The Borrower agrees to notify the Collateral Agent and the
Administrative Agent, in writing, promptly after the Borrower obtains notice or
knowledge of any Casualty to a Mortgaged Property, which notice shall set forth
a description of such Casualty and the Borrower's good faith estimate of the
amount of related damages. The Borrower agrees, subject to the foregoing
limitations, to endorse and transfer or cause to be endorsed or transferred any
Casualty Proceeds received by it or any other Credit Party to the Collateral
Agent.
(b) The Borrower will notify the Collateral Agent and the
Administrative Agent immediately upon obtaining knowledge of the institution of
any action or proceeding for the taking of any Mortgaged Property, or any part
thereof or interest therein, for public or quasi-public use under the power of
eminent domain, by reason of any public improvement or condemnation proceeding,
or in any other manner (a "Condemnation"). No settlement or compromise of any
claim in connection with any such action or proceeding shall be made without the
consent of the Collateral Agent, which consent shall not be unreasonably
withheld. The Collateral Agent is authorized, at its option (for the benefit of
the Secured Parties), to collect and receive all proceeds of any such
Condemnation (in each case, the "Condemnation Proceeds"). The Borrower agrees to
execute or cause to be executed such further assignments of any Condemnation
Proceeds as the Collateral Agent may reasonably require.
(c) In the event of any Condemnation of the Mortgaged Property, or
any part thereof and subject to the provisions of clause (e), the Collateral
Agent shall apply the Condemnation Proceeds first, in the case of a partial
Condemnation, to the repair or restoration of any integrated structure subject
to such Condemnation or, in the case of a total or "substantially all"
Condemnation, to the location of a replacement property, acquisition of such
replacement property and construction of the replacement structures, and second,
shall apply the remainder of such Condemnation Proceeds (less the reasonable
costs, if any, incurred by the Collateral Agent in the recovery of such
Condemnation Proceeds) to prepay obligations outstanding under this Agreement,
with any remaining Condemnation Proceeds being returned to the Borrower.
(d) In the event of any Casualty of less than 50% of the useable
square footage of the improvements of any Mortgaged Property, the Borrower
shall, subject to the conditions contained in clause (e), restore the Mortgaged
Property to substantially its same condition immediately prior to such Casualty.
In the event of any Casualty of greater than 50% of the
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useable square footage of the improvements of any Mortgaged Property and so
long as no Default or Event of Default has occurred and is continuing, the
Borrower shall have the option to either:
(i) restore the Mortgaged Property to a condition substantially
similar to its condition immediately prior to such Casualty and to invest
the balance, if any, of any Casualty Proceeds in equipment or other assets
used in the Borrower's principal lines of business within 6 months after
the receipt thereof, provided that the Borrower, pending such reinvestment,
promptly deposits such excess Casualty Proceeds in a cash collateral
account established with the Collateral Agent for the benefit of the
Secured Parties, or
(ii) direct the Collateral Agent to apply the related Casualty
Proceeds to prepay obligations outstanding under this Agreement, with any
remaining Casualty Proceeds being returned to the Borrower.
Any excess Casualty Proceeds that are not reinvested in the Borrower's principal
lines of business as contemplated above will be applied to prepay the
Obligations.
If required to do so, the Borrower shall make the election
contemplated by the immediately preceding clause by notifying the Collateral
Agent and the Administrative Agent promptly after the later to occur of (A) five
days after the Borrower and its insurance carrier reach a final determination of
the amount of any Casualty Proceeds and (B) 30 days after the occurrence of the
Casualty. If the Borrower shall be required or shall elect to restore the
Mortgaged Property, the insufficiency of any Casualty Proceeds or Condemnation
Proceeds to defray the entire expense of such restoration shall in no way
relieve the Borrower of such obligation so to restore. In the event the
Borrower shall be required to restore or shall notify the Collateral Agent and
the Administrative Agent of its election to restore, the Borrower shall
diligently and continuously prosecute the restoration of the Mortgaged Property
to completion. In the event of a Casualty where the Borrower is required to make
the election set forth above and the Borrower shall fail to notify the
Collateral Agent and the Administrative Agent of its election within the period
set forth above or shall elect not to restore the Mortgaged Property, the
Collateral Agent shall (after being reimbursed for all reasonable costs of
recovery of such Casualty Proceeds) apply such Casualty Proceeds to prepay
obligations outstanding under this Agreement. In addition, upon such
prepayment, the Borrower shall be obligated to place the remaining portion, if
any, of the Mortgaged Property in a safe condition that is otherwise in
compliance with the requirements of applicable Governmental Authorities and the
provisions of this Agreement and the applicable Mortgage.
(e) Except as otherwise specifically provided in this Section, all
Casualty Proceeds and all Condemnation Proceeds recovered by the Collateral
Agent (A) are to be applied to the restoration of the applicable Mortgaged
Property (less the reasonable cost, if any, to the Collateral Agent of such
recovery and of paying out such proceeds, including reasonable attorneys' fees
(including the allocated costs of in-house legal counsel), other charges and
disbursements and costs allocable to inspecting the Work (as defined below)) and
(B) shall be applied by the Collateral Agent to the payment of the cost of
restoring or replacing the Mortgaged Property so damaged, destroyed or taken or
of the portion or portions of the Mortgaged Property not so taken (the "Work")
and (C) shall be paid out from time to time to the Borrower as and to the extent
the Work (or the location and acquisition of any replacement of any Mortgaged
Property) progresses for the payment thereof, but subject to each of the
following conditions:
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(i) the Borrower must promptly commence the restoration process or the
location, acquisition and replacement process (in the case of a total or
"substantially all" Condemnation) in connection with the Mortgaged
Property;
(ii) the Work shall be in the charge of an architect or engineer and
before the Borrower commences any Work, other than temporary work to
protect property or prevent interference with business, the Collateral
Agent shall have received the plans and specifications and the general
contract for the Work from the Borrower. The plans and specifications
shall provide for such Work that, upon completion thereof, the improvements
shall (A) be in compliance with all requirements of applicable Governmental
Authorities such that all representations and warranties of the Borrower
relating to the compliance of such Mortgaged Property with applicable laws,
rules or regulations in this Agreement or the Security Documents will be
correct in all respects and (B) be at least equal in value and general
utility to the improvements that were on such Mortgaged Property (or that
were on the Mortgaged Property that has been replaced, if applicable) prior
to the Casualty or Taking, and in the case of a Taking, subject to the
effect of such Taking;
(iii) except as provided in clause (iv), each request for payment
shall be made on seven days' prior notice to the Collateral Agent and shall
be accompanied by a certificate to be made by such architect or engineer,
stating (A) that all the Work completed has been done in substantial
