Exhibit 28.2
Amended and Restated Credit Agreement (New Credit Agreement) by and
among Chattem, Inc., Signal Investment & Management Co. and the Lenders
identified therein dated as of June 26, 1997.
AMENDED AND RESTATED
CREDIT AGREEMENT
(New Credit Agreement)
among
CHATTEM, INC.,
as Borrower,
Domestic Subsidiaries of Borrower,
as Guarantors,
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK OF TENNESSEE, N.A.,
as Agent
DATED AS OF JUNE 26, 1997
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS................................. 1
1.1 Definitions....................................................... 1
1.2 Computation of Time Periods and Other Definitional Provisions..... 24
1.3 Accounting Terms.................................................. 24
SECTION 2 CREDIT FACILITIES................................................ 25
2.1 Revolving Loans................................................... 25
2.2 Swingline Loan Subfacility........................................ 26
2.3 Term Loans........................................................ 28
2.4 Continuations and Conversions..................................... 29
2.5 Minimum Amounts................................................... 30
2.6 Notes............................................................. 30
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS........................... 31
3.1 Interest.......................................................... 31
3.2 Place and Manner of Payments...................................... 31
3.3 Prepayments....................................................... 32
3.4 Fees.............................................................. 34
3.5 Payment in full at Maturity....................................... 34
3.6 Computations of Interest and Fees................................. 35
3.7 Pro Rata Treatment................................................ 35
3.8 Allocation of Payments After Event of Default..................... 36
3.9 Sharing of Payments............................................... 37
3.10 Capital Adequacy................................................. 38
3.11 Inability To Determine Interest Rate............................. 38
3.12 Illegality....................................................... 39
3.13 Requirements of Law.............................................. 39
3.14 Taxes............................................................ 40
3.15 Indemnity........................................................ 42
3.16 Replacement of Lenders........................................... 43
SECTION 4 GUARANTY......................................................... 44
4.1 Guaranty of Payment............................................... 44
4.2 Obligations Unconditional......................................... 44
4.3 Modifications..................................................... 45
4.4 Waiver of Rights.................................................. 45
4.5 Reinstatement..................................................... 46
4.6 Remedies.......................................................... 46
4.7 Limitation of Guaranty............................................ 46
4.8 Rights of Contribution............................................ 46
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SECTION 5 CONDITIONS PRECEDENT............................................. 47
5.1 Closing Conditions................................................ 47
5.2 Conditions to All Extensions of Credit............................ 54
SECTION 6 REPRESENTATIONS AND WARRANTIES................................... 54
6.1 Financial Condition............................................... 54
6.2 No Material Change................................................ 55
6.3 Organization and Good Standing.................................... 55
6.4 Due Authorization................................................. 55
6.5 No Conflicts...................................................... 55
6.6 Consents.......................................................... 56
6.7 Enforceable Obligations........................................... 56
6.8 No Default........................................................ 56
6.9 Ownership......................................................... 56
6.10 Indebtedness..................................................... 56
6.11 Litigation....................................................... 56
6.12 Taxes............................................................ 57
6.13 Compliance with Law.............................................. 57
6.14 ERISA............................................................ 57
6.15 Subsidiaries..................................................... 58
6.16 Use of Proceeds; Margin Stock.................................... 59
6.17 Government Regulation............................................ 59
6.18 Environmental Matters............................................ 59
6.19 Intellectual Property............................................ 60
6.20 Solvency......................................................... 61
6.21 Investments...................................................... 61
6.22 No Financing of Corporate Takeovers.............................. 61
6.23 Location of Collateral........................................... 61
6.24 Disclosure....................................................... 61
6.25 Licenses, etc.................................................... 61
6.26 No Burdensome Restrictions....................................... 62
6.27 Brokers' Fees.................................................... 62
6.28 Labor Matters.................................................... 62
6.29 Collateral Documents............................................. 62
6.30 Related Transactions............................................. 62
6.31 Representations and Warranties Incorporated
from Purchase Agreement.......................................... 63
6.32 Senior Debt...................................................... 63
SECTION 7 AFFIRMATIVE COVENANTS............................................ 63
7.1 Information Covenants............................................. 63
7.2 Preservation of Existence and Franchises.......................... 67
7.3 Books and Records................................................. 67
7.4 Compliance with Law............................................... 67
7.5 Payment of Taxes and Other Indebtedness........................... 67
7.6 Insurance......................................................... 68
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7.7 Maintenance of Property........................................... 69
7.8 Performance of Obligations........................................ 69
7.9 Collateral........................................................ 69
7.10 Use of Proceeds.................................................. 69
7.11 Audits/Inspections............................................... 69
7.12 Financial Covenants.............................................. 70
7.13 Additional Credit Parties........................................ 71
7.14 Interest Rate Protection Agreements.............................. 72
7.15 Ownership of Subsidiaries........................................ 72
7.16 Appraisal Reports................................................ 72
SECTION 8 NEGATIVE COVENANTS............................................... 72
8.1 Indebtedness...................................................... 72
8.2 Liens............................................................. 73
8.3 Nature of Business................................................ 73
8.4 Consolidation and Merger.......................................... 73
8.5 Sale or Lease of Assets........................................... 74
8.6 Advances, Investments and Loans................................... 74
8.7 Dividends......................................................... 74
8.8 Transactions with Affiliates...................................... 75
8.9 Fiscal Year; Organizational Documents............................. 75
8.10 Prepayments of Indebtedness...................................... 75
8.11 Subordinated Debt................................................ 75
8.12 Limitations...................................................... 75
8.13 Sale Leasebacks.................................................. 76
8.14 Negative Pledges................................................. 76
8.15 Capital Expenditures............................................. 76
8.16 Operating Leases................................................. 76
8.17 Payment Blockage Notice.......................................... 76
SECTION 9 EVENTS OF DEFAULT................................................ 77
9.1 Events of Default................................................. 77
9.2 Acceleration; Remedies............................................ 80
SECTION 10 AGENCY PROVISIONS............................................... 80
10.1 Appointment...................................................... 80
10.2 Delegation of Duties............................................. 81
10.3 Exculpatory Provisions........................................... 81
10.4 Reliance on Communications....................................... 82
10.5 Notice of Default................................................ 82
10.6 Non-Reliance on Agent and Other Lenders.......................... 82
10.7 Indemnification.................................................. 83
10.8 Agent in Its Individual Capacity................................. 83
10.9 Successor Agent.................................................. 84
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SECTION 11 MISCELLANEOUS................................................... 84
11.1 Notices.......................................................... 84
11.2 Right of Set-Off................................................. 84
11.3 Benefit of Agreement............................................. 85
11.4 No Waiver; Remedies Cumulative................................... 88
11.5 Payment of Expenses; Indemnification............................. 88
11.6 Amendments, Waivers and Consents................................. 89
11.7 Counterparts..................................................... 90
11.8 Headings......................................................... 90
11.9 Defaulting Lender................................................ 90
11.10 Survival of Indemnification and Representations and Warranties.. 90
11.11 Governing Law; Venue............................................ 91
11.12 Waiver of Jury Trial............................................ 91
11.13 Time............................................................ 91
11.14 Severability.................................................... 92
11.15 Entirety........................................................ 92
11.16 Binding Effect.................................................. 92
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SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Existing Permitted Investments
Schedule 5.1(h) Mortgaged Properties and Leasehold Properties
Schedule 6.10 Indebtedness
Schedule 6.11 Litigation
Schedule 6.14 ERISA Matters
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.23(a) Real Property Locations
Schedule 6.23(b) Personal Property Locations
Schedule 6.23(c) Chief Executive Offices
Schedule 7.6 Insurance
Schedule 8.2 Liens
Schedule 8.8 Affiliate Transactions
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1 Form of Notice of Borrowing
Exhibit 2.4 Form of Notice of Continuation/Conversion
Exhibit 2.6(a) Form of Revolving Loan Note
Exhibit 2.6(b) Form of Tranche A Term Loan Note
Exhibit 2.6(c) Form of Swingline Note
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.1(f) Form of Borrowing Base Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
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AMENDED AND RESTATED CREDIT AGREEMENT
(New Credit Agreement)
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Credit Agreement"), is
entered into as of June 26, 1997 among CHATTEM, INC., a Tennessee corporation
(the "Borrower"), each of the Borrower's Domestic Subsidiaries, individually
a "Guarantor" and collectively the "Guarantors"), the New Credit Agreement
Lenders (as defined herein), and NATIONSBANK OF TENNESSEE, N.A., as agent for
the New Credit Agreement Lenders (in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrower, the Guarantors, the lenders party thereto and
NationsBank of Tennessee, N.A., as Agent are currently parties to that
certain $55 million Credit Agreement dated as of April 29, 1996 (as amended
or modified from time to time, the "Prior New Credit Agreement"). The credit
facilities provided pursuant to the Prior New Credit Agreement replaced and
refinanced the credit facilities provided to the Borrower by The First
National Bank of Chicago, as agent and certain other lenders under the credit
agreements dated as of June 17, 1994;
WHEREAS, the Borrower and the Guarantors have requested that the New
Credit Agreement Lenders provide an amended and restated $50,000,000 credit
facility to replace and refinance the credit facilities provided pursuant to
the Prior New Credit Agreement, making this Credit Agreement the New Credit
Agreement under the Indenture (as hereinafter defined); and
WHEREAS, the New Credit Agreement Lenders have agreed to make the
requested credit facility available to the Borrower on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Acquired Assets" means, collectively, those assets acquired under and
pursuant to the Purchase Agreement.
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 7.13.
"Adjusted Base Rate" means the Base Rate plus the Applicable Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the Applicable
Percentage.
"Agent" means NationsBank of Tennessee, N.A. or any successor
administrative agent appointed pursuant to Section 10.9.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling (including but not limited to all directors and
executive officers of such Person), controlled by or under direct or indirect
common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i)
to vote 10% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, First Union Capital Partners, Inc. shall not be deemed an
Affiliate of the Borrower.
"Agency Services Address" means NationsBank of Tennessee, N.A.,
NC1-001-15-04, 101 South Tryon Street, Charlotte, North Carolina 28255, Attn:
Agency Services, or such other address as may be identified by written notice
from the Agent to the Borrower.
"Applicable Percentage" means for Revolving Loans and Tranche A Term
Loans, the appropriate applicable percentages corresponding to the Leverage
Ratio in effect as of the most recent Calculation Date as shown below:
Applicable Percentage Applicable Percentage
Pricing Leverage For Eurodollar For Base Rate
Level Ratio Loans Loans
- ------------------------ -------------------------- ---------------------- ----------------------
I Less Than 4.0 to 1.0 2.25% 1.25%
II Greater Than or Equal To
4.0 to 1.0 but Less Than
4.5 to 1.0 2.50% 1.50%
III Greater Than or Equal To
4.5 to 1.0 but Less Than
5.0 to 1.0 2.75% 1.75%
IV Greater Than or Equal To
5.0 to 1.0 3.00% 2.00%
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The Applicable Percentage for Revolving Loans and Tranche A Term Loans
shall, in each case, be determined and adjusted quarterly on the date (each a
"Calculation Date") five Business Days after the date by which the Borrower
is required to provide the officer's certificate in accordance with the
provisions of Section 7.1(e); provided, however that (i) the initial
Applicable Percentage for Revolving Loans and Tranche A Term Loans shall be
based on Pricing Level IV (as shown above) and shall remain at Pricing Level
IV until the first Calculation Date subsequent to the Closing Date and,
thereafter, the Pricing Level shall be determined by the then current
Leverage Ratio, and (ii) if the Borrower fails to provide the officer's
certificate required by Section 7.1(e) on or before the most recent
Calculation Date or fails to deliver a copy of such officer's certificate to
the Agency Services Address as required by Section 7.1(e), the Applicable
Percentage for Revolving Loans and Tranche A Term Loans from such Calculation
Date shall be based on Pricing Level IV until such time that an appropriate
officer's certificate is provided whereupon the Pricing Level shall be
determined by the then current Leverage Ratio. Each Applicable Percentage
shall be effective from one Calculation Date until the next Calculation Date.
Any adjustment in the Applicable Percentage shall be applicable to all
existing Loans as well as any new Loans made or issued.
"Asset Disposition" means the disposition of any or all of the assets of
the Borrower, or any of its Subsidiaries, whether by sale, lease, transfer or
otherwise unless such disposition is permitted by the terms of Section
8.5(a), (b) or (c) hereof.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Base Rate" means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater
of (a) the Federal Funds Rate in effect on such day plus of 1% or (b) the
Prime Rate in effect on such day. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error)
that it is unable after due inquiry to ascertain the Federal Funds Rate for
any reason, including the inability or failure of the Agent to obtain
sufficient quotations in accordance with the terms hereof, the Base Rate
shall be determined without regard to clause (a) of the first sentence of
this definition until the circumstances giving rise to such inability no
longer exist. Any change in the Base Rate due to a change in the Prime Rate
or the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate determined by
reference to the Base Rate.
"Borrower" means the Person identified as such in the heading hereof,
together with any successors and permitted assigns.
"Borrowing Base" means, as of any day, the sum, calculated in Dollars, of
(a) 80% of Eligible Receivables plus (b) 50% of Eligible Inventory in each
case as set forth in the most recent Borrowing Base Certificate delivered to
the Agent and the Lenders in
3
accordance with the terms of Section 7.1(g) plus (c) $3 million during the
period of December 1 to May 31 of each year.
"Borrowing Base Certificate" means a Borrowing Base Certificate
substantially in the form of Exhibit 7.1(g).