compliance with the plans and specifications, (B) that the sum requested is
justly required to reimburse the Borrower for payments by the Borrower to,
or is justly due to, the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or materials for
the Work (giving a brief description of such services and materials) and
that, when added to all sums previously paid out by the Collateral Agent,
does not exceed the value of the Work done to the date of such certificate;
(iv) each request for payment in connection with the acquisition of a
replacement Mortgaged Property (in the case of a total or "substantially
all" Condemnation) shall be made on 30 days' prior notice to the Collateral
Agent and, in connection therewith, (A) each such request shall be
accompanied by a copy of the sales contract or other document governing the
acquisition of the replacement property by the Borrower and a certificate
of the Borrower stating that the sum requested represents the sales price
under such contract or document and the related reasonable transaction fees
and expenses (including brokerage fees) and setting forth in sufficient
detail the various components of such requested sum and (B) the Borrower
shall (I) in addition to any other items required to be delivered under
this Section), provide the Administrative Agent and the Collateral Agent
with such opinions, documents, certificates, title insurance policies,
surveys and other insurance policies as they may reasonably request and
(II) take such other actions as the Administrative Agent and the Collateral
Agent may reasonably deem necessary or appropriate (including actions with
respect to the delivery to the Collateral Agent of a first priority
Mortgage with respect to such real property for the ratable benefit of the
Secured Parties);
(v) each request shall be accompanied by waivers of lien satisfactory
to the Collateral Agent covering that part of the Work for which payment or
reimbursement is being requested and, if required by the Collateral Agent,
by a search prepared by a title company or licensed abstractor or by other
evidence satisfactory to the Collateral Agent, that there has not been
filed with respect to such Mortgaged Property any mechanics' or other lien
or instrument for the retention of title in respect of any part of the Work
not discharged of record or bonded to the reasonable satisfaction of the
Collateral Agent;
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(vi) there shall be no Default or Event of Default that has occurred
and is continuing;
(vii) the request for any payment after the Work has been completed
shall be accompanied by a copy of any certificate or certificates required
by law to render occupancy of the improvements being rebuilt, repaired or
restored legal; and
(viii) after commencing the Work, the Borrower shall continue to
perform the Work diligently and in good faith to completion in accordance
with the approved plans and specifications.
Upon completion of the Work and payment in full therefor, the Collateral Agent
will disburse to the Borrower the amount of any Casualty Proceeds or
Condemnation Proceeds then or thereafter in the hands of the Collateral Agent on
account of the Casualty or Taking that necessitated such Work to be applied (x)
to prepay obligations outstanding under this Agreement, with any excess being
returned to the Borrower, or (y) to be reinvested in the Borrower's principal
lines of business within 180 days after the receipt thereof, provided that the
Borrower, pending such reinvestment, promptly deposits such amounts in a cash
collateral account established with the Collateral Agent for the benefit of the
Secured Parties.
(f) Notwithstanding any other provisions of this Section, if the
Borrower shall have elected to replace a Mortgaged Property in connection with a
total or "substantially all" Condemnation as contemplated in clause (c), all
Condemnation Proceeds held by the Collateral Agent in connection therewith shall
be applied to prepay obligations outstanding under this Agreement if (i) the
Borrower notifies the Collateral Agent and the Administrative Agent that it does
not intend to replace the related Mortgaged Property, (ii) a Responsible Officer
of the Borrower shall not have notified the Administrative Agent and the
Collateral Agent in writing that the Borrower has acquired or has entered into a
binding contract to acquire land upon which it will construct the replacement
property within six months after the related Condemnation or (iii) the Borrower
shall have not notified the Administrative Agent and the Collateral Agent in
writing that it has begun construction of the replacement structures within one
year after the related Condemnation.
(g) Nothing in this Section shall prevent the Collateral Agent from
applying at any time all or any part of the Casualty Proceeds or Condemnation
Proceeds to (i) the curing of any Event of Default under this Agreement or (ii)
the payment of any of the Obligations after the occurrence and during the
continuance of an Event of Default.
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness. The Borrower will not, and will not permit
any Restricted Subsidiary to, incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and
set forth in Schedule 6.01(a); provided, however, that such Indebtedness
shall be repaid concurrently with the incurrence of the Borrowing of the
Initial Credit Event hereunder ("Indebtedness to be Paid");
(b) Indebtedness represented by the Notes and by the other Credit
Documents;
68
(c) Indebtedness under the Senior Subordinated Notes (as the same may
be amended from time to time, without increasing the committed amount
thereunder, except as otherwise permitted by this Section) and any
Refinancing Indebtedness of the Borrower with respect thereto in an
aggregate principal amount on the date of Incurrence that, when added to
all other Indebtedness Incurred pursuant to this clause and then
outstanding, shall not exceed the sum of the then outstanding Indebtedness
under the Senior Subordinated Notes;
(d) Indebtedness (i) of the Borrower to any wholly owned Restricted
Subsidiary or to any Guarantor and (ii) of any Restricted Subsidiary to the
Borrower or any wholly owned Restricted Subsidiary;
(e) Indebtedness represented by the Guarantees of Indebtedness
Incurred pursuant to clause (c) (provided, that any Guarantee with respect
to the Senior Subordinated Notes will be subordinated to the same extent as
the Senior Subordinated Notes) or clause (d);
(f) Indebtedness relating to Capital Lease Obligations, Sale/Leaseback
Transactions and Permitted Purchase Money Liens; provided, that
(i) with respect to Capital Lease Obligations, Indebtedness
relating to Purchase Money Liens and Unrestricted Sale/Leaseback
Transactions, either (A) the Incurrence of such Indebtedness relating
to Capital Expenditures, Unrestricted Sale/Leaseback Transactions and
Permitted Purchase Money Liens would be permitted pursuant to Section
6.08 in the fiscal year in which it is Incurred, or (B) the aggregate
principal amount of such Indebtedness does not exceed $10,000,000 at
any one time; and
(ii) with respect to Restricted Sale/Leaseback Transactions, if
the Net Cash Proceeds thereof are applied in accordance with Section
2.13(b).
(g) Indebtedness under Hedging Obligations; provided, however, that
such Hedging Obligations are entered into for bona fide hedging purposes
of the Borrower or its Restricted Subsidiaries (as determined in good faith
by the Board of Directors or senior management of the Borrower) and
correspond in terms of notional amount, duration, currencies and interest
rates, as applicable, to Indebtedness of the Borrower or its Restricted
Subsidiaries Incurred without violation of this Agreement or to business
transactions of the Borrower or its Restricted Subsidiaries on customary
terms entered into in the ordinary course of business; and
(h) Indebtedness in an aggregate principal amount which, together with
all other Indebtedness of the Borrower and the Restricted Subsidiaries
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (a) through (g)) does not exceed $5,000,000 at any one
time outstanding.
SECTION 6.02. Liens. The Borrower will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the date hereof and set forth in Schedule 6.02(a); provided
that such Liens shall secure only those obligations which they secure on
the date hereof;
69
(b) any Lien created under the Credit Documents;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition, and (ii) such Lien does not apply to any other property or
assets of the Borrower or any Subsidiary;
(d) Liens for taxes not yet due or which are being contested in
compliance with Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or which are being contested in
compliance with Section 5.03;
(f) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(g) Liens and deposits to secure the performance of bids, contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety, indemnity and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(h) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount
and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(i) Liens relating to Indebtedness described in Section 6.01(f);
(j) any interest or title of a lessor or any Lien encumbering such
lessor's interest with respect to any lease to the Borrower or any
Subsidiary; and
(k) judgment Liens that do not otherwise constitute an Event of
Default.
SECTION 6.03. Investments, Loans and Advances. The Borrower will not,
and will not permit any Restricted Subsidiary to, make or permit to exist any
Investment in any other person, except:
(a) Investments by the Borrower existing on the date hereof in the
capital stock of the Subsidiaries;
(b) Permitted Investments;
(c) Investments in Unrestricted Subsidiaries not to exceed $20,000 in
the aggregate; and
(d) Investments in Restricted Subsidiaries;
(e) Investments made in connection with Permitted Investments;
70
(f) Investments which would be permitted as Indebtedness pursuant to
Section 6.01;
(g) loans and advances to employees of the Borrowers and any
Restricted Subsidiary made in the ordinary course of business consistent
with past practices of the Borrower or such Restricted Subsidiary; provided
that the aggregate principal amount of such loans, advances and Employee
Notes payable shall not exceed $1,000,000 at any one time outstanding;
(h) loans and advances to, or Employee Notes received from, employees
of Holding, the Borrower or any of their Subsidiaries made or received in
connection with the substantially concurrent purchase of common stock of
Holding or the Borrower by such employees; provided that the aggregate
principal amount of such loans, advances and Employee Notes payable shall
not exceed $1,000,000 at any one time outstanding; and
(i) other Investments in an aggregate amount not in excess of
$500,000 at any one time outstanding.
SECTION 6.04. Mergers, Consolidations, Sales of Assets and
Acquisitions. (a) The Borrower will not merge, consolidate or amalgamate with
or into any other person (other than a merger of a wholly owned Subsidiary into
the Borrower) unless: (i) the Borrower shall be the surviving person (the
"Surviving Person") or the Surviving Person (if other than the Borrower) formed
by such merger, consolidation or amalgamation shall be a corporation organized
and existing under the laws of the State of Delaware, (ii) the Surviving Person
(if other than the Borrower) shall expressly assume, by an agreement
satisfactory in form and substance to the Agents, executed and delivered to the
Agents by the Surviving Person, the due and punctual performance of all of the
obligations and agreements of the Borrower under this Agreement, (iii)
immediately after giving effect to such merger, consolidation or amalgamation,
no Default or Event of Default shall have occurred, and (iv) the Borrower shall
have carried out any acts necessary to ensure that any security interest
purported to be created by any Security Document shall continue to be a valid,
perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in the applicable
Collateral.
(b) The Borrower will not permit any Restricted Subsidiary to merge into
or consolidate with any other person, or permit any other person to merge into
or consolidate with it, except that if at the time thereof and immediately after
giving effect thereto no Event of Default or Default shall have occurred and be
continuing (i) any wholly owned Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation and (ii) any
wholly owned Subsidiary may merge into or consolidate with any other wholly
owned Subsidiary in a transaction in which the surviving entity is a wholly
owned Subsidiary and no person other than the Borrower or a wholly owned
Subsidiary receives any consideration.
(c) The Borrower will not, and will not permit any Restricted Subsidiary
to, purchase, lease, or otherwise acquire (in one transaction or a series of
transactions) any Assets or capital stock (or other equity interests) of any
person other than in the ordinary course of the Borrower's business, except for
Permitted Acquisitions.
(d) The Borrower will not, and will not permit any Restricted Subsidiary
to, enter into any Asset Disposition or Sale/Leaseback Transaction, except for
(i) Unrestricted Asset Dispositions, (ii) Unrestricted Sale/Leaseback
Transactions permitted by Section 6.01(f), (iii) Restricted Asset Dispositions,
the Net Cash Proceeds of which are applied in accordance with
71
Section 2.13(b), and (iv) Restricted Sale/Leaseback Transactions which are
permitted by Section 6.01(f) and the Net Cash Proceeds of which are applied in
accordance with Section 2.13(b).
SECTION 6.05. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. Neither Holding nor the Borrower shall, and the
Borrower shall not permit any Restricted Subsidiary to, (a) Directly or
indirectly, declare or pay any dividend or make any distribution (whether in
cash, securities or other Property) on or with respect to the Capital Stock of
the Borrower or any Restricted Subsidiary (including any payment in connection
with any merger or consolidation with or into the Borrower or any Restricted
Subsidiary) except for any dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and except any dividend or
distribution which is made to the Borrower or a wholly owned Restricted
Subsidiary (provided that such Restricted Subsidiary is a Wholly Owned
Subsidiary), or any dividend or distribution payable solely in shares of Capital
Stock (other than Redeemable Stock) of the Borrower, purchase, repurchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Borrower
or any Affiliate of the Borrower held by persons other than the Borrower or a
Restricted Subsidiary or any Securities exchangeable for or convertible into any
such Capital Stock (other than for or into Capital Stock of the Borrower that is
not Disqualified Stock), purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition,
or the refinancing of any Subordinated Obligations with Refinancing
Indebtedness), or make any Investment (other than pursuant to Section 6.03) in
any person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein referred to
as a "Restricted Payment"); provided, however, that
(i) the purchase, repurchase, redeem, legally defease, acquire or
retire for value, or pay dividends or make loans to Holding to enable
Holding substantially concurrently therewith to purchase, repurchase,
redeem, legally defease, acquire or retire for value, shares of, or options
to purchase shares of, Capital Stock of the Borrower or Holding from
employees or former employees of the Borrower, Holding or any of their
Subsidiaries (or their estates or beneficiaries thereof) upon death,
disability, retirement or termination pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments
thereto) approved by the board of directors of the Borrower or Holding, as
the case may be, under which such individuals purchase or sell, or are
granted the option to purchase or sell, shares of such Capital Stock;
provided, that (i) the aggregate amount of such purchases, repurchases,
redemptions, defeasances, acquisitions or retirements shall not exceed
$1,000,000 in any fiscal year or $3,000,000 in the aggregate after the
Closing Date, except that (x) such amounts shall be increased by the
aggregate net amount of cash received by the Borrower after the Closing
Date from the sale of such Capital Stock to, or the exercise of options to
purchase such shares by, employees of the Borrower, Holding or any of their
Subsidiaries, and (y) the Borrower may forgive or return Employee Notes
without regard to the limitations set forth in clause (d)(i) and such
forgiveness or return shall not be treated as a Restricted Payment for
purpose of determining compliance with clause (d)(i) and such purchases,
repurchases, defeasances, acquisitions or retirements (but not forgiveness
or returns of Employee Notes) shall be included in the calculation of the
amount of Restricted Payments;
(ii) beginning not earlier than the fifth anniversary of the Closing
Date, the Borrower may pay cash dividends on the Borrower's Exchangeable
Preferred Stock, and Holding may pay cash dividends on Holding's
Exchangeable Preferred Stock, but only in
72
accordance with the terms of the Exchangeable Preferred Stock in amounts
not greater than 11 1/2% per annum of the original aggregate liquidation
preference of the Borrower's Exchangeable Preferred Stock plus accreted PIK
liquidation preference;
(iii) the Borrower may redeem the Borrower's Exchangeable Preferred
Stock (including accreted PIK liquidation preference) with Net Cash
Proceeds of an Equity Issuance pursuant to Section 2.13(c)(i) in accordance
with its terms; provided, however, that Holdings shall concurrently apply
the proceeds of such redemption to redeem a like amount of Holding's
Exchangeable Preferred Stock; and
(iv) the Borrower and/or Holding may make Contingent Acquisition-
Related Payments; or
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any such subsidiary to (i) pay any
dividends or make any other distributions on its capital stock or any other
interest or (ii) make or repay any loans or advances to the Borrower or Holding
of such subsidiary.