"Business Day" means any day other than a Saturday, a Sunday, a legal
holiday or a day on which banking institutions are authorized or required by
law or other governmental action to close in Charlotte, North Carolina;
provided that in the case of Eurodollar Loans, such day is also a day on
which dealings between banks are carried on in U.S. dollar deposits in the
London interbank market.
"Calculation Date" has the meaning set forth in the definition of
Applicable Percentage.
"Capital Expenditures" means all expenditures of the Credit Parties and
their Subsidiaries which, in accordance with GAAP, would be classified as
capital expenditures, including, without limitation, Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities of
not more than twelve months from the date of acquisition, (b) U.S. dollar
denominated (or with respect to Foreign Subsidiaries, U.S. dollar denominated
and non U.S. dollar denominated) time deposits and certificates of deposit of
(i) any Lender or SunTrust Bank, Chattanooga, N.A., (ii) any domestic (or
with respect to Foreign Subsidiaries, any domestic or nondomestic) commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000 or (iii) any bank whose short-term commercial paper rating from
S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1
or the equivalent thereof (any such bank being an "Approved Bank"), in each
case with maturities of not more than 270 days from the date of acquisition,
(c) commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued by,
or guaranteed by, any domestic corporation rated A-1 (or the equivalent
thereof) or better by S&P or P-1 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of acquisition, (d)
repurchase agreements with a bank or trust company (including any of the
Lenders or SunTrust Bank, Chattanooga, N.A.) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which the
Borrower shall have a perfected first priority security interest (subject to
no other Liens) and having, on the date of purchase thereof, a fair market
4
value of at least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of
1940, as amended, which are administered by SunTrust Bank, Chattanooga, N.A.
or reputable financial institutions having capital of at least $500,000,000
and the portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"Change of Control" means any of the following events: either (i) a
"person" or a "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) (other than (A) Hamico, Inc., a
Tennessee corporation or (B) a Person that is a member of the Board of
Directors of the Borrower as of the Closing Date) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of more than 35% of the then outstanding voting stock of the Borrower or (ii)
a majority of the Board of Directors of the Borrower shall consist of
individuals who are not Continuing Directors; "Continuing Director" means, as
of any date of determination, (A) an individual who on the date two years
prior to such determination date was a member of the Borrower's Board of
Directors or (B) any new Director whose nomination for election by the
Borrower's shareholders was approved by a vote of at least 75% of the
Directors then still in office who either were Directors on the date two
years prior to such determination date or whose nomination for election was
previously so approved.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, modified,
succeeded or replaced from time to time.
"Collateral" means all collateral referred to in and covered by the
Collateral Documents.
"Collateral Documents" means the Security Agreements, the Pledge
Agreement, the Mortgage Documents and such other documents executed and
delivered in connection with the attachment and perfection of the Lenders'
security interests in the assets of the Credit Parties, including, without
limitation, UCC financing statements and patent and trademark filings.
"Commitment Fees" means the fees payable to the New Credit Agreement
Lenders pursuant to Section 3.4(a).
"Commitments" means the Revolving Committed Amount, the Swingline
Committed Amount and the Tranche A Term Loan Committed Amount.
"Credit Documents" means this Credit Agreement, the Notes, any Joinder
Agreement, the Collateral Documents, the Fee Letter and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto.
5
"Credit Parties" means the Borrower and the Guarantors and "Credit Party"
means any one of them.
"Credit Party Obligations" means, without duplication, (a) all of the
obligations of the Credit Parties to the New Credit Agreement Lenders and the
Agent, whenever arising, under this Credit Agreement, the Notes, the
Collateral Documents or any of the other Credit Documents to which the
Borrower or any other Credit Party is a party (including, but not limited to,
any interest accruing after the occurrence of a Bankruptcy Event with respect
to any Credit Party, regardless of whether such interest is an allowed claim
under the Bankruptcy Code) and (b) all liabilities and obligations owing from
a Credit Party to any New Credit Agreement Lender, or any Affiliate of a New
Credit Agreement Lender, arising under interest rate protection agreements,
foreign currency exchange agreements, commodity purchase or option agreements
or other interest or exchange rate or commodity price hedging agreements
(collectively, the "Hedging Agreements").
"Debt Issuance" means the issuance of any Indebtedness by a Credit Party
or any of its Subsidiaries, other than Indebtedness permitted by Section 8.1.
"Default" means any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at such time (a)
has failed to make a Loan, Tranche A Supplemental Term Loan or Tranche B Term
Loan or purchase a Participation Interest required pursuant to the terms of
this Credit Agreement or Supplemental Credit Agreement, (b) has failed to pay
to the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement or Supplemental Credit Agreement or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
"Domestic Subsidiaries" means all Subsidiaries of the Borrower that are
domiciled, incorporated or organized under the laws of any state of the
United States or the District of Columbia.
"Dollars" and "$" means dollars in lawful currency of the United States
of America.
"EBIT" means, for any period, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) Net Income for such
period (excluding the effect of any extraordinary or other non-recurring
gains or losses outside of the ordinary course of business) plus (b) an
amount which, in the determination of Net Income for such period has been
deducted for (i) Interest Expense for such period and (ii) total Federal,
state, foreign or other income taxes for such period, all as determined in
accordance with GAAP.
6
"EBITDA" means, for any period, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) Net Income for such
period (excluding the effect of any extraordinary or other non-recurring
gains or losses outside of the ordinary course of business) plus (b) an
amount which, in the determination of Net Income for such period has been
deducted for (i) Interest Expense for such period, (ii) total Federal, state,
foreign or other income taxes for such period and (iii) all depreciation,
amortization and other non-cash charges for such period, all as determined in
accordance with GAAP.
"Effective Date" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of
the Lenders) and on which the initial Loans shall have been made.
"Eligible Assignee" means (a) any Lender or Affiliate or subsidiary of a
Lender and (b) any other commercial bank, financial institution or
"accredited investor" (as defined in Regulation D of the Securities and
Exchange Commission) reasonably acceptable to the Agent and the Borrower.
"Eligible Inventory" means, as of any date of determination and without
duplication, the lower of (a) the aggregate book value (based on a FIFO or a
moving average cost valuation, consistently applied) or (b) fair market value
of all raw materials and finished goods inventory owned by the Borrower, in
either case, less appropriate reserves determined in accordance with GAAP,
but excluding in any event (i) inventory subject to any Lien, other than
Liens securing Credit Party Obligations, (ii) inventory which is not in good
condition or fails to meet standards for sale or use imposed by governmental
agencies, departments or divisions having regulatory authority over such
goods, (iii) inventory which is not useable or saleable at prices
approximating their cost in the ordinary course of the Borrower's business
(including without duplication the amount of any reserves for obsolescence,
unsalability or decline in value), (iv) inventory located outside of the
United States, (v) inventory located at a location not owned or leased by the
Borrower, (vi) inventory located at a location leased by the Borrower or in a
public warehouse facility with respect to which the Agent shall not have
received a landlord, bailee and/or warehousemen's access and lien waiver
satisfactory to the Agent, (vii) inventory which is leased or on consignment,
(viii) inventory consisting of packaging materials and supplies, (ix)
inventory which consists of goods in transit, (x) inventory with respect to
which the Agent does not have a valid and perfected first-priority security
interest and (xi) inventory which fails to meet such other specifications and
requirements as may from time to time be established by the Agent in its
reasonable discretion.
"Eligible Receivables" means, at any time, the aggregate book value of
all accounts receivable, receivables, and obligations for payment created or
arising from the sale of inventory or the rendering of services in the
ordinary course of business (collectively, the "Receivables"), owned by or
owing to the Borrower, net of allowances and reserves for doubtful or
uncollectible accounts and sales adjustments consistent with the Borrower's
internal policies and in any event in accordance with GAAP, but
7
excluding in any event (i) Receivables subject to any Lien, other than Liens
securing Credit Party Obligations, (ii) Receivables which are more than 60
days past due (net of reserves for bad debts in connection with any such
Receivables), (iii) Receivables not otherwise excluded by clause (ii) above
but owing from an account debtor having twenty percent (20%) of the balance
owing by such account debtor to the Borrower (calculated without taking into
account any credit balances of such account debtor) more than sixty (60) days
past due, (iv) Receivables evidenced by notes, chattel paper or other
instruments, unless such notes, chattel paper or instruments have been
delivered to and are in the possession of the Agent, (v) Receivables owing by
an account debtor which is not solvent or is subject to any bankruptcy or
insolvency proceeding of any kind, (vi) Receivables owing by an account
debtor located outside of the United States (unless payment for the goods
shipped is secured by an irrevocable letter of credit in a form and from an
institution acceptable to the Agent), (vii) Receivables which are contingent
or subject to offset, deduction, counterclaim, dispute or other defense to
payment, in each case to the extent of such offset, deduction, counterclaim,
dispute or other defense, (viii) Receivables for which any direct or indirect
Subsidiary of the Borrower or any Affiliate of the Borrower is the account
debtor, (ix) Receivables representing a sale to the government of the United
States of America or any subdivision thereof unless the Borrower has complied
(to the satisfaction of the Agent), with respect to the granting of a
security interest in such Receivable, with the Federal Assignment of Claims
Act or other similar applicable law, (x) Receivables from any single account
debtor and its Affiliates which otherwise constitute Eligible Receivables
comprising more than twenty five percent (25%) of all Eligible Receivables,
but only to the extent in excess of such twenty-five percent (25%) and (xi)
Receivables which fail to meet such other specifications and requirements as
may from time to time be established by the Agent in its reasonable
discretion.
"Environmental Claim" means any investigation, written notice, violation,
written demand, written allegation, action, suit, injunction, judgment,
order, consent decree, penalty, fine, lien, proceeding, or written claim
(whether administrative, judicial, or private in nature) arising (a) pursuant
to, or in connection with, an actual or alleged violation of, any
Environmental Law, (b) in connection with any Hazardous Material, (c) from
any assessment, abatement, removal, remedial, corrective, or other response
action in connection with an Environmental Law or other order of a
Governmental Authority or (d) from any actual or alleged damage, injury,
threat, or harm to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal requirement of any
Governmental Authority pertaining to (a) the protection of health, safety, and
the indoor or outdoor environment, (b) the conservation, management, or use of
natural resources and wildlife, (c) the protection or use of surface water and
groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (e) pollution (including any release
to air, land, surface water, and groundwater), and includes, without limitation,
the Comprehensive Environmental Response, Compensation,
8
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act of 1976 and
Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33
USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq.,
Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety
and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of
1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act
of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42
USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f)
et seq., any analogous implementing or successor law, and any amendment,
rule, regulation, order, or directive issued thereunder.
"Equity Issuance" means any issuance by the Borrower to any Person of (a)
shares of its capital stock or other equity interests, (b) any shares of its
capital stock or other equity interests pursuant to the exercise of options
(other than stock issued to employees and directors pursuant to employees or
directors stock option plans) or warrants or (c) any shares of its capital
stock or other equity interests pursuant to the conversion of any debt
securities to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect form time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity, whether or not incorporated, which is
under common control with any Credit Party or any of its Subsidiaries within
the meaning of Section 4001(a)(14) of ERISA, or is a member of a group which
includes any Credit Party or any of its Subsidiaries and which is treated as
a single employer under Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means any Loan, Tranche A Supplemental Term Loan or
Tranche B Term Loan bearing interest based at a rate determined by reference
to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan
comprising part of the same borrowing (including conversions, extensions and
renewals), a per annum interest rate determined pursuant to the following
formula:
Eurodollar Rate = London Interbank Offered Rate
------------------------------
1--Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be
9
amended from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Loans is determined), whether or not
Lender has any Eurocurrency liabilities subject to such reserve requirement
at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements
without benefits of credits for proration, exceptions or offsets that may be
available from time to time to a Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" has the meaning specified in Section 9.1.
"Excess Cash Flow" means, with respect to any fiscal year period of the
Borrower and its Subsidiaries, on a consolidated basis, an amount equal to
(a) EBITDA for such period minus (b) Capital Expenditures for such period
minus (c) cash Interest Expense for such period minus (d) Federal, state and
other income taxes actually paid during such period minus (e) Principal
Amortization Payments made during such period minus (f) voluntary prepayments
made with respect to the Tranche A Term Loans, Tranche A Supplemental Term
Loans or Tranche B Term Loans during such period minus (g) increases in
Working Capital for such period plus (h) decreases in Working Capital for
such period, minus (i) any cash gain from an Asset Disposition (to the extent
included in EBITDA and paid to the Lenders as a mandatory prepayment pursuant
to Section 3.3(b)(iii) hereof and Section 3.3(b)(iii) of the Supplemental
Credit Agreement).
"Extension of Credit" means, as to any Lender, the making of a Loan by
such Lender (or a participation therein by a Lender).
"Federal Funds Rate" means for any day the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day and (b) if no such rate is so published on
such next preceding Business Day, the Federal Funds Rate for such day shall
be the average rate quoted to the Agent on such day on such transactions as
determined by the Agent.
"Fee Letter" means that certain letter agreement, dated as of May 22,
1997, between the Agent and the Borrower, as amended, modified, supplemented
or replaced from time to time.
"Fixed Charge Coverage Ratio" means, as of the end of each fiscal quarter of
the Borrower, for the twelve month period ending on such date, with respect to
the Borrower
10
and its Subsidiaries on a consolidated basis, the ratio of (a) EBITDA for the
applicable period minus Capital Expenditures for the applicable period minus
Federal, State and other income taxes paid in cash for the applicable period
to (b) the sum of (i) cash Interest Expense for the applicable period plus
(ii) Scheduled Funded Debt Payments for the applicable period.