SECTION 6.06. Transactions with Affiliates. Neither Holding nor the
Borrower shall, and the Borrower shall not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into or suffer to exist
any transaction or series of transactions (including the purchase, sale,
transfer, assignment, lease, conveyance or exchange of any Property or the
rendering of any service) with, or for the benefit of, any Affiliate of the
Borrower, other than the payment of Transaction Costs approved by the
Syndication Agent prior to the Closing Date (an "Affiliate Transaction"), unless
the terms of such Affiliate Transaction are (i) set forth in writing, (ii) in
the interests of the Borrower or such Restricted Subsidiary as the case may be,
and (iii) no less favorable to the Borrower or such Restricted Subsidiary, as
the case may be, than those that could be obtained in a comparable arm's length
transaction with a person that is not an Affiliate of the Borrower.
Notwithstanding the foregoing limitations, the Borrower or any Restricted
Subsidiary may enter into or permit to exist the following:
(a) any transaction permitted pursuant to Section 6.03 or Section
6.05;
(b) the issuance of Capital Stock for cash;
(c) the payment of compensation (including amounts paid pursuant to
employee benefit plans) for the personal services of officers, directors
and employees of the Borrower or any of the Restricted Subsidiaries, so
long as the board of directors of the Borrower in good faith shall have
approved the terms thereof and deemed the services theretofore or
thereafter to be performed for such compensation to be fair consideration
therefor; or
(d) the payment of the Transaction Costs.
SECTION 6.07. Business of Holding, Borrower and Subsidiaries. The
Borrower will not, and will not permit any Restricted Subsidiary to, engage at
any time in any business or business activity other than the business currently
conducted by it and business activities reasonably related or complementary
thereto. Notwithstanding anything to the contrary in this Agreement, Holding
shall not engage in any business, or have any assets, operations, obligations,
liabilities or employees, except as specifically contemplated in the Credit
Documents and the Recapitalization Agreements.
73
SECTION 6.08. Capital Expenditures. The Borrower will not, and will
not permit any Restricted Subsidiary to, or make Capital Expenditures if the
aggregate amount thereof would exceed the following limits in the following
fiscal years; provided, that the unused portion of the scheduled limit for any
fiscal year (not to exceed $4,000,000) may be carried forward to be used in the
following fiscal year.
FISCAL YEAR LIMIT
-------------- -------------
1998 $6,000,000
1999 $8,000,000
2000 $8,000,000
2001 $8,000,000
2002 $8,000,000
2003 $8,000,000
2004 $8,000,000
SECTION 6.09. Debt/Adjusted EBITDA Ratio. The Debt/Adjusted EBITDA
Ratio shall not exceed the following amounts as of the ends of fiscal quarters
of the Borrower ending nearest to the following dates:
- ---------------------------------------------------------------------------------------------------
FISCAL DEBT/ADJUSTED EBITDA RATIO
QUARTER
ENDING
NEAREST TO
- ---------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
- ---------------------------------------------------------------------------------------------------
March 31 6.00:1.00 5.25:1.00 4.50:1.00 3.75:1.00 3.50:1.00 3.50:1.00
- ---------------------------------------------------------------------------------------------------
June 30 6.25:1:00 6.00:1.00 5.00:1.00 4.25:1.00 3.75:1.00 3.50:1.00
- ---------------------------------------------------------------------------------------------------
September 30 6.25:1:00 6.00:1.00 5.00:1.00 4.25:1.00 3.75:1.00 3.50:1.00
- ---------------------------------------------------------------------------------------------------
December 31 6.00:1.00 5.25:1.00 4.50:1.00 3.75:1.00 3.50:1.00 3.50:1.00
- ---------------------------------------------------------------------------------------------------
and thereafter, 3.50:1.00.
SECTION 6.10. Minimum EBITDA. The EBITDA for the fiscal year of the
Borrower shall not be less than the following amounts as of the end of the
following fiscal years:
FISCAL YEAR ENDING
NEAREST TO
DECEMBER 31, MINIMUM EBITDA
--------------------- -------------------
1998 $27,000,000
1999 $29,000,000
2000 $32,000,000
2001 $34,000,000
2002 $37,000,000
74
FISCAL YEAR ENDING
NEAREST TO
DECEMBER 31, MINIMUM EBITDA
------------------- ------------------
2003 $39,000,000
and thereafter
SECTION 6.11. Interest Coverage Ratio.
(a) The ratio of
(i) the EBITDA for the period of four fiscal quarters ending nearest
to June 30, 1998 to
(ii) the product of 4 times the Consolidated Interest Expense for the
fiscal quarter ending nearest to June 30, 1998,
shall not be less than 1.5:1.0.
(b) The ratio of
(i) the EBITDA for the period of four fiscal quarters ending nearest
to September 30, 1998 to
(ii) the product of 2 times the Consolidated Interest Expense for the
period of two fiscal quarters ending nearest to September 30, 1998,
shall not be less than 1.5:1.0.
(c) The ratio of
(i) the EBITDA for the period of four fiscal quarters ending nearest
to December 31, 1998 to
(ii) the product of 1.33 times the Consolidated Interest Expense for
the period of three fiscal quarters ending nearest to December 31, 1998,
shall not be less than 1.75:1.0.
(d) The ratio of EBITDA to Consolidated Interest Expense for the
period of four fiscal quarters ending nearest to each of the following
dates, shall not be less than the following ratios:
- ------------------------------------------------------------------------------------------------
FISCAL QUARTER ENDING
NEAREST TO CONSOLIDATED INTEREST COVERAGE RATIO
- ------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
- ------------------------------------------------------------------------------------------------
March 31 1.75:1.00 2.00:1.00 2.30:1.00 2.75:1.00 3.00:1:00 3.00:1:00
- ------------------------------------------------------------------------------------------------
June 30 1.75:1.00 2.00:1.00 2.30:1.00 2.75:1.00 3.00:1:00
- ------------------------------------------------------------------------------------------------
September 30 1.75:1.00 2.00:1.00 2.30:1.00 2.75:1.00 3.00:1:00
- ------------------------------------------------------------------------------------------------
75
- ------------------------------------------------------------------------------------------------
FISCAL QUARTER ENDING
NEAREST TO CONSOLIDATED INTEREST COVERAGE RATIO
- ------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
- ------------------------------------------------------------------------------------------------
December 31 2.00:1.00 2.30:1.00 2.75:1.00 3.00:1.00 3.00:1:00
- ------------------------------------------------------------------------------------------------
and thereafter, 3.00:1.00.
SECTION 6.12. Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio as of the end of any period of four fiscal quarters shall not be less than
1.2:1.0, beginning with the fiscal quarter ending nearest to March 31, 1999.
SECTION 6.13. Modification of Certain Agreements. Neither Holding, the
Borrower nor any Restricted Subsidiary shall consent to any amendment,
supplement or other modification of any of the terms or provisions contained in
the Senior Subordinated Notes, the Exchangeable Preferred Stock, or any document
or instrument evidencing or applicable to any Subordinated Obligation, other
than any amendment, supplement or other modification which extends the date or
reduces the amount of any required repayment or redemption.
ARTICLE VII
Defaults and Remedies
SECTION 7.01. Events of Default. In case of the happening of any of
the following events ("Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with any Credit Document or the borrowings or issuances of
Letters of Credit hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Credit
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any L/C Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or L/C Disbursement (after demand for such reimbursement) or any
other amount (other than an amount referred to in clause (b)) due under any
Credit Document, when and as the same shall become due and payable, and
such default shall continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by
Holding, the Borrower or any Restricted Subsidiary of any covenant,
condition or agreement contained in Section 5.01(a), 5.05 or 5.07(b) or in
Article VI;
(e) default shall be made in the due observance or performance by
Holding, the Borrower or any Restricted Subsidiary of any covenant,
condition or agreement contained in any Credit Document (other than those
specified in clause (b), (c) or (d) ) and such default shall continue
unremedied for a period of 15 days after notice thereof from the
Administrative Agent or any Lender to the Borrower;
76
(f) Holding, the Borrower or any Restricted Subsidiary shall (i) fail
to pay any principal or interest, regardless of amount, due in respect of
any Indebtedness in a principal amount in excess of $2,500,000, when and as
the same shall become due and payable, or (ii) fail to observe or perform
any other term, covenant, condition or agreement contained in any agreement
or instrument evidencing or governing any such Indebtedness if the effect
of any failure referred to in this clause (ii) is to cause, or to permit
the holder or holders of such Indebtedness or a trustee on its or their
behalf (with or without the giving of notice, the lapse of time or both) to
cause, such Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of Holding, the Borrower or any Material Subsidiary, or
of a substantial part of the property or assets of Holding, the Borrower or
a Material Subsidiary, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for Holding, the Borrower or any Material Subsidiary or for a
substantial part of the property or assets of Holding, the Borrower or a
Material Subsidiary, (iii) the winding-up or liquidation of Holding, the
Borrower or any Material Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered, or (iv) any similar relief
is granted under any foreign laws;
(h) Holding, the Borrower or any Material Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of
any petition described in clause (g), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holding, the Borrower or any Material Subsidiary or
for a substantial part of the property or assets of Holding, the Borrower
or any Material Subsidiary, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they
become due or (vii) take any action for the purpose of effecting any of the
foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $2,500,000 shall be rendered against Holding, the
Borrower, any Restricted Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken (and not stayed) by a judgment creditor to levy upon assets or
properties of Holding, the Borrower or any Subsidiary to enforce any such
judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events,
could reasonably be expected to result in liability of the Borrower and its
ERISA Affiliates in an aggregate amount exceeding $1,000,000 or requires
payments exceeding $500,000 in any year;
(k) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any
other Credit Party not to be, a valid, perfected, first priority (except as
otherwise expressly provided in this Agreement
77
or such Security Document) security interest in securities, assets or
properties with a Fair Market Value of $500,000 or more and purported to be
covered thereby, except to the extent that any such loss of perfection or
priority results from the failure of the Collateral Agent to maintain
possession of certificates representing securities pledged under the Pledge
Agreement and except to the extent that such loss is covered by a lender's
title insurance policy and the related insurer promptly after such loss
shall have acknowledged in writing that such loss is covered by such title
insurance policy;
(l) any Credit Document shall cease, for any reason, to be in full
force and effect or any Credit Party or any of its Subsidiaries shall so
assert in writing; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Borrower
described in clause (g) or (h)), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Credit Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Credit Document to the contrary notwithstanding; and in any event
with respect to the Borrower described in clause (g) or (h), the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Credit
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other
Credit Document to the contrary notwithstanding.
ARTICLE VII
The Agents
SECTION 8.01. Appointment of Administrative and Collateral Agent. In
order to expedite the transactions contemplated by this Agreement, Bankers Trust
Company is hereby appointed to act as Administrative Agent and Collateral Agent
on behalf of the Lenders and the Issuing Bank , and Salomon Brothers Inc is
hereby appointed to act as Syndication Agent on behalf of the Lenders and the
Issuing Bank (for purposes of this Article VIII, the Administrative Agent, the
Collateral Agent and the Syndication Agent are referred to collectively as the
"Agents"). Each of the Lenders and each subsequent holder of any Note by its
acceptance thereof, hereby irrevocably authorizes the Agents to take such
actions on behalf of such Lender or holder or the Issuing Bank and to exercise
such powers as are specifically delegated to the Agents by the terms and
provisions hereof and of the other Credit Documents, together with such actions
and powers as are reasonably incidental thereto. The Administrative Agent is
hereby expressly authorized by the Lenders and the Issuing Bank, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders and the
Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or the Issuing Bank
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to
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the Borrower of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by the Borrower or any other Credit
Party pursuant to this Agreement or the other Credit Documents as received by
the Administrative Agent. Without limiting the generality of the foregoing, the
Agents are hereby expressly authorized to execute any and all documents
(including releases) with respect to the Collateral and the rights of the
Secured Parties with respect thereto, as contemplated by and in accordance with
the provisions of this Agreement and the Security Documents.