"Foreign Subsidiaries" means all Subsidiaries of the Borrower that are
not Domestic Subsidiaries.
"Funded Debt" means, without duplication, the sum of (a) all Indebtedness
of the Borrower and its Subsidiaries for borrowed money, (b) all purchase
money Indebtedness of the Borrower and its Subsidiaries, (c) the principal
portion of all obligations of the Borrower and its Subsidiaries under Capital
Leases, (d) commercial letters of credit and the maximum amount of all
performance and standby letters of credit issued or bankers' acceptance
facilities created for the account of the Borrower or any of its
Subsidiaries, including, without duplication, all unreimbursed draws
thereunder, (e) all Guaranty Obligations of the Borrower and its Subsidiaries
with respect to Funded Debt of another person, (f) all Funded Debt of another
entity secured by a Lien on any property of the Borrower or any of its
Subsidiaries whether or not such Funded Debt has been assumed by a Borrower
or any of its Subsidiaries, (g) all Funded Debt of any partnership or
unincorporated joint venture to the extent the Borrower or one of its
Subsidiaries is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such partnership or joint
venture and (h) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product pursuant to which a Borrower or any of its
Subsidiaries is the obligor where such transaction is considered borrowed
money indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3.
"Governmental Authority" means any Federal, state, local, provincial or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantor" means each of the Domestic Subsidiaries of the Borrower and
each Additional Credit Party which has executed a Joinder Agreement, together
with their successors and assigns.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Indebtedness, leases, dividends or other obligations
of any other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (a) to purchase
any such Indebtedness or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for the
11
payment or purchase of such indebtedness or obligation or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including, without limitation, maintenance agreements, comfort letters, take
or pay arrangements, put agreements or similar agreements or arrangements)
for the benefit of the holder of Indebtedness of such other Person, (c) to
lease or purchase property, securities or services primarily for the purpose
of assuring the owner of such Indebtedness or obligation, or (d) to otherwise
assure or hold harmless the owner of such Indebtedness or obligation against
loss in respect thereof. The amount of any Guaranty Obligation hereunder
shall (subject to any limitations set forth therein) be deemed to be an
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such Guaranty
Obligation is made.
"Hazardous Materials" means any substance, material or waste defined or
regulated in or under any Environmental Laws.
"Hedging Agreements" has the meaning set forth in the definition of
Credit Party Obligations.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person to the extent of the value of such property
(other than customary reservations or retentions of title under agreements
with suppliers entered into in the ordinary course of business), (d) all
obligations, including without limitation, intercompany items, of such Person
issued or assumed as the deferred purchase price of property or services
purchased by such Person which would appear as liabilities on a balance sheet
of such Person, (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (f) all Guaranty Obligations
of such Person, (g) the principal portion of all obligations of such Person
under (i) Capital Leases and (ii) any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product of such Person where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP (collectively, "TROLS"), (h) all
obligations of such Person in respect of interest rate protection agreements,
foreign currency exchange agreements, or other interest or exchange rate or
commodity price hedging agreements, (i) the maximum amount of all performance
and standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (j) all preferred stock issued
by such Person and required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date and (k) the
aggregate amount of uncollected accounts receivable of such Person subject at
such time to a sale of receivables (or similar transaction) regardless of
whether such transaction is effected without recourse to such
12
Person or in a manner that would not be reflected on the balance sheet of
such Person in accordance with GAAP. The Indebtedness of any Person shall
include the Indebtedness of any partnership or unincorporated joint venture
in which such Person is legally obligated or has a reasonable expectation of
being liable with respect thereto.
"Indenture" means that certain Indenture dated as of August 3, 1994 among
the Borrower as issuer, Signal Investment & Management Co. as guarantor and
SouthTrust Bank of Alabama, National Association, as trustee, as the same may
be modified, supplemented or amended from time to time.
"Interest Coverage Ratio" means, as of the end of each fiscal quarter of
the Borrower, for the twelve month period ending on such date, with respect
to the Borrower and its Subsidiaries on a consolidated basis, the ratio of
(a) EBIT for the applicable period to (b) cash Interest Expense for the
applicable period.
"Interest Expense" means, for any period, with respect to the Borrower
and its Subsidiaries on a consolidated basis, all interest expense, including
the interest component under Capital Leases, as determined in accordance with
GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans other than
Swingline Loans, the last day of each fiscal quarter of the Borrower and on
the Revolving Loan Maturity Date or the Tranche A Term Loan Maturity Date, as
applicable, and (b) as to Eurodollar Loans or any Swingline Loan, on the last
day of each applicable Interest Period and on the Revolving Loan Maturity
Date or the Tranche A Term Loan Maturity Date, as applicable.
"Interest Period" means, (i) as to Eurodollar Loans, a period of one, two
or three months' duration, as the Borrower may elect, commencing, in each
case, on the date of the borrowing (including continuations and conversions
thereof) and (ii) as to any Swingline Loan, a period commencing in each case
on the date of the borrowing and ending on the date agreed to by the Borrower
and the Swingline Lender in accordance with the provision of Section
2.3(b)(i) (such ending date in any event to be not more than seven (7)
Business Days from the date of borrowing); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day (except that
where the next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding Business Day), (b) no Interest Period shall
extend beyond the Revolving Loan Maturity Date or the Tranche A Term Loan
Maturity Date, as applicable, (c) with regard to the Tranche A Term Loans, no
Interest Period shall extend beyond any Principal Amortization Payment Date
unless the portion of Tranche A Term Loans comprised of Base Rate Loans
together with the portion of Tranche A Term Loans comprised of Eurodollar
Loans with Interest Periods expiring prior to the date such Principal
Amortization Payment is due, is at least equal to the amount of such
Principal Amortization Payment due on such date and (d) where an Interest
Period begins on a day for which there is no numerically corresponding day in
the calendar month in which the
13
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"Investment" means (a) the acquisition (whether for cash, property,
services, assumption of Indebtedness, securities or otherwise) of assets,
shares of capital stock, bonds, notes, debentures, partnership, joint venture
or other ownership interests or other securities of any Person or (b) any
deposit with, or advance, loan or other extension of credit to, any Person
(other than deposits made in connection with the purchase of equipment or
other assets in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person, including, without limitation,
any Guaranty Obligation incurred for the benefit of such person.
"Joinder Agreement" means a Joinder Agreement substantially in the form
of Exhibit 7.13.
"Leasehold Properties" has the meaning set forth in Section 5.1(h).
"Lender" means collectively, the Supplemental Credit Lenders and the New
Credit Agreement Lenders.
"Leverage Ratio" means, as of the end of each fiscal quarter of the
Borrower, with respect to the Borrower and its Subsidiaries on a consolidated
basis, the ratio of (a) Funded Debt on such date to (b) EBITDA for the twelve
month period ending on such date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including, without limitation,
any agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice filed
under the Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means the Revolving Loans, the Swingline Loans and/or
the Tranche A Term Loans (or a portion of any Revolving Loan or the Tranche A
Term Loans), individually or collectively, as appropriate.
"London Interbank Offered Rate" means, with respect to any Eurodollar
Loan for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate
is specified on Telerate Page 3750, the applicable rate shall be the
arithmetic mean of all such rates. If, for any reason, such rate is not
available, the term "London Interbank Offered Rate" shall mean, with respect
to any Eurodollar Loan for
14
the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all
such rates.
"Material Adverse Effect" means a material adverse effect, after taking
into account applicable insurance (to the extent the provider thereof has the
financial ability to support its obligations with respect thereto and is not
disputing same), on (a) the operations, financial condition, business or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of a Credit Party to perform its respective obligations under this
Credit Agreement, or any of the other Credit Documents, the Supplemental
Credit Agreement or any of the other Supplemental Credit Documents or (c) the
validity or enforceability of this Credit Agreement, or any of the other
Credit Documents, the Supplemental Credit Agreement or any of the other
Supplemental Credit Documents, or the rights and remedies of the Lenders
hereunder or thereunder taken as a whole.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating securities.
"Mortgage Documents" means the Mortgages, the Mortgage Policies and such
other documents and agreements executed or delivered in connection with the
Real Properties.
"Mortgage Policies" has the meaning set forth in Section 5.1(h).
"Mortgages" has the meaning set forth in Section 5.1(h).
"Mortgaged Properties" has the meaning set forth in Section 5.1(h).
"Multiemployer Plan" means a Plan covered by Title IV of ERISA which is a
multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of ERISA, other
than a Multiemployer Plan, which any Credit Party or any of its Subsidiaries
or any ERISA Affiliate and at least one employer other than a Credit Party or
any of its Subsidiaries or any ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank of Tennessee, N.A. and its successors.
"Net Cash Proceeds" means the gross cash proceeds (including cash
actually received by way of deferred payment pursuant to a promissory note,
receivable, or otherwise) received from an Asset Disposition, an Equity
Issuance, a Debt Issuance or Recovery Event net of (a) transaction costs
payable to third parties or (b) a good faith
15
estimate of the taxes payable with respect to such proceeds
(including, without duplication, withholding taxes).
"Net Income" means, for any period, the net income after taxes for such
period of the Borrower and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Net Worth" means, as of any date, shareholders' equity or net worth of the
Borrower and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"New Credit Agreement Lender" means any of the Persons identified as a "New
Credit Agreement Lender" on the signature pages hereto, and any Person which may
become a Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"Non-Excluded Taxes" has the meaning set forth in Section 3.14.
"Note" or "Notes" means the Revolving Loan Notes, the Swingline Note and/or
the Tranche A Term Loan Notes, individually or collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower for a Revolving Loan,
in the form of Exhibit 2.1.
"Notice of Continuation/Conversion" means a request by the Borrower to
continue an existing Eurodollar Loan to a new Interest Period or to convert a
Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in
the form of Exhibit 2.5.
"Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) which is not a Capital Lease
other than any such lease in which that Person is the lessor.
"Participation Interest" means the Extension of Credit by a Lender by way of
the issuance of or a purchase of a participation in Swingline Loans as provided
in Section 2.2, or in any Loans as provided in Section 3.9.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA and any successor thereto.
"Permitted Acquisition" means the acquisition of all of the capital stock of
another Person, all or substantially all of the assets of another Person or a
brand or product line of another Person, provided that each of the following
conditions are satisfied: (v) prior to such acquisition, the Borrower shall
deliver to the Agent and Lenders evidence reasonably satisfactory to the Agent
and Required Lenders
16
demonstrating that after giving effect to such acquisition on a pro forma
basis, as if such acquisition had occurred on the first day of the twelve
month period ending on the last day of the Borrower's most recently completed
fiscal quarter, the Credit Parties and their Subsidiaries would have been in
compliance with all the financial covenants set forth in Section 7.12, (w)
simultaneously with any such acquisition, the Borrower shall have taken all
action required under applicable law, or reasonably requested by the Agent,
to grant to the Agent, for the benefit of the Lenders, a valid and perfected
first-priority security interest in all the assets acquired pursuant to such
acquisition, (x) the acquisition is consummated pursuant to a negotiated
acquisition agreement and involves the purchase of a consumer product or
product line similar to those manufactured, distributed or sold by the
Borrower as of the date hereof, or of a business that manufactures,
distributes or sells one or more consumer products or product lines, similar
to those manufactured, distributed or sold by the Borrower as of the date
hereof, (y) after giving effect to the acquisition, the representations and
warranties set forth in Section 6 hereof shall be true and correct in all
material respects on and as of the date of such acquisition with the same
effect as though made on and as of such date, and (z) no Default or Event of
Default exists and is continuing or would result from such acquisition.
"Permitted Investments" means Investments which are (a) cash or Cash
Equivalents, (b) accounts receivable created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (c) Investments in a Domestic Subsidiary of a Credit Party, (d)
loans to directors, officers, employees, agents, customers or suppliers in the
ordinary course of business for reasonable business expenses, not to exceed in
the aggregate $500,000.00 at any one time, (e) Investments subsequent to the
Closing Date in (i) Chattem (Canada) Inc. not to exceed $500,000.00 in the
aggregate, (ii) Chattem (U.K.) Limited not to exceed $500,000.00 in the
aggregate, and (iii) HBA Insurance, Ltd. not to exceed $500,000.00 in the
aggregate, (f) Investments in Permitted Acquisitions, including any contingency
payments associated therewith, not to exceed $5,000,000 in the aggregate during
the term of this Credit Agreement, (g) the purchase, redemption, acquisition or
retirement by the Borrower of any shares of its capital stock of any class or
any warrants or options to purchase any such shares in an amount not to exceed
$2,000,000 in the aggregate and (h) all those existing Investments of the
Borrower identified on Schedule 1.1(b) attached hereto.
"Permitted Liens" means (a) Liens securing Credit Party Obligations, (b)
Liens for taxes not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof),
(c) Liens in respect of property imposed by law arising in the ordinary course
of business such as materialmen's, mechanics', warehousemen's, carrier's,
landlords' and other nonconsensual statutory Liens which are not due and payable
or, if due and payable, are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established (and as to which the property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof), (d) pledges or
deposits
17
made in the ordinary course of business to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social security
programs, (e) Liens arising from good faith deposits in connection with or to
secure performance of tenders, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations incurred
in the ordinary course of business (other than obligations in respect of the
payment of borrowed money), (f) Liens arising from good faith deposits in
connection with or to secure performance of statutory obligations and surety
and appeal bonds, (g) easements, rights-of-way, restrictions (including
zoning restrictions), minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing the
use of the encumbered property for its intended purposes, (h) judgment Liens
that would not constitute an Event of Default, (i) Liens in connection with
Indebtedness allowed under Section 8.1(c), (j) Liens arising by virtue of any
statutory or common law provision relating to banker's liens, rights of
setoff or similar rights as to deposit accounts or other funds maintained
with a creditor depository institution and (k) Liens existing on the date
hereof and identified on Schedule 8.2; provided that no such Lien shall
extend to any property other than the property subject thereto on the Closing
Date.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of ERISA)
which is covered by ERISA and with respect to which any Credit Party or any of
its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer"
within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the Amended and Restated Pledge Agreement, executed
and delivered by each of the applicable Credit Parties in favor of the Agent,
for the benefit of the Lenders, to secure their obligations under the Credit
Documents, as amended, modified, extended, renewed or replaced from time to
time.
"Prime Rate" means the per annum rate of interest established from time to
time by the Agent as its Prime Rate. Any change in the interest rate resulting
from a change in the Prime Rate shall become effective as of 12:01 a.m. of the
Business Day on which each change in the Prime Rate is announced by the Agent.
The Prime Rate is a reference rate used by the Agent in determining interest
rates on certain loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any debtor.
"Principal Amortization Payment" means a principal payment on the Tranche A
Term Loan as set forth in Section 2.3(c).
"Principal Amortization Payment Date" means the date a Principal
Amortization Payment is due.
18
"Purchase Agreement" means that certain Asset Purchase Agreement, as amended
and modified from time to time, by and among the Borrower, Signal, SunSource
International, Inc., a Hawaii corporation and Mindbody, Inc., a Florida
corporation, dated as of May 23, 1997.
"Real Properties" means the Mortgaged Properties.
"Recovery Event" means the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds, condemnation award payable or
indemnification payments from other third parties by reasons of theft, loss,
physical destruction or damage, taking or similar event with respect to any of
their respective property or assets.
"Regulation D, G, U, or X" means Regulation D, G, U or X, respectively, of
the Board of Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Reportable Event" means a "reportable event" as defined in Section 4043 of
ERISA with respect to which the notice requirements to the PBGC have not been
waived.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes at least 67% of the Credit Exposure of all
Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the preceding sentence,
the term "Credit Exposure" as applied to each Lender shall mean (a) at any time
prior to the termination of the Commitments, the sum of (i) the Revolving Loan
Commitment Percentage of such Lender multiplied by the Revolving Committed
Amount, plus (ii) the Tranche A Term Loan Commitment Percentage of such Lender
multiplied by the aggregate principal amount of Tranche A Term Loans outstanding
at such time, plus (iii) the Tranche A Supplemental Term Loan Commitment
Percentage of such Lender multiplied by the aggregate principal amount of
Tranche A Supplemental Term Loans outstanding at such time, plus (iv) the
Tranche B Term Loan Commitment Percentage of such Lender multiplied by the
aggregate principal amount of Tranche B Term Loans outstanding at such time and
(b) at any time after the termination of the Commitments, the sum of (i) the
principal balance of the outstanding Loans of such Lender plus (ii) the
principal balance of the outstanding Tranche A Supplemental Term Loans of such
Lender plus (iii) the principal balance of outstanding Tranche B Term Loans of
such Lender.
"Requirement of Law" means, as to any Person, the articles or certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or to which any of its
material property is subject.
"Revolving Loan Commitment Percentage" means, for each New Credit Agreement
Lender, the percentage identified as its Revolving Loan Commitment
19
Percentage on Schedule 1.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions of
Section 11.3.
"Revolving Committed Amount" means THIRTY MILLION DOLLARS ($30,000,000) or
such lesser amount as the Revolving Committed Amount may be reduced pursuant to
Section 2.1(d) or Section 3.3.
"Revolving Loans" means the Revolving Loans made to the Borrower pursuant to
Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes of the
Borrower in favor of each of the New Credit Agreement Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1, individually or collectively,
as appropriate, as such promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time and as evidenced in the form of
Exhibit 2.6(a).
"Revolving Loan Maturity Date" means the earlier of (i) June 26, 2002 and
(ii) the date on which the Tranche A Term Loans are repaid in full.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"Scheduled Funded Debt Payments" means, as of the date of determination, for
the Borrower and its Subsidiaries, on a consolidated basis, the sum of all
scheduled payments of principal on Funded Debt for the applicable period ending
on the date of determination (including the principal component of payments due
on Capital Leases during the applicable period ending on the date of
determination); it being understood that Scheduled Funded Debt Payments shall
not include voluntary prepayments or the mandatory prepayments required pursuant
to Section 3.3.
"Security Agreements" means the Amended and Restated Security Agreements,
including without limitation, a separate Security Agreement for aircraft as
amended or modified from time to time, executed and delivered by each of the
Credit Parties in favor of the Agent for the benefit of the Lenders to secure
their obligations under the Credit Documents, as such may be amended, modified,
extended, renewed, restated or replaced from time to time.
"Senior Leverage Ratio" means as of the end of each fiscal quarter of the
Borrower, with respect to the Borrower and its Subsidiaries on a consolidated
basis, the ratio of (a) Funded Debt minus Subordinated Debt on such date to (b)
EBITDA for the twelve month period ending on such date.
"Signal" means Signal Investment & Management Co., a Delaware corporation,
which is a wholly-owned subsidiary of the Borrower.
20
"Single Employer Plan" means any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular date, that on
such date (a) such Person is able to pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (b) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's assets would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (d) the fair value of
the assets of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person and (e)
the present fair saleable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured. In computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subordinated Debt" means the Indebtedness evidenced by the Indenture or by
the guarantees thereof.
"Subsidiary" means, as to any Person, (a) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50% equity
interest at any time.
"Supplemental Credit Agreement" means that certain Supplemental Credit
Agreement dated as of the date hereof, among the Borrower, the Guarantors,
NationsBank of Tennessee, N.A., as agent, and certain other lenders named
therein, as amended, modified, supplemented or renewed from time to time.
"Supplemental Credit Documents" means the Supplemental Credit Agreement, the
Tranche A Supplemental Term Loan Notes, the Tranche B Term Loan Notes, any
Joinder Agreement, the Collateral Documents, the Fee Letter and all other
related agreements and documents issued or delivered thereunder or pursuant
thereto.
"Supplemental Credit Lender" means any of the Persons identified as a
"Supplemental Credit Lender" on the signature pages to the Supplemental Credit
21
Agreement, and any Person which may become a Supplemental Credit Lender by way
of assignment in accordance with the terms of the Supplemental Credit Agreement,
together with their successors and permitted assigns.
"Swingline Committed Amount" shall have the meaning assigned to such term in
Section 2.2(a).
"Swingline Lender" means NationsBank.
"Swingline Loan" shall have the meaning assigned to such term in Section
2.2(a).
"Swingline Note" means the promissory note of the Borrower in favor of the
Swingline Lender in the original principal amount of $5,000,000, as such
promissory note may be amended, modified, restated or replaced from time to
time.
"Termination Event" means (a) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the meaning
of Section 4062(e) of ERISA); (b) the withdrawal of any Credit Party or any of
its Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan during a
plan year in which it was a substantial employer (as such term is defined in
Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(c) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (d) the
institution of proceedings to terminate or the actual termination of a Plan by
the PBGC under Section 4042 of ERISA; (e) any event or condition which might
reasonably constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan; or (f) the complete
or partial withdrawal of any Credit Party or any of its Subsidiaries or any
ERISA Affiliate from a Multiemployer Plan.
"Term Loans" means the Tranche A Term Loans, the Tranche A Supplemental Term
Loans and the Tranche B Term Loans.
"Tranche A Supplemental Term Loans" means the Tranche A Supplemental Term
Loans made to the Borrower pursuant to Section 2.1 of the Supplemental Credit
Agreement.
"Tranche A Supplemental Term Loan Commitment Percentage" means, for each
Supplemental Credit Lender, the percentage identified as its Tranche A
Supplemental Term Loan Commitment Percentage on Schedule 1.1(a) of the
Supplemental Credit Agreement, as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section 11.3 of
the Supplemental Credit Agreement.
"Tranche A Supplemental Term Loan Committed Amount" means TEN MILLION
DOLLARS ($10,000,000.00).
"Tranche A Supplemental Term Loan Maturity Date" means June 26, 2002.
22
"Tranche A Supplemental Term Loan Note" or "Tranche A Supplemental Term Loan
Notes" means the promissory notes of the Borrower in favor of each of the
Supplemental Credit Lenders evidencing the Tranche A Supplemental Term Loans
provided pursuant to Section 2.1 of the Supplemental Credit Agreement,
individually or collectively, as appropriate, as such promissory notes may be
amended, modified, supplemented, extended, renewed or replaced from time to time
as evidenced in the form of Exhibit 2.4(a) of the Supplemental Credit Agreement.
"Tranche A Term Loans" means the Tranche A Term Loans made to the Borrower
pursuant to Section 2.3(a).
"Tranche A Term Loan Commitment Percentage" means, for each New Credit
Agreement Lender, the percentage identified as its Tranche A Term Loan
Commitment Percentage on Schedule 1.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions of Section
11.3.
"Tranche A Term Loan Committed Amount" means TWENTY MILLION DOLLARS
($20,000,000.00).
"Tranche A Term Loan Maturity Date" means June 26, 2002.
"Tranche A Term Loan Note" or "Tranche A Term Loan Notes" means the
promissory notes of the Borrower in favor of each of the New Credit Agreement
Lenders evidencing the Tranche A Term Loans provided pursuant to Section 2.3(a),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced from time
to time as evidenced in the form of Exhibit 2.6(b).
"Tranche B Term Loan Committed Amount" means THIRTY-FIVE MILLION DOLLARS
($35,000,000).
"Tranche B Term Loan Commitment Percentage" means, for a Supplemental Credit
Lender, the percentage identified as its Tranche B Term Loan Commitment
Percentage on Schedule 1.1(a) of the Supplemental Credit Agreement, as such
percentage may be modified in connection with any assignment made in accordance
with the provisions of Section 11.3 of the Supplemental Credit Agreement.
"Tranche B Term Loan Note" or "Tranche B Term Loan Notes" means the
promissory notes of the Borrower in favor of the Supplemental Credit Lenders
having a Tranche B Term Loan Commitment Percentage evidencing the Tranche B Term
Loans provided pursuant to Section 2.1 of the Supplemental Credit Agreement,
individually or collectively, as appropriate, as such promissory notes may be
amended, modified, supplemented, extended, renewed or replaced from time to time
as evidenced in the form of Exhibit 2.4(b) of the Supplemental Credit Agreement.
23
"Tranche B Term Loans" means, the Tranche B Term Loans made to the Borrower
pursuant to Section 2.1 of the Supplemental Credit Agreement.
"TROLS" has the meaning set forth in the definition of Indebtedness.
"Unused Commitment" means, for any period, the amount by which (a) the then
applicable aggregate Revolving Committed Amount exceeds (b) the daily average
sum for such period of the outstanding aggregate principal amount of all
Revolving Loans (but not including any Swingline Loans).
"Working Capital" means, at any time, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the excess of current assets (excluding
cash and Cash Equivalents) over current liabilities (excluding the current
portion of Funded Debt), as determined in accordance with GAAP.
1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding." References in this Credit Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the New Credit
Agreement Lenders hereunder shall be prepared, in accordance with GAAP applied
on a consistent basis. All financial statements delivered to the New Credit
Agreement Lenders hereunder shall be accompanied by a statement from the
Borrower that GAAP has not changed since the most recent financial statements
delivered by the Borrower to the New Credit Agreement Lenders or if GAAP has
changed describing such changes in detail and explaining how such changes affect
the financial statements. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered pursuant
to Section 7.1 (or, prior to the delivery of the first financial statements
pursuant to Section 7.1, consistent with the financial statements described in
Section 5.1(c)); provided, however, if (a) the Borrower shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) either Agent or the Required Lenders shall so object in
writing within 60 days after delivery of such financial statements (or after the
New Credit Agreement Lenders have been informed of the change in GAAP affecting
such financial statements, if later), then such calculations shall be made on a
basis consistent with the most recent financial statements delivered by the
Borrower to the New Credit Agreement Lenders as to which no such objection shall
have been made.
24
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Revolving Loan Commitment. Subject to the terms and conditions set forth
herein, each New Credit Agreement Lender that has a Revolving Loan Commitment
Percentage severally agrees to make revolving loans (each a "Revolving Loan" and
collectively the "Revolving Loans") to the Borrower, in Dollars, at any time and
from time to time, during the period from and including the Effective Date to
but not including the Revolving Loan Maturity Date (or such earlier date if the
Revolving Committed Amount has been terminated as provided herein); provided,
however, that (i) the sum of the aggregate amount of Revolving Loans outstanding
plus the aggregate amount of Swingline Loans outstanding shall not exceed the
lesser of (x) the Revolving Committed Amount and (y) the Borrowing Base, and
(ii) with respect to each individual New Credit Agreement Lender, such New
Credit Agreement Lender's outstanding Revolving Loans shall not exceed such New
Credit Agreement Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount.
(b) Method of Borrowing for Revolving Loans. By no later than 11:00 a.m. (i)
one Business Day prior to the date of the requested borrowing of Revolving Loans
that will be Base Rate Loans or (ii) three Business Days prior to the date of
the requested borrowing of Revolving Loans that will be Eurodollar Loans, the
Borrower shall submit a written Notice of Borrowing in the form of Exhibit 2.1
to the Agent setting forth (A) the amount requested, (B) whether such Revolving
Loans shall accrue interest at the Adjusted Base Rate or the Adjusted Eurodollar
Rate, (C) with respect to Revolving Loans that will be Eurodollar Loans, the
Interest Period applicable thereto and (D) evidence that the Borrower has
complied in all respects with Section 5.2.