SECTION 8.02. Limitations on Liabilities. Neither the Agents nor any
of their respective directors, officers, employees or agents shall be liable as
such for any action taken or omitted by any of them except for its or his own
gross negligence or wilful misconduct, or be responsible for any statement,
warranty or representation herein or the contents of any document delivered in
connection herewith, or be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrower or any other Credit
Party of any of the terms, conditions, covenants or agreements contained in any
Credit Document. The Agents shall not be responsible to the Lenders or the
holders of the Notes for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the Notes or any other Credit
Documents, instruments or agreements. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes hereof until
it shall have received from the payee of such Note notice, given as provided
herein, of the transfer thereof in compliance with Section 9.04. The Agents
shall in all cases be fully protected in acting, or refraining from acting, in
accordance with written instructions signed by the Required Lenders and, except
as otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders and each
subsequent holder of any Note. Each Agent shall, in the absence of knowledge to
the contrary, be entitled to rely on any instrument or document believed by it
in good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. Neither the Agents nor any of their respective
directors, officers, employees or agents shall have any responsibility to the
Borrower or any other Credit Party on account of the failure of or delay in
performance or breach by any Lender or the Issuing Bank of any of its
obligations hereunder or to any Lender or the Issuing Bank on account of the
failure of or delay in performance or breach by any other Lender or the Issuing
Bank or the Borrower or any other Credit Party of any of their respective
obligations hereunder or under any other Credit Document or in connection
herewith or therewith. Each of the Agents may execute any and all duties
hereunder by or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or suffered in good faith
by it in accordance with the advice of such counsel.
SECTION 8.03. Acting at the Direction of the Required Lenders. The
Lenders hereby acknowledge that neither Agent shall be under any duty to take
any discretionary action permitted to be taken by it pursuant to the provisions
of this Agreement unless it shall be requested in writing to do so by the
Required Lenders.
SECTION 8.04. Resignation of the Administrative Agent or the
Collateral Agent. Subject to, and effective upon, the appointment and
acceptance of a successor Agent as provided below, either Agent may resign at
any time by notifying the Lenders and the Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor. If no
successor shall have been so appointed by the Required Lenders (subject, so
long as no Event of Default has occurred and is continuing, to the consent of
the Borrower, which consent shall not be unreasonably withheld or delayed) and
shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank with an office in New
York, New
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York, having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank. Upon the acceptance of any appointment as Agent
hereunder by a successor bank, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After the Agent's resignation hereunder, the provisions of this Article and
Section 9.05 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
SECTION 8.05. Other Transactions. With respect to the Loans made by it
hereunder and the Notes issued to it, each Agent in its individual capacity and
not as Agent shall have the same rights and powers as any other Lender and may
exercise the same as though it were not an Agent, and the Agents and their
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with Holding, the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent.
SECTION 8.06. Reimbursement and Indemnity. Each Lender agrees (a) to
reimburse the Agents, on demand, in the amount of its pro rata share (based on
its Commitments hereunder) of any expenses incurred for the benefit of the
Lenders by the Agents, including counsel fees (including the allocated costs of
in-house legal counsel) and compensation of agents and employees paid for
services rendered on behalf of the Lenders, that shall not have been reimbursed
by the Borrower and (b) to indemnify and hold harmless each Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against it in its capacity as Agent or any of them in any way
relating to or arising out of this Agreement or any other Credit Document or any
action taken or omitted by it or any of them under this Agreement or any other
Credit Document, to the extent the same shall not have been reimbursed by the
Borrower or any other Credit Party, provided that no Lender shall be liable to
an Agent or any such other indemnified person for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Agent or any of its directors, officers,
employees or agents. Each Revolving Credit Lender agrees to reimburse each the
Issuing Bank and its directors, employees and agents, in each case, to the same
extent and subject to the same limitations as provided above for the Agents.
SECTION 8.07. No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents or
any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement or any other Credit
Document, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
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(a) if to the Borrower or Holding, to it at 27711 Diaz Road, P.O. Box
9020, Temecula, CA 92589-9020, Attention of Chief Financial Officer
(telecopy: 909-694-1225) with a copy to Freeman Spogli & Co. Incorporated,
11100 Santa Monica Boulevard, Los Angeles, CA 90025, Attention of Jon Ralph
(telecopy: 310-444-1870);
(b) if to the Administrative Agent with respect to notices under
Article II, to Bankers Trust Company, 130 Liberty St., 14th Floor, New
York, NY 10006, Attention of Stuart Levy, Deal Administrator (telephone:
212-250-4869), (telecopy: 212-250-6029;
(c) if to the Administrative Agent with respect to other matters, to
Bankers Trust Company, 300 South Grand Ave., Floor 41, Los Angeles, CA
90071, Attention of Keith Bernstein, Principal (telephone: 213-620-8148),
(telecopy: 213-620-8484);
(d) if to the Syndication Agent, to Salomon Smith Barney, 7 World
Trade Center, New York, NY 10048, Attention of Nick Erni, (telecopy: 212-
783-2316); and
(e) if to a Lender, to it at its address (or telecopy number) set
forth on Annex 2 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or Holding herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Credit Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans, the issuance of Letters of Credit by the
Issuing Bank and the execution and delivery to the Lenders of the Notes
evidencing such Loans, regardless of any investigation made by the Lenders or
the Issuing Bank or on their behalf, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any Fee or
any other amount payable under this Agreement or any other Credit Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not been terminated. The provisions of Sections 2.14, 2.16,
2.20 and 9.05 shall remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Credit Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank.