(c) Funding of Revolving Loans. Upon receipt of a Notice of Borrowing, the
Agent shall promptly inform the applicable New Credit Agreement Lenders as to
the terms thereof. Each such New Credit Agreement Lender shall make its
Revolving Loan Commitment Percentage of the requested Revolving Loans available
to the Agent by 1:00 p.m. on the date specified in the Notice of Borrowing by
deposit, in Dollars, of immediately available funds at the offices of the Agent
at its principal office in Charlotte, North Carolina or at such other address as
the Agent may designate in writing. The amount of the requested Revolving Loans
will then be made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office of the Agent, to the extent
the amount of such Revolving Loans are made available to the Agent.
No New Credit Agreement Lender shall be responsible for the failure or delay
by any other New Credit Agreement Lender in its obligation to make Revolving
Loans
25
hereunder; provided, however, that the failure of any New Credit Agreement
Lender to fulfill its obligations hereunder shall not relieve any other New
Credit Agreement Lender of its obligations hereunder. Unless the Agent shall
have been notified by any New Credit Agreement Lender prior to the date of
any such Revolving Loan that such New Credit Agreement Lender does not intend
to make available to the Agent its portion of the Revolving Loans to be made
on such date, the Agent may assume that such New Credit Agreement Lender has
made such amount available to the Agent on the date of such Revolving Loans,
and the Agent in reliance upon such assumption, may (in its sole discretion
but without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent, the Agent shall be able to recover such corresponding
amount from such New Credit Agreement Lender. If such New Credit Agreement
Lender does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent will promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover from the New Credit Agreement Lender
or the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such corresponding amount
is recovered by the Agent at a per annum rate equal to (i) from the Borrower
at the applicable rate for such Revolving Loan pursuant to the Notice of
Borrowing and (ii) from a New Credit Agreement Lender at the Federal Funds
Rate.
(d) Reductions of Revolving Committed Amount. Upon at least three Business
Days' notice, the Borrower shall have the right to permanently terminate or
reduce the aggregate unused amount of the Revolving Committed Amount at any time
or from time to time; provided that (i) each partial reduction shall be in an
aggregate amount at least equal to $1,000,000 and in integral multiples of
$500,000 above such amount and (ii) no reduction shall be made which would
reduce the Revolving Committed Amount to an amount less than the aggregate
amount of outstanding Revolving Loans. Any reduction in (or termination of) the
Revolving Committed Amount shall be permanent and may not be reinstated.
2.2 SWINGLINE LOAN SUBFACILITY.
(a) Swingline Commitment. Subject to the terms and conditions set forth
herein, the Swingline Lender, in its individual capacity, agrees to make certain
revolving credit loans to the Borrower (each a "Swingline Loan" and,
collectively, the "Swingline Loans") at any time and from time to time, during
the period from and including the Effective Date to but not including the
Revolving Loan Maturity Date for the purposes hereinafter set forth; provided,
however, (i) the aggregate amount of Swingline Loans outstanding at any time
shall not exceed FIVE MILLION DOLLARS ($5,000,000.00) (the "Swingline Committed
Amount"), and (ii) the sum of the aggregate principal amount of outstanding
Revolving Loans plus the aggregate principal amount of outstanding Swingline
Loans shall not exceed the lesser of (x) the Revolving Committed Amount and (y)
the Borrowing Base. Swingline Loans hereunder shall be made as Base Rate Loans
in
26
accordance with the provisions of this Section 2.3, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrower desires a Swingline
Loan advance hereunder it shall give written notice (or telephone notice
promptly confirmed in writing) to the Swingline Lender not later than 11:00
A.M. (Charlotte, North Carolina time) on the Business Day of the requested
Swingline Loan advance. Each such notice shall be irrevocable and shall
specify (A) that a Swingline Loan advance is requested, (B) the date of the
requested Swingline Loan advance (which shall be a Business Day) and (C) the
principal amount of the Swingline Loan advance requested. Each Swingline
Loan shall be made as a Base Rate Loan and shall have such maturity date as
the Swingline Lender and the Borrower shall agree upon receipt by the
Swingline Lender of any such notice from the Borrower. The Swingline Lender
shall initiate the transfer of funds representing the Swingline Loan advance
to the Borrower by 3:00 P.M. (Charlotte, North Carolina time) on the
Business Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall be in a minimum
principal amount of $100,000 and in integral multiples of $100,000 in excess
thereof.
(iii) Repayment of Swingline Loans. The principal amount of all Swingline
Loans shall be due and payable on the earlier of (A) the maturity date
agreed to by the Swingline Lender and the Borrower with respect to such Loan
(which maturity date shall not be a date more than seven (7) Business Days
from the date of advance thereof) or (B) the Revolving Loan Maturity Date.
The Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the New Credit Agreement Lenders, demand
repayment of its Swingline Loans by way of a Revolving
Loan advance, in which case the Borrower shall be deemed to have requested a
Revolving Loan advance comprised solely of Base Rate Loans in the amount of
such Swingline Loans; provided, however, that any such demand shall be
deemed to have been given one Business Day prior to the Revolving Loan
Maturity Date and on the date of the occurrence of any Event of Default
described in Section 9.1 and upon acceleration of the indebtedness hereunder
and the exercise of remedies in accordance with the provisions of Section
9.2. Each New Credit Agreement Lender hereby irrevocably agrees to make its
pro rata share of each such Revolving Loan in the amount, in the manner and
on the date specified in the preceding sentence notwithstanding (I) the
amount of such borrowing may not comply with the minimum amount for advances
of Revolving Loans otherwise required hereunder, (II) whether any conditions
specified in Section 5.2 are then satisfied, (III) whether a Default or an
Event of Default then exists, (IV) failure of any such request or deemed
request for Revolving Loan to be made by the time otherwise required
hereunder, (V) whether the date of such borrowing is a date on which
27
Revolving Loans are otherwise permitted to be made hereunder or (VI) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower or any
other Credit Party), then each New Credit Agreement Lender hereby agrees
that it shall forthwith purchase (as of the date such borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the
Swingline Lender such participations in the outstanding Swingline Loans as
shall be necessary to cause each such New Credit Agreement Lender to share
in such Swingline Loans ratably based upon its Revolving Loan Commitment
Percentage (determined before giving effect to any termination of the
Commitments pursuant to Section 2.1(d)), provided that (A) all interest
payable on the Swingline Loans shall be for the account of the Swingline
Lender until the date as of which the respective participation is purchased
and (B) at the time any purchase of participations pursuant to this sentence
is actually made, the purchasing New Credit Agreement Lender shall be
required to pay to the Swingline Lender, to the extent not paid to the
Swingline Lender by the Borrower in accordance with the terms of subsection
(c) below, interest on the principal amount of participation purchased for
each day from and including the day upon which such borrowing would
otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to the Federal Funds Rate.
(c) Interest on Swingline Loans. Subject to the provisions of Section 3.1,
each Swingline Loan shall bear interest at per annum rate equal to the Base
Rate. Interest on Swingline Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
2.3 TERM LOANS.
(a) Tranche A Term Loan. Subject to the terms and conditions set forth
herein, each New Credit Agreement Lender that has a Tranche A Term Loan
Commitment Percentage severally agrees, on the Effective Date, to make a term
loan (collectively, the "Tranche A Term Loans") to the Borrower, in Dollars, in
an amount equal to such New Credit Agreement Lender's Tranche A Term Loan
Commitment Percentage of the Tranche A Term Loan Committed Amount; provided that
the aggregate amount of such Tranche A Term Loans made on the Effective Date
shall not exceed the Tranche A Term Loan Committed Amount. Once repaid, Tranche
A Term Loans cannot be reborrowed.
(b) Funding of Tranche A Term Loans. On the Effective Date, each applicable
New Credit Agreement Lender will make its Tranche A Term Loan Commitment
Percentage of the Tranche A Term Loan Committed Amount available to the Agent by
deposit, in Dollars and in immediately available funds, at the offices of the
Agent at its principal office in Charlotte, North Carolina or at such other
address as the
28
Agent may designate in writing. The amount of the Tranche A Term Loans will
then be made available to the Borrower by the Agent by crediting the account
of the Borrower on the books of such office of the Agent, to the extent the
amount of such Tranche A Term Loans are made available to the Agent. All
Tranche A Term Loans on the Effective Date shall be Base Rate Loans. Thereafter,
all or any portion of the Tranche A Term Loans may be converted into Eurodollar
Loans in accordance with the terms of Section 2.4.
(c) Amortization. The principal amount of the Tranche A Term Loans shall be
repaid in quarterly payments in the amounts and on the dates set forth below:
PRINCIPAL AMORTIZATION TRANCHE A TERM LOAN
PAYMENT DATES PRINCIPAL AMORTIZATION PAYMENT
---------------------- ------------------------------
September 30, 1997............... $820,000.00
December 31, 1997................ $820,000.00
March 31, 1998................... $820,000.00
June 30, 1998.................... $820,000.00
September 30, 1998............... $820,000.00
December 31, 1998................ $933,333.33
March 31, 1999................... $933,333.33
June 30, 1999.................... $933,333.33
September 30, 1999............... $933,333.34
December 31, 1999................ $1,100,000.00
March 31, 2000................... $1,100,000.00
June 30, 2000.................... $1,100,000.00
September 30, 2000............... $1,100,000.00
December 31, 2000................ $1,100,000.00
March 31, 2001................... $1,100,000.00
June 30, 2001.................... $1,100,000.00
September 30, 2001............... $1,100,000.00
December 31, 2001................ $1,100,000.00
March 31, 2002................... $1,100,000.00
June 26, 2002.................... $1,166,666.67
Total............................ $20,000,000.00
2.4 CONTINUATIONS AND CONVERSIONS.
Subject to the terms of Section 5.2, the Borrower shall have the option, on
any Business Day, to continue in existence Eurodollar Loans for a subsequent
Interest Period, to convert Base Rate Loans into Eurodollar Loans or to convert
Eurodollar Loans into Base Rate Loans; provided, however, that (a) each such
continuation or conversion must be requested by the Borrower pursuant to a
written Notice of Continuation/Conversion, in the form of Exhibit 2.4, in
compliance with the terms set forth below, (b) except as provided in Section
3.12, Eurodollar Loans may only be continued or converted into Base Rate Loans
on the last day of the Interest
29
Period applicable thereto, (c) Eurodollar Loans may not be continued nor may
Base Rate Loans be converted into Eurodollar Loans during the existence and
continuation of a Default or Event of Default and (d) any request to extend a
Eurodollar Loan that fails to comply with the terms hereof or any failure to
request an extension of a Eurodollar Loan at the end of an Interest Period
shall constitute a request for a conversion to a Base Rate Loan on the last
day of the applicable Interest Period. Each continuation or conversion must
be requested by the Borrower no later than 11:00 a.m. (i) one Business Day
prior to the date for a requested conversion of a Eurodollar Loan to a Base
Rate Loan or (ii) three Business Days prior to the date for a requested
extension of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Agent which shall set forth (A)
whether the Loans to be continued or converted are Revolving Loans or Tranche
A Term Loans, (B) whether the Borrower wishes to continue or convert such
Loans and (C) if the request is to continue a Eurodollar Loan or convert a
Base Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto.
2.5 MINIMUM AMOUNTS.
Each request for a borrowing, conversion or continuation shall be subject to
the requirements that (a) each Eurodollar Loan shall be in a minimum amount of
$1,000,000 and in integral multiples of $500,000 in excess thereof, (b) each
Base Rate Loan shall be in a minimum amount of the lesser of $1,000,000 (and
integral multiples of $500,000 in excess thereof) or the remaining amount
available under the Revolving Committed Amount or the then remaining principal
balance of the Tranche A Term Loan, as applicable and (c) no more than ten
Eurodollar Loans shall, in the aggregate, be outstanding under the Supplemental
Credit Agreement and hereunder at any one time. For the purposes of this
Section, all Eurodollar Loans with the same Interest Periods shall be considered
as one Eurodollar Loan, but Eurodollar Loans with different Interest Periods,
even if they begin on the same date, shall be considered as separate Eurodollar
Loans.
2.6 NOTES.
(a) Revolving Loan Notes. The Revolving Loans made by each New Credit
Agreement Lender shall be evidenced by a duly executed promissory note of the
Borrower to each applicable New Credit Agreement Lender in the face amount of
its Revolving Loan Commitment Percentage of the Revolving Committed Amount in
substantially the form of Exhibit 2.6(a).
(b) Tranche A Term Loan Notes. The Tranche A Term Loan made by each New
Credit Agreement Lender shall be evidenced by a duly executed promissory note of
the Borrower to each applicable New Credit Agreement Lender in the face amount
of its Tranche A Term Loan Commitment Percentage of the Tranche A Term Loan
Committed Amount in substantially the form of Exhibit 2.6(b).
(c) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in
substantially the
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form of Exhibit 2.6(c) in a principal amount equal to the amount of the
Swingline Committed Amount.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 INTEREST.
(a) Interest Rate. All Base Rate Loans (including, without limitation, all
Swingline Loans) shall accrue interest at the Adjusted Base Rate and all
Eurodollar Loans shall accrue interest at the Adjusted Eurodollar Rate.
(b) Default Rate of Interest. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing hereunder or
under the other Credit Documents (including without limitation fees and
expenses) shall bear interest, payable on demand, at a per annum rate equal to
4% plus the rate which would otherwise be applicable (or if no rate is
applicable, then the rate for Revolving Loans that are Base Rate Loans plus four
percent (4%) per annum).