SECTION 9.03. Effectiveness; Termination. This Agreement shall become
effective when it shall have been executed by the Borrower, Holding and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns. This Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Credit Document shall have been paid
in full and all Letters of Credit
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have been cancelled or have expired and all amounts drawn thereunder have been
reimbursed in full.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, Holding, the
Administrative Agent, the Issuing Bank or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it and the Notes
held by it); provided, however, that
(x) the Borrower and the Administrative Agent and (only with respect
to Revolving Credit Commitments and Revolving Credit Loans) the Swingling
Lender and the Issuing Bank must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld), except in
the case of an assignment to a Lender or an Affiliate of such Lender of any
Loan or Note (when no consent of any party is required), or at any time
when an Event of Default has occurred and is continuing (when no consent of
the Borrower is required), and
(y) the amount of the Commitment of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (or, if less, the
entire remaining amount of such Lender's Commitment), (ii) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations with respect to the Revolving
Credit Commitments and/or the Term Loans, (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with the Note or Notes subject to such
assignment and a processing and recordation fee of $3,500 and (iv) the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire. Upon acceptance and recording
pursuant to clause (e) of this Section, from and after the effective date
specified in each Assignment and Acceptance, (A) the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees
accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in clause (i), such
assigning Lender makes no representation
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or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Credit Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower
or any Subsidiary or the performance or observance by the Borrower or any
Subsidiary of any of its obligations under this Agreement, any other Credit
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements referred to in Section 3.05(a) or delivered pursuant to
Section 5.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee appoints
and authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower, the Issuing Bank, the Collateral
Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment, an Administrative Questionnaire completed in respect
of the assignee (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in clause (b) and, if required, the
written consent of the Borrower, the Administrative Agent and (only with respect
to Revolving Credit Commitments and Revolving Credit Loans) the Swingline Lender
and the Issuing Bank to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders, the
Issuing Bank and the Swingline Lender. No assignment shall be effective unless
it has been recorded in the Register as provided in this clause. Within five
Business Days after receipt of notice, (i) the Borrower, at its own expense,
shall execute and deliver to the Administrative Agent new Notes payable to the
order of such assignee (or, if such assignee shall so request, to such assignee
or registered assigns) representing Loans made pursuant to the Commitments
assumed by it or Term Loans acquired by it, as the case may be, pursuant to such
Assignment and Acceptance and (ii) the assigning Lender, if it shall cease to be
a party hereto as provided in clause (a), shall deliver the Notes held by it to
the Borrower for cancellation. The new Notes delivered to such assignee shall
be dated the date of the original Notes issued hereunder and shall otherwise be
in substantially the form of the appropriate Exhibit or Exhibits thereto.
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(f) Each Lender may without the consent of the Borrower, the
Swingline Lender, the Issuing Bank or the Administrative Agent sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it and the Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participating banks or
other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if
they were Lenders and (iv) the Borrower, the Administrative Agent, the Issuing
Bank and the Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement,
and such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to the Loans or L/C Disbursements and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers which extend the final scheduled maturity
of any Loan, Note or Letter of Credit (unless such Letter of Credit is not
extended beyond the Maturity Date) in which such participant is participating,
or reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest amounts) or reduce the principal amount thereof, or
increase the amount of the participant's participation over the amount thereof
then in effect (provided that a waiver of any Default or of a mandatory
reduction in the Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased thereby), or consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of such confidential
information on terms no less restrictive than those applicable to the Lenders
pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement and the Notes issued to it to a Federal Reserve Bank
to secure extensions of credit by such Federal Reserve Bank to such Lender;
provided that no such assignment shall release a Lender from any of its
obligations hereunder or substitute any such Bank for such Lender as a party
hereto.
(i) Neither Holding nor the Borrower shall assign or delegate any of
its rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank and each Lender, and any attempted
assignment without such consent shall be null and void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower and Holding
agree, jointly and severally, to pay all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Swingline
Lender in connection with the syndication of the credit facilities provided for
herein and the preparation and administration of this Agreement and the other
Credit Documents or in connection with any amendments, modifications or waivers
of the provisions hereof or thereof (whether or not the transactions hereby or
thereby contemplated shall be consummated) or incurred by the Administrative
Agent, the Collateral Agent or any Lender in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Credit
Documents or in connection with the
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Loans made or the Notes or Letters of Credit issued hereunder, including the
fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the
Administrative Agent and the Collateral Agent, and, in connection with any such
enforcement or protection, the fees, charges and disbursements of any other
counsel for the Administrative Agent, the Collateral Agent or any Lender
(including the allocated costs of in-house legal counsel).
(b) The Borrower and Holding agree, jointly and severally, to
indemnify the Administrative Agent, the Collateral Agent, each Lender and the
Issuing Bank, each Affiliate of any of the foregoing persons and each of their
respective directors, officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees (including the allocated costs of in-house legal
counsel), charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Credit Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged
presence or Release of Hazardous Materials on any property owned or operated by
the Borrower or any of the Subsidiaries, or any Environmental Claim related in
any way to the Borrower or the Subsidiaries; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Credit Document, or any investigation made by or on
behalf of the Administrative Agent, the Collateral Agent, any Lender or the
Issuing Bank. All amounts due under this Section shall be payable on written
demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower or Holding against any of and all
the obligations of the Borrower or Holding now or hereafter existing under this
Agreement and other Credit Documents held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
such other Credit Document and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER
CREDIT DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
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INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS")
AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Credit Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Credit Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or any other Credit Document or consent to
any departure by the Borrower or any other Credit Party therefrom shall in any
event be effective unless the same shall be permitted by clause (b), and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower or Holding in
any case shall entitle the Borrower or Holding to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, Holding and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan or any date for reimbursement of an L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the prior
written consent of each holder of a Note affected thereby, (ii) change or extend
the Commitment or decrease or extend the date for payment of the Commitment Fees
of any Lender without the prior written consent of such Lender or (iii) amend or
modify the provisions of Section 2.17 or 9.04(i), the provisions of this
Section, the definition of the term "Required Lenders" or release any Guarantor
or all or substantially all of the Collateral, without the prior written consent
of each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender hereunder or under
any other Credit Document without the prior written consent of the
Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline
Lender. Each Lender and each holder of a Note shall be bound by any waiver,
amendment or modification authorized by this Section regardless of whether its
Note shall have been marked to make reference thereto, and any consent by any
Lender or holder of a Note pursuant to this Section shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall have been
so marked.