(c) Interest Payments. Interest on Loans (including, without limitation, all
Swingline Loans) shall be due and payable in arrears on each Interest Payment
Date. If an Interest Payment Date falls on a date which is not a Business Day,
such Interest Payment Date shall be deemed to be the next succeeding Business
Day (subject to accrual of interest for the period of such extension), except
that in the case of Eurodollar Loans where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding day.
3.2 PLACE AND MANNER OF PAYMENTS.
All payments of principal, interest, fees, expenses and other amounts to be
made by a Credit Party under this Credit Agreement shall be received not later
than 2:00 p.m. on the date when due, in Dollars and in immediately available
funds, by the Agent at its offices at NationsBank Plaza, Charlotte, North
Carolina. Payments received after such time shall be deemed to have been
received on the next Business Day. The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Agent, the Loans, fees or
other amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails to specify, or if such application would
be inconsistent with the terms hereof, the Agent shall, subject to Section 3.7,
distribute such payment to the New Credit Agreement Lenders in such manner as
the Agent may deem appropriate). The Agent will distribute such payments to the
applicable New Credit Agreement Lenders on the date received if any such payment
is received prior to 2:00 p.m.; otherwise the Agent will distribute such payment
to the applicable Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be
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extended to the next succeeding Business Day (subject to accrual of interest
and fees for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be made on the
next preceding Business Day.
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrower shall have the right to prepay Loans
in whole or in part from time to time without premium or penalty; provided,
however, that (i) Eurodollar Loans may only be prepaid on three Business Days'
prior written notice to the Agent and any prepayment of Eurodollar Loans will be
subject to Section 3.15; (ii) Base Rate Loans may only be prepaid after written
notice (confirmed by a telephone call from the Borrower) to the Agent not later
than 11:00 a.m. on the Business Day of the applicable prepayment (iii) each such
partial prepayment of Loans shall be (A) in the case of Revolving Loans in the
minimum principal amount of $500,000 and integral multiples of $500,000 in
excess thereof, (B) in the case of Swingline Loans, in a minimum principal
amount of $1,000,000 and integral multiples of $1,000,000 in excess thereof and
(C) in the case of Tranche A Term Loans, in a minimum principal amount of
$1,000,000 and integral multiples of $1,000,000 in excess thereof; (iv)
voluntary prepayments with respect to the Term Loans shall be applied pro rata
between the outstanding Tranche A Term Loans, Tranche A Supplemental Term Loans
and Tranche B Term Loans (pro rata among the remaining Principal Amortization
Payments in inverse order of maturity thereof); and (v) any prepayment of
Tranche A Term Loans made within one year of the Closing Date shall be subject
to the prepayment penalty provisions of Section 3.3(d) hereof.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time the sum of the aggregate
amount of Revolving Loans outstanding plus the aggregate amount of Swingline
Loans outstanding exceeds the lesser of (x) the Revolving Committed Amount
and (y) the Borrowing Base, the Borrower shall immediately make a principal
payment to the Agent in the manner and in an amount necessary to be in
compliance with Section 2.1.
(ii) Excess Cash Flow. Within 10 days after the date the audited
financial statements are required to be delivered pursuant to Section
7.1(a), the Borrower shall make a prepayment of the Loans, Tranche A
Supplemental Term Loans and Tranche B Term Loans in an amount equal to 75%
of the Excess Cash Flow earned during such prior fiscal year (to be applied
as set forth in Section 3.3(c) below).
(iii) Asset Dispositions. Immediately upon receipt by the Borrower or any
of its Subsidiaries of proceeds from any Asset Disposition, the Borrower
shall forward 100% of the Net Cash Proceeds of such Asset Disposition to
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the Lenders as a prepayment of the Loans, Tranche A Supplemental Term Loans
and Tranche B Term Loans (to be applied as set forth in Section 3.3(c)
below).
(iv) Issuances of Equity. Immediately upon receipt by the Borrower or
any of its Subsidiaries of proceeds from any Equity Issuance (other than the
issuance of shares of capital stock of the Borrower in connection with the
Borrower's purchase of the Acquired Assets), the Borrower shall forward 50%
of the Net Cash Proceeds of such Equity Issuance to the Lenders as a
prepayment of the Loans, Tranche A Supplemental Term Loans and Tranche B
Term Loans (to be applied as set forth in Section 3.3(c) below).
(v) Recovery Event. Subject to the terms and conditions of Section 7.6
hereof, immediately upon receipt by the Borrower or any of its Subsidiaries
of proceeds from any Recovery Event, the Borrower shall forward 100% of the
Net Cash Proceeds from such Recovery Event to the Lenders as a prepayment of
the Loans, Tranche A Supplemental Term Loans and Tranche B Term Loans (to be
applied as set forth in Section 3.3(c) below).
(vi) Debt Issuances. Immediately upon receipt by the Borrower or any of
its Subsidiaries of proceeds from any Debt Issuance, the Borrower shall
prepay the Loans, the Tranche A Supplemental Term Loans and the Tranche B
Term Loans in an aggregate amount equal to 100% of the Net Cash Proceeds of
such Debt Issuance to the Lenders (such prepayment to be applied as set
forth in Section 3.3(c) below).
(c) Application of Prepayments. All amounts required to be paid pursuant to
Section 3.3(b)(i) shall be applied first to Revolving Loans and second to
Swingline Loans. All amounts required to be paid pursuant to Section 3.3(b)(ii),
(iii), (iv), (v) and (vi) above shall be applied, first pro rata among the
outstanding Tranche A Term Loans, the Tranche A Supplemental Term Loans and
Tranche B Term Loans (which amounts shall then be applied to the remaining
Principal Amortization Payments due with respect to the Tranche A Term Loans,
the Tranche A Supplemental Term Loans and Tranche B Term Loans in inverse order
of maturity thereof), second to the Revolving Loans (with a corresponding
reduction in the Revolving Committed Amount) and third to Swingline Loans (with
a corresponding reduction in the Revolving Committed Amount). One or more
holders of the Tranche B Term Loans may decline to accept a mandatory prepayment
under Sections 3.3(b)(ii), (iii), (iv), (v) or (vi) with respect to the Tranche
B Term Loans (to the extent there is sufficient Tranche A Term Loans and Tranche
A Supplemental Term Loans outstanding to be paid with such prepayment) in which
case such declined prepayments shall be allocated pro rata among the Tranche A
Term Loans and Tranche A Supplemental Term Loans and among the Tranche B Term
Loans held by Lenders accepting such prepayments; provided, however, a Lender
declining to accept a mandatory prepayment shall be required to make such
election to decline with respect to the Tranche B Term Loan of such Lender.
Within the parameters of the application set forth above, prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments hereunder shall be subject to
Section 3.15.
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(d) Prepayment Penalty. In the event the Borrower voluntarily elects to
prepay the Tranche A Term Loan within one year following the Closing Date as
permitted by Section 3.3(a) hereof and such prepayment is made with the proceeds
of any other Indebtedness, the Borrower shall be obligated to pay a prepayment
fee equal to one-half percent (1/2%) of the principal amount prepaid; provided,
however, the prepayment fee referred to in this Section 3.3(d) shall not apply
to any voluntary prepayment made with any part of the fifty percent (50%)
portion of proceeds from an Equity Issuance that the Borrower is permitted to
retain pursuant to Section 3.3(b)(iv) hereof. After one year from the Closing
Date, the Borrower may prepay the Tranche A Term Loan without a prepayment
penalty or fee.
3.4 FEES.
(a) Commitment Fees. In consideration of the Revolving Committed Amount
being made available by the New Credit Agreement Lenders hereunder, the
Borrower agrees to pay to the Agent, for the pro rata benefit of each
applicable New Credit Agreement Lender (based on each New Credit Agreement
Lender's Revolving Loan Commitment Percentage of the Revolving Committed
Amount), a fee equal to one-half of one percent (.5%) per annum on the Unused
Commitment (the "Commitment Fees"). The accrued Commitment Fees shall
commence to accrue on the Closing Date and shall be due and payable in
arrears on the last Business Day of each fiscal quarter of the Borrower (as
well as on the Revolving Loan Maturity Date and on any date that the
Revolving Committed Amount is reduced) for the immediately preceding fiscal
quarter (or portion thereof), beginning with the first of such dates to occur
after the Closing Date.
(b) Administrative Fees. The Borrower agrees to pay to the Agent, for its
own account, an annual fee as agreed to between the Borrower and the Agent in
the Fee Letter.
3.5 PAYMENT IN FULL AT MATURITY.
(a) On the Revolving Loan Maturity Date, the entire outstanding principal
balance of all Revolving Loans, together with accrued but unpaid interest and
all other sums owing with respect thereto, shall be due and payable in full,
unless accelerated sooner pursuant to Section 9.
(b) On the Tranche A Term Loan Maturity Date, the entire outstanding
principal balance of all Tranche A Term Loans, together with accrued but unpaid
interest and all other sums owing with respect thereto, shall be due and payable
in full, unless accelerated sooner pursuant to Section 9.
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3.6 COMPUTATIONS OF INTEREST AND FEES.
(a) Except for Base Rate Loans, in which case interest shall be computed on
the basis of a 365 or 366 day year as the case may be (unless the Base Rate is
determined by reference to the Federal Funds Rate), all computations of interest
and fees hereunder shall be made on the basis of the actual number of days
elapsed over a year of 360 days. Interest shall accrue from and include the date
of borrowing (or continuation or conversion) but exclude the date of payment.
(b) It is the intent of the New Credit Agreement Lenders and the Credit
Parties to conform to and contract in strict compliance with applicable usury
law from time to time in effect. All agreements between the New Credit Agreement
Lenders and the Borrower are hereby limited by the provisions of this paragraph
which shall override and control all such agreements, whether now existing or
hereafter arising and whether written or oral. In no way, nor in any event or
contingency (including but not limited to prepayment or acceleration of the
maturity of any obligation), shall the interest taken, reserved, contracted for,
charged, or received under this Credit Agreement, under the Notes or otherwise,
exceed the maximum nonusurious amount permissible under applicable law. If, from
any possible construction of any of the Credit Documents or any other document,
interest would otherwise be payable in excess of the maximum nonusurious amount,
any such construction shall be subject to the provisions of this paragraph and
such documents shall be automatically reduced to the maximum nonusurious amount
permitted under applicable law, without the necessity of execution of any
amendment or new document. If any New Credit Agreement Lender shall ever receive
anything of value which is characterized as interest on the Loans under
applicable law and which would, apart from this provision, be in excess of the
maximum lawful amount, an amount equal to the amount which would have been
excessive interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment of interest, or
refunded to the Borrower or the other payor thereof if and to the extent such
amount which would have been excessive exceeds such unpaid principal amount of
the Loans. The right to demand payment of the Loans or any other indebtedness
evidenced by any of the Credit Documents does not include the right to receive
any interest which has not otherwise accrued on the date of such demand, and the
New Credit Agreement Lenders do not intend to charge or receive any unearned
interest in the event of such demand. All interest paid or agreed to be paid to
the New Credit Agreement Lenders with respect to the Loans shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term (including any renewal or extension) of the
Loans so that the amount of interest on account of such indebtedness does not
exceed the maximum nonusurious amount permitted by applicable law.
3.7 PRO RATA TREATMENT.
Except to the extent otherwise provided herein, each Loan borrowing, each
Tranche A Supplemental Term Loan borrowing, each Tranche B Term Loan
borrowing, each payment or prepayment of principal of any Loan, Tranche A
Supplemental Term Loan, or Tranche B Term
35
Loan, each payment of fees (other than the Administrative Fees retained by
the Agent for its own account), each reduction of the Revolving Committed
Amount, and each conversion or continuation of any Loan, Tranche A
Supplemental Term Loan or the Tranche B Term Loan, shall be allocated pro
rata among the relevant Lenders in accordance with the respective Revolving
Loan Commitment Percentages, Tranche A Term Loan Commitment Percentages,
Tranche A Supplemental Term Loan Commitment Percentages, and Tranche B Term
Loan Commitment Percentages, as applicable, of such Lenders (or, if the
Commitments, Tranche A Supplemental Term Loan Committed Amount or Tranche B
Term Loan Committed Amount of such Lenders have expired or been terminated,
in accordance with the respective principal amounts of their outstanding
Loans, Tranche A Supplemental Term Loans, Tranche B Term Loans and
Participation Interests of such Lenders); provided that, if any Lender shall
have failed to pay its applicable pro rata share of any Loan, Tranche A
Supplemental Term Loan or Tranche B Term Loan then any amount to which such
Lender would otherwise be entitled pursuant to this Section shall instead be
payable to the Agent; provided further, that in the event any amount paid to
any Lender pursuant to this Section is rescinded or must otherwise be
returned by the Agent, each Lender shall, upon the request of the Agent,
repay to the Agent the amount so paid to such Lender, with interest for the
period commencing on the date such payment is returned by the Agent until the
date the Agent receives such repayment at a rate per annum equal to, during
the period to but excluding the date two Business Days after such request,
the Federal Funds Rate, and thereafter, the Base Rate plus four percent (4%)
per annum.