(c) If a Lender refuses to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which requires the
consent of all of the Lenders and has been approved by the Required Lenders, the
Borrower shall have the right for a 60 day period following such refusal, to
replace such Lender (a "Replaced Lender") with one or more assignees permitted
pursuant to Section 9.04 (collectively, the "Replacement Lender") acceptable to
Administrative Agent, provided that
(i) at the time of any replacement pursuant to this clause, the
Replacement Lender and Replaced Lender shall enter into one or more
Assignment and Acceptances pursuant to Section 9.04(b) (and with all fees
payable pursuant to Section 9.04(b) to be paid by the Replacement Lender)
pursuant to which the Replacement Lender shall acquire all of the
outstanding Loans and Commitments (including principal, interest and
Commitment
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Fees) of, and in each case participations in Letters of Credit and
Swingline Loans by, the Replaced Lender,
(ii) the Replacement Lender shall pay to the Replaced Lender in
respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all unpaid interest on, all outstanding Loans of the
Replaced Lender, and all unpaid Commitment Fees payable to the Replaced
Lender, (B) an amount equal to all unpaid drawings with respect to Letters
of Credit that have been funded by (and not reimbursed to) such Replaced
Lender, together with all unpaid interest thereon, (C) an amount equal to
such Replaced Lender's funded participations in any Swingline Loans, and
(D) an amount equal to all unpaid fees owing to the Replaced Lender with
respect thereto,
(iii) the Replacement Lender shall pay to the appropriate Issuing Bank
an amount equal to such Replaced Lender's Applicable Percentage of any
unpaid drawings with respect to Letters of Credit issued by it to the
extent such amount was not theretofore funded by such Replaced Lender, and
(iv) the Replacement Lender shall pay to the Swingline Lender an
amount equal to the unfunded amount of any participation of the Replaced
Lender in a Swingline Loan which is required to be funded; and
(ii) all obligations of the Borrower owing to the Replaced Lender
other than principal, interest and Commitment Fees, shall be paid in full
to such Replaced Lender concurrently with such replacement.
Upon the execution of the respective Assignment and Acceptance, recordation of
such assignment in the Register by Administrative Agent, and the payment of
foregoing amounts, the Replacement Lender shall become a Lender hereunder and
the Replaced Lender shall cease to constitute a Lender hereunder except with
respect to indemnification provisions under this Agreement which by the terms of
this Agreement survive the termination of this Agreement, which indemnification
provisions shall survive as to such Replaced Lender. Notwithstanding anything
to the contrary contained above, no Issuing Bank may be replaced hereunder at
any time while it has Letters of Credit outstanding hereunder unless
arrangements satisfactory to such Issuing Bank (including the furnishing of a
standby letter of credit in form and substance, and issued by an issuer
satisfactory to such Issuing Bank or the furnishing of cash collateral in
amounts and pursuant to arrangements satisfactory to such Issuing Bank) have
been made with respect to such outstanding Letters of Credit.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein or in the Notes to the contrary, if at any time the interest rate
applicable to any Loan or participation in any L/C Disbursement, together with
all fees, charges and other amounts which are treated as interest on such Loan
or participation in such L/C Disbursement under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Lender holding
such Loan or participation in accordance with applicable law, the rate of
interest payable in respect of such Loan or participation hereunder or under the
Note held by such Lender, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan or participation
but were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or participations or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender.
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SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Credit Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Credit Documents. Nothing in this Agreement or in the
other Credit Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other
Credit Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Credit Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by telecopy
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each
of Holding and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Credit Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
88
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Credit Documents against the Borrower,
Holding or their respective properties in the courts of any jurisdiction.
(b) Each of Holding and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Credit Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders agrees to keep
confidential (and to use its best efforts to cause its respective agents and
representatives to keep confidential) the Information (as defined below) and all
copies thereof, extracts therefrom and analyses or other materials based
thereon, except that the Administrative Agent, the Collateral Agent, the Issuing
Bank or any Lender shall be permitted to disclose Information (a) to such of its
respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information, (b) to the extent requested by
any regulatory authority, (c) to the extent otherwise required by applicable
laws and regulations or by any subpoena or similar legal process, (d) in
connection with any suit, action or proceeding relating to the enforcement of
its rights hereunder or under the other Credit Documents or (e) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent,
the Issuing Bank, any Lender or the Collateral Agent on a nonconfidential basis
from a source other than the Borrower or Holding. For the purposes of this
Section, "Information" means all financial statements, certificates, reports,
agreements and information (including all analyses, compilations and studies
prepared by the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender based on any of the foregoing) that are received from the Borrower or
Holding and related to the Borrower or Holding, any shareholder of the Borrower
or Holding or any employee, customer or supplier of the Borrower or Holding,
other than any of the foregoing that were available to the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to its disclosure thereto by the Borrower or Holding, and which are in the
case of Information provided after the date hereof, clearly identified at the
time of delivery as confidential. The provisions of this Section shall remain
operative and in full force and effect until the second anniversary of the
termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
HUDSON RESPIRATORY CARE INC.,
by /s/ Richard W. Johansen
_____________________
Name: Richard W. Johansen
Title: President and Chief Financial Officer
by /s/ Jay R. Ogram
---------------------
Name: Jay R. Ogram
Title: Chief Financial Officer
RIVER HOLDING CORP.,
by /s/ Charles P. Rullman
______________________
Name: Charles P. Rullman
Title: President
BANKERS TRUST COMPANY, as Administrative Agent,
Collateral Agent, Swingline Lender and Issuing
Bank,
by /s/ Robert R. Telesca
______________________
Name: Robert R. Telesca
Title: Assistant Vice President
SALOMON BROTHERS INC, as Arranger, Advisor and
Syndication Agent,
by /s/ Chad A. Leat
______________________
Name: Chad A. Leat
Title: Managing Director
LENDERS
-------
BANKERS TRUST COMPANY,
by /s/ Robert R. Telesca
_________________________
Name: Robert R. Telesca
Title: Assistant Vice President
90
SALOMON BROTHERS HOLDING
COMPANY INC,
by /s/ Chad A. Leat
_________________________
Name: Chad A. Leat
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by /s/ Helen Wilson
_________________________
Name: Helen Wilson
Title: Vice President
/s/ James O. Heil
_________________________
Name: James O. Heil
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by /s/ Nicholas J. Campbell
_________________________
Name: Nicholas J. Campbell
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT,
by /s/ Dan Dobrjanskyj
_________________________
Name: Dan Dobrjanskyj
Title: Assistant Vice President
/s/ Anthony Heyman
_________________________
Name: Anthony Heyman
Title: Assistant Vice President
CREDITANSTALT CORPORATE FINANCE,
INC,
by /s/ Greg Roux
_________________________
Name: Greg Roux
Title: Vice President
/s/ Jack R. Bertges
_________________________
Name: Jack R. Bertges
Title: Senior Vice President
91
WELLS FARGO BANK, N.A.,
by /s/ Delia B. Fance
_________________________
Name: Delia B. Fance
Title: Vice President
ROYAL BANK OF CANADA,
by /s/ Athar Khan
________________________
Name: Athar Khan
Title: Senior Manager
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NATIONSBANK OF TEXAS, N.A.,
by /s/ Keith Fern
_________________________
Name: Keith Fern
Title: Vice President
SOCIETE GENERALE,
by /s/ Maureen E. Kelly
_________________________
Name: Maureen E. Kelly
Title: Vice President
93