3.8 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Credit Agreement or the
Supplemental Credit Agreement, after the occurrence and during the continuance
of an Event of Default, all amounts collected or received by an Agent or any
Lender on account of amounts outstanding under any of the Credit Documents or
any of the Supplemental Credit Documents or in respect of the Collateral shall
be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys' fees) of the Agent in
connection with enforcing the rights of the Lenders under the Credit
Documents and the Supplemental Credit Lenders under the Supplemental Credit
Documents and any protective advances made by the Agent with respect to the
Collateral under or pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to an Agent in its capacity as
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses, (including, without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the Credit
Documents and the Supplemental Credit Documents;
FOURTH, to the payment of all accrued fees and interest payable to (i)
the New Credit Agreement Lenders hereunder and (ii) the Supplemental Credit
Lenders under the Supplemental Credit Agreement;
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FIFTH, to the payment of the outstanding principal amount of the Loans,
Tranche A Supplemental Term Loans and Tranche B Term Loans, and to any
principal amounts outstanding under Hedging Agreements, pro rata, as set
forth below;
SIXTH, to all other obligations which shall have become due and payable
under the Credit Documents and Supplemental Credit Documents, pro rata, and
not repaid pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
outstanding Tranche A Supplemental Term Loans, outstanding Tranche B Term Loans
and obligations under Hedging Agreements held by such Lender bears to the
aggregate then outstanding Loans, outstanding Tranche A Supplemental Term Loans,
outstanding Tranche B Term Loans and obligations under Hedging Agreements) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH," "FIFTH,"
and "SIXTH" above.
3.9 SHARING OF PAYMENTS.
The New Credit Agreement Lenders agree among themselves that, except to
the extent otherwise provided herein, in the event that any Lender shall
obtain payment in respect of any Loan, Tranche A Supplemental Term Loan or
Tranche B Term Loan, or any other obligation owing to such Lender under this
Credit Agreement or the Supplemental Credit Agreement through the exercise of
a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of the Bankruptcy 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, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders for cash an interest in such Loans, Tranche A
Supplemental Term Loans or Tranche B Term Loans, and other obligations in
such amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders and Supplemental Credit Lenders share
such payment in accordance with their respective ratable shares as provided
for in this Credit Agreement and the Supplemental Credit Agreement. The New
Credit Agreement Lenders further agree among themselves that if payment to a
New Credit Agreement Lender or Supplemental Credit Lender obtained by such
New Credit Agreement Lender or Supplemental Credit Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of the
interest theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each
Lender or Supplemental Credit Lender whose payment shall have been rescinded
or otherwise restored. The Borrower agrees that any Lender so purchasing such
an interest may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker's lien or counterclaim,
37
with respect to such interest as fully as if such Lender were a holder of
such Loan, Tranche A Supplemental Term Loan or Tranche B Term Loans or other
obligation in the amount of such interest. Except as otherwise expressly
provided in this Credit Agreement, if any Lender or the Agent shall fail to
remit to the Agent or any other Lender an amount payable by such Lender or
the Agent to the Agent or such other Lender pursuant to this Credit Agreement
or the Supplemental Credit Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to the Agent
or such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.9
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders under this Section 3.9 to share in the benefits of any recovery on
such secured claim.
3.10 CAPITAL ADEQUACY.
If, after the date hereof, any New Credit Agreement Lender has determined
that the adoption or the becoming effective of, or any change in, or any
change by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof in the
interpretation or administration of, any applicable law, rule or regulation
regarding capital adequacy, or compliance by such New Credit Agreement Lender
with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
New Credit Agreement Lender's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such New
Credit Agreement Lender could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such New
Credit Agreement Lender's policies with respect to capital adequacy), then,
upon notice from such New Credit Agreement Lender to the Borrower, the
Borrower shall be obligated to pay to such New Credit Agreement Lender such
additional amount or amounts as will compensate such New Credit Agreement
Lender for such reduction. Each determination by any such New Credit
Agreement Lender of amounts owing under this Section shall, absent manifest
error, be conclusive and binding on the parties hereto.
3.11 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period, the Agent shall promptly give telecopy or
telephonic notice thereof to the Borrower and the New Credit Agreement
Lenders. If such notice is given (a) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as Base Rate
Loans, (b) any Loans that were to have been converted on the first day of
such Interest Period to or continued as Eurodollar Loans shall be converted
to or continued as Base Rate Loans and (c) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn
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by the Agent, no further Eurodollar Loans shall be made or continued as such,
nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
3.12 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any New Credit
Agreement Lender to make or maintain Eurodollar Loans as contemplated by this
Credit Agreement, (a) such New Credit Agreement Lender shall promptly give
written notice of such circumstances to the Borrower and the Agent (which notice
shall be withdrawn whenever such circumstances no longer exist), (b) the
commitment of such New Credit Agreement Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it shall no
longer be unlawful for such New Credit Agreement Lender to make or maintain
Eurodollar Loans, such New Credit Agreement Lender shall then have a commitment
only to make a Base Rate Loan when a Eurodollar Loan is requested and (c) such
New Credit Agreement Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Base Rate Loans on the respective last
days or the then current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such conversion of a Eurodollar
Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, the Borrower shall pay to such New Credit Agreement
Lender such amounts, if any, as may be required pursuant to Section 3.15.
3.13 REQUIREMENTS OF LAW.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any New Credit Agreement
Lender, or compliance by any New Credit Agreement Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the Closing Date
(or, if later, the date on which such New Credit Agreement Lender becomes a New
Credit Agreement Lender):
(a) shall subject such New Credit Agreement Lender to any tax of any
kind whatsoever with respect to any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such New Credit Agreement Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 3.14 (including Non-Excluded
Taxes imposed solely by reason of any failure of such New Credit Agreement
Lender to comply with its obligations under Section 3.14(b)) and changes
in taxes measured by or imposed upon the overall net income, or franchise
tax (imposed in lieu of such net income tax), of such New Credit Agreement
Lender or its applicable lending office, branch, or any affiliate
thereof);
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(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by,
any office of such New Credit Agreement Lender which is not otherwise
included in the determination of the Eurodollar Rate hereunder; or
(c) shall impose on such New Credit Agreement Lender any other
condition (excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such New
Credit Agreement Lender, by an amount which such New Credit Agreement Lender
reasonably deems to be material, of making, converting into, continuing or
maintaining Eurodollar Loans or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, upon notice to the Borrower from
such New Credit Agreement Lender, through the Agent, in accordance herewith,
the Borrower shall be obligated to promptly pay such New Credit Agreement
Lender, upon its demand, any additional amounts necessary to compensate such
New Credit Agreement Lender for such increased cost or reduced amount
receivable, provided that, in any such case, the Borrower may elect to
convert the Eurodollar Loans made by such New Credit Agreement Lender
hereunder to Base Rate Loans by giving the Agent at least one Business Day's
notice of such election, in which case the Borrower shall promptly pay to
such New Credit Agreement Lender, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 3.15. If any New
Credit Agreement Lender becomes entitled to claim any additional amounts
pursuant to this Section 3.13, it shall provide prompt notice thereof to the
Borrower, through the Agent, certifying (x) that one of the events described
in this Section 3.13 has occurred and describing in reasonable detail the
nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by
such New Credit Agreement Lender and a reasonably detailed explanation of the
calculation thereof. Such a certificate as to any additional amounts payable
pursuant to this Section 3.13 submitted by such New Credit Agreement Lender,
through the Agent, to the Borrower shall be conclusive and binding on the
parties hereto in the absence of manifest error. This covenant shall survive
the termination of this Credit Agreement and the payment of the Loans and all
other amounts payable hereunder.
3.14 TAXES.
(a) Except as provided below in this Section 3.14, all payments made
by the Borrower under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by
or imposed upon the overall net income of any New Credit Agreement Lender
or its applicable lending office, or any branch or affiliate thereof, and
all franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any New Credit Agreement Lender or its
applicable lending office, or any branch or affiliate thereof, in each
case imposed in lieu of net income taxes: (i) by the jurisdiction under
the laws of
40
which such New Credit Agreement Lender, applicable lending office, branch
or affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such jurisdiction
is located or any political subdivision thereof; or (ii) by reason of any
connection between the jurisdiction imposing such tax and such New Credit
Agreement Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such New Credit Agreement Lender
having executed, delivered or performed its obligations, or received
payment under or enforced, this Credit Agreement or any Notes. If any
such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Agent or any New Credit Agreement
Lender hereunder or under any Notes, (A) the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield
to an Agent or such New Credit Agreement Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder
at the rates or in the amounts specified in this Credit Agreement and any
Notes, provided, however, that the Borrower shall be entitled to deduct
and withhold any Non-Excluded Taxes and shall not be required to increase
any such amounts payable to any New Credit Agreement Lender that is not
organized under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements of paragraph
(b) of this Section 3.14 whenever any Non-Excluded Taxes are payable by
the Borrower, and (B) as promptly as possible thereafter the Borrower
shall send to the Agent for its own account or for the account of such New
Credit Agreement Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment thereof.
If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the New Credit Agreement Lenders for any
incremental taxes, interest or penalties that may become payable by the
Agent or any New Credit Agreement Lender as a result of any such failure.
The agreements in this subsection shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b) Each New Credit Agreement Lender that is not incorporated under
the laws of the United States of America or a state thereof shall:
(i)(A) on or before the date of any payment by the Borrower under
this Credit Agreement or Notes to such New Credit Agreement Lender,
deliver to the Borrower and the Agent (x) two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Credit Agreement and any Notes
without deduction or withholding of any United States federal income
taxes and (y) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(B) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such
form or certification
41
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it
to the Borrower; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(ii) in the case of any such New Credit Agreement Lender that is
not a "bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (A) represent to the Borrower (for the benefit
of the Borrower and the Agent) that it is not a bank within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (B)
agree to furnish to the Borrower, on or before the date of any
payment by the Borrower, with a copy to the Agent, two accurate and
complete original signed copies of Internal Revenue Service
Form W-8, or successor applicable form certifying to such New Credit
Agreement Lender's legal entitlement at the date of such certificate
to an exemption from U.S. withholding tax under the provisions of
Section 881(c) of the Internal Revenue Code with respect to payments
to be made under this Credit Agreement and any Notes (and to deliver
to the Borrower and the Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the Agent for filing and
completing such forms), and (C) agree, to the extent legally entitled
to do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such other
forms as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a New Credit Agreement Lender
hereunder which renders all such forms inapplicable or which would prevent
such New Credit Agreement Lender from duly completing and delivering any
such form with respect to it and such New Credit Agreement Lender so
advises the Borrower and the Agent then such New Credit Agreement Lender
shall be exempt from such requirements. Each Person that shall become a
New Credit Agreement Lender or a participant of a New Credit Agreement
Lender pursuant to Section 11.3 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms, certifications
and statements required pursuant to this subsection (b); provided that in
the case of a participant of a New Credit Agreement Lender, the
obligations of such participant of a New Credit Agreement Lender pursuant
to this subsection (b) shall be determined as if the participant of a
New Credit Agreement Lender were a New Credit Agreement Lender except that
such participant of a New Credit Agreement Lender shall furnish all such
required forms, certifications and statements to the New Credit Agreement
Lender from which the related participation shall have been purchased.
3.15 INDEMNITY.
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The Borrower promises to indemnify each New Credit Agreement Lender and to
hold each New Credit Agreement Lender harmless from any loss or expense which
such Lender may sustain or incur (other than through such New Credit Agreement
Lender's gross negligence or willful misconduct) as a consequence of (a) default
by the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Credit Agreement, (b) default by the
Borrower in making any prepayment of a Eurodollar Loan after the Borrower has
given a notice thereof in accordance with the provisions of this Credit
Agreement and (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to (i) the amount of interest which
would have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Eurodollar Loans provided for herein
(excluding, however, the Applicable Percentage included therein, if any) minus
(ii) the amount of interest (as reasonably determined by such New Credit
Agreement Lender) which would have accrued to such New Credit Agreement Lender
on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. The agreements in this Section
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.16 REPLACEMENT OF LENDERS.
If any New Credit Agreement Lender delivers a notice to the Borrower
pursuant to Sections 3.10, 3.13 or 3.14, then the Borrower shall have the
right, if no Default or Event of Default then exists, to either (i) replace
such New Credit Agreement Lender (the "Replaced Lender") with one or more
additional banks or financial institutions (collectively, the "Replacement
Lender"), provided that (A) at the time of any replacement pursuant to this
Section 3.16, the Replacement Lender shall enter into one or more assignment
agreements substantially in the form of Exhibit 11.3 pursuant to, and in
accordance with the terms of, Section 11.3(b) (and with all fees payable
pursuant to said Section 11.3(b) to be paid by the Replacement Lender)
pursuant to which the Replacement Lender shall acquire all of the rights and
obligations of the Replaced Lender hereunder and, in connection therewith,
shall pay to the Replaced Lender in respect thereof an amount equal to the
sum of (a) the principal of, and all accrued interest on, all outstanding
Loans of the Replaced Lender, and (b) all accrued, but theretofore unpaid,
fees owing to the Replaced Lender pursuant to Section 3.4, and (B) all
obligations of the Borrower owing to the Replaced Lender (including all
obligations, if any, owing pursuant to Section 3.10, 3.13 or 3.14, but
excluding those obligations specifically described in clause (A) above in
respect of which the assignment purchase price has been, or is concurrently
being paid) shall be paid in full to such Replaced Lender concurrently with
such replacement or (ii) if a Replacement Lender is not located within 60
days of such notice, terminate the Commitments and repay the Loans, Tranche A
Supplemental Term Loans and Tranche B Term Loans in full within 120 days of
receipt of such notice without incurring any prepayment penalty under Section
3.3(d).
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SECTION 4
GUARANTY
4.1 GUARANTY OF PAYMENT.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each New Credit Agreement Lender, each
Affiliate of New Credit Agreement Lender that enters into a Hedging Agreement
and the Agent the prompt payment of the Credit Party Obligations in full when
due (whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise). The Guarantors additionally, jointly and severally, unconditionally
guarantee to each New Credit Agreement Lender the timely performance of all
other obligations under the Credit Documents and Hedging Agreements. This
Guaranty is a guaranty of payment and not of collection and is a continuing
guaranty and shall apply to all Credit Party Obligations whenever arising.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity
or enforceability of any of the Credit Documents or the Hedging Agreements,
or any other agreement or instrument referred to therein, to the fullest
extent permitted by applicable law, irrespective of any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor. Each Guarantor agrees that this Guaranty
may be enforced by the New Credit Agreement Lenders without the necessity at
any time of resorting to or exhausting any other security or collateral and
without the necessity at any time of having recourse to the Notes or any
other of the Credit Documents or any collateral, if any, hereafter securing
the Credit Party Obligations or otherwise and each Guarantor hereby waives
the right to require the New Credit Agreement Lenders to proceed against the
Borrower or any other Person (including a co-guarantor) or to require the New
Credit Agreement Lenders to pursue any other remedy or enforce any other
right. Each Guarantor further agrees that it shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Credit Party Obligations for amounts paid under
this Guaranty until such time as the New Credit Agreement Lenders (and any
Affiliates of New Credit Agreement Lenders entering into Hedging Agreements)
have been paid in full, all Commitments under the Credit Agreement have been
terminated and no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the New Credit Agreement
Lenders in connection with monies received under the Credit Documents. Each
Guarantor further agrees that nothing contained herein shall prevent the New
Credit Agreement Lenders from suing on the Notes or any of the other Credit
Documents or any of the Hedging Agreements or foreclosing its security
interest in or Lien on any collateral, if any, securing the Credit Party
Obligations or from exercising any other rights available to it under this
Credit Agreement, the Notes, any other of the Credit Documents, or any other
instrument of security, if any, and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute
a discharge of any
44
of any Guarantor's obligations hereunder; it being the purpose and intent of
each Guarantor that its Guarantor's obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither any
Guarantor's obligations under this Guaranty nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or
limitation of the liability of the Borrower or by reason of the bankruptcy or
insolvency of the Borrower. Each Guarantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Credit Party
Obligations and notice of or proof of reliance by the Agent or any New Credit
Agreement Lender upon this Guarantee or acceptance of this Guarantee. The
Credit Party Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Guarantee. All dealings between the Borrower
and any of the Guarantors, on the one hand, and the Agent and the New Credit
Agreement Lenders, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon this Guarantee.
4.3 MODIFICATIONS.
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the New Credit Agreement
Lenders shall not have any obligation to protect, perfect, secure or insure any
such security interests, liens or encumbrances now or hereafter held, if any,
for the Credit Party Obligations or the properties subject thereto; (c) the time
or place of payment of the Credit Party Obligations may be changed or extended,
in whole or in part, to a time certain or otherwise, and may be renewed or
accelerated, in whole or in part; (d) the Borrower and any other party liable
for payment under the Credit Documents may be granted indulgences generally; (e)
any of the provisions of the Notes or any of the other Credit Documents may be
modified, amended or waived; (f) any party (including any co-guarantor) liable
for the payment thereof may be granted indulgences or be released; and (g) any
deposit balance for the credit of the Borrower or any other party liable for the
payment of the Credit Party Obligations or liable upon any security therefor may
be released, in whole or in part, at, before or after the stated, extended or
accelerated maturity of the Credit Party Obligations, all without notice to or
further assent by the Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
4.4 WAIVER OF RIGHTS.
Each Guarantor expressly waives: (a) notice of acceptance of this
Guaranty by the New Credit Agreement Lenders and of all extensions of credit
to the Borrower by the Lenders; (b) presentment and demand for payment or
performance of any of the Credit Party Obligations; (c) protest and notice of
dishonor or of default (except as specifically required in the Credit
Agreement) with respect to the Credit Party Obligations or with respect to
any security therefor; (d) notice of the New Credit Agreement Lenders
obtaining, amending, substituting for, releasing, waiving or modifying any
security interest, lien or encumbrance, if any, hereafter securing the Credit
Party Obligations, or the New Credit Agreement Lenders' subordinating,
compromising, discharging or releasing such security interests, liens or
encumbrances, if any; (e)
45
all other notices to which the Guarantor might otherwise be entitled; and (f)
demand for payment under this Guaranty.
4.5 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit
Party Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by an
Agent or such New Credit Agreement Lender in connection with such rescission
or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
4.6 REMEDIES.
The Guarantors agree that, as between the Guarantors, on the one hand, and
the Agent and the New Credit Agreement Lenders, on the other hand, the Credit
Party Obligations may be declared to be forthwith due and payable as provided in
Section 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in accordance
with the terms of the Security Agreements and the other Collateral Documents and
that the New Credit Agreement Lenders may exercise their remedies thereunder in
accordance with their terms.
4.7 LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in any of
the Credit Documents, to the extent the obligations of any Guarantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.8 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
next sentence hereof), pay to such Excess Funding
46
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined
below and determined, for this purpose, without reference to the properties,
assets, liabilities and debts of such Excess Funding Guarantor) of such
Excess Payment (as defined below). The payment obligation of any Guarantor to
any Excess Funding Guarantor under this Section 4.8 shall be subordinate and
subject in right of payment to the prior payment in full of the obligations
of such Guarantor under the other provisions of this Section 4, and such
Excess Funding Guarantor shall not exercise any right or remedy with respect
to such excess until payment and satisfaction in full of all of such
obligations. For purposes hereof, (i) "Excess Funding Guarantor" shall mean,
in respect of any obligations arising under the other provisions of this
Section 4 (hereafter, the "Guaranteed Obligations"), a Guarantor that has
paid an amount in excess of its Pro Rata Share of the Guaranteed Obligations;
(ii) "Excess Payment" shall mean, in respect of any Guaranteed Obligations,
the amount paid by an Excess Funding Guarantor in excess of its Pro Rata
Share of such Guaranteed Obligations; and (iii) "Pro Rata Share", for the
purposes of this Section 4.8, shall mean, for any Guarantor, the ratio
(expressed as a percentage) of (a) the amount by which the aggregate present
fair saleable value of all of its assets and properties exceeds the amount of
all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of
the Borrower and all of the Guarantors exceeds the amount of all of the debts
and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the Guarantors, all as
of the Closing Date (if any Guarantor becomes a party hereto subsequent to
the Closing Date, then for the purposes of this Section 4.8 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the Closing Date and
the information pertaining to, and only pertaining to, such Guarantor as of
the date such Guarantor became a Guarantor shall be deemed true as of the
Closing Date).
SECTION 5
CONDITIONS PRECEDENT
5.1 CLOSING CONDITIONS.
The obligation of the New Credit Agreement Lenders to enter into this Credit
Agreement and make the initial Extension of Credit is subject to satisfaction of
the following conditions (in form and substance acceptable to the Lenders in
their sole discretion):
(a) Executed Credit Documents. Receipt by the Agent of duly executed
copies of: (i) this Credit Agreement; (ii) the Notes; (iii) the Collateral
Documents and (iv) all other Credit Documents.
(b) Corporate Documents. Receipt by the Agent of the following:
(i) Charter Documents. Copies of the articles or certificates of
incorporation or other charter documents of each Credit Party
certified to be true
47
and complete as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party certified
by a secretary or assistant secretary of such Credit Party to be true
and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board of Directors
of each Credit Party approving and adopting the Credit Documents to
which it is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a secretary
or assistant secretary of such Credit Party to be true and correct and
in force and effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of good standing,
existence or its equivalent with respect to each Credit Party
certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing would have a Material Adverse Effect on the business or
operations of a Credit Party in such jurisdiction and (B) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary to be true and correct
as of the Effective Date.
(c) Financial Statements. Receipt by the Agent and the Lenders of (i)
the consolidated financial statements of SunSource International, Inc.
("SunSource") and its Subsidiaries for the fiscal year ending December 31,
1995, together with comparative form figures for fiscal year 1994,
including balance sheets and income and cash flow statements, in each case
audited by nationally recognized independent public accountants and
containing an unqualified opinion of such firm that such statements
present fairly, in all material respects, the consolidated financial
position and results of operations of SunSource and its Subsidiaries, and
are prepared in conformity with GAAP, (ii) unaudited consolidated
financial statements of SunSource and its Subsidiaries for the fiscal year
ending December 31, 1996, including balance sheets and income and cash
flow statements (which statements have been certified as being true and
correct by SunSource in the Purchase Agreement), (iii) with respect to
the Acquired Assets, company-prepared statements (which statements have
been certified as being true and correct by SunSource in the Purchase
Agreement) as to sales, gross profit and advertising cost analysis for
the last three complete fiscal years ended December 31, 1996 and interim
financial statements for the period ended March 31, 1997 and the comparable
period of the prior year, (iv) the unaudited consolidated financial
statements of the Borrower and its Subsidiaries for fiscal quarter ending
May 31, 1997, including balance
48
sheets and income and cash flow statements, accompanied by a certificate
of the chief financial officer of the Borrower to the effect that such
unaudited financial statements fairly present in all material respects
the consolidated financial condition of the Borrower and its Subsidiaries
and have been prepared in conformity with GAAP, (v) a satisfactory
proforma consolidated balance sheet of the Borrower and its Subsidiaries
as of the Closing Date giving effect to the acquisition of the Acquired
Assets and the transactions contemplated by the Purchase Agreement and
reflecting estimated purchase price accounting adjustments, prepared by
nationally recognized independent accountants, (vi) satisfactory
projections (the "Projections") for each twelve month period through the
twelve month period ending seven (7) years from the Closing Date and
(vii) company prepared quarterly consolidated financial statements of the
Borrower and its Subsidiaries for the projected first year following the
Closing Date giving effect to the acquisition of the Acquired Assets,
(viii) a Borrower-prepared report containing information as to brand sales
and advertising cost analysis for the fiscal years ending December 31,
1994, 1995 and 1996 and (ix) such other information relating to the
Acquired Assets as the Agent may reasonably require in connection with
the structuring and syndication of credit facilities of the type described
herein.
(d) Opinion of Counsel. Receipt by the Lenders of an opinion, or
opinions (which shall cover, among other things, authority, legality,
validity, binding effect, enforceability and attachment and perfection of
liens), satisfactory to the Agent, addressed to the Agent on behalf of the
Lenders and dated as of the Effective Date, from legal counsel to the
Credit Parties.
(e) Audit. Receipt by the Agent of a field examination, in form and
substance satisfactory to the Agent, of the accounts receivable, inventory,
payables, controls and systems of the Borrower and its Subsidiaries
(including the Acquired Assets).
(f) Appraisal Report. Receipt by the Lenders of asset appraisal reports
with respect to the five principal brands included in the Acquired Assets
in form and substance reasonably satisfactory to the Agent.
(g) Personal Property Collateral. The Agent shall have received, in
form and substance satisfactory to the Agent:
(i) searches of Uniform Commercial Code ("UCC") filings in the
jurisdiction of the chief executive office of each Credit Party and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Lenders' security
interest in the Collateral, copies of the financing statements on
file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(ii) to the extent not previously received by the Agent, duly
executed UCC financing statements for each appropriate jurisdiction
as is necessary, in the Agent's sole discretion, to perfect the
Lenders' security interest in the Collateral;
49
(iii) to the extent not previously received by the Agent, searches
of ownership of intellectual property in the appropriate governmental
offices and such patent/trademark/copyright filings as requested by
the Agent in order to perfect the Agent's security interest in the
Collateral;
(iv) to the extent not previously received by the Agent, all stock
certificates evidencing the stock pledged to the Agent pursuant to the
Pledge Agreement, together with duly executed in blank undated stock
powers attached thereto;
(v) to the extent not previously received by the Agent, all
instruments and chattel paper in the possession of a Credit Party
together with allonges or assignments as may be necessary or
appropriate to perfect the Lenders' security interest in the
Collateral; and
(vi) to the extent not previously received by the Agent, all
material contracts or agreements to which a Credit Party is a party
including, without limitation, the Purchase Agreement together with
assignments and third party consents as may be necessary or appropriate
to perfect the Lenders' security interest in the Collateral.
(h) Real Property Collateral. The Agent shall have received, in form
and substance satisfactory to the Agent:
(i) to the extent not previously received by the Agent, fully
executed and notarized mortgages, deeds of trust or deeds to secure
debt (each a "Mortgage" and collectively the "Mortgages") encumbering
the fee interest of the Credit Parties in each real property asset
owned by a Credit Party set forth on Schedule 5.1(h) (each a "Mortgaged
Property" and collectively the "Mortgaged Properties"), together with
such UCC-1 financing statements as the Agent shall deem appropriate
with respect to each such Mortgaged Property;
(ii) an opinion of counsel (which counsel shall be satisfactory
to the Agent) in the state in which each Mortgaged Property is located
with respect to the enforceability of the form of Mortgage and
sufficiency of the form of UCC-1 financing statements to be recorded
or filed in such state and such other matters as the Agent may request,
in form and substance satisfactory to the Agent;
(iii) to the extent not previously received by the Agent, in the
case of each leasehold estate of the Credit Parties set forth on
Schedule 5.1(h) (each a "Leasehold Property" and collectively the
"Leasehold Properties"), such estoppel letters, consents and waivers
from the landlords of such real property as may be reasonably required
by the Agent, which estoppel letters shall be in form and substance
reasonably satisfactory to the Agent;
50
(iv) to the extent not previously received by the Agent, ALTA
mortgagee title insurance policies (the "Mortgage Policies") issued by
title insurers satisfactory to the Agent (the "Title Insurance
Company"), in amounts satisfactory to the Agent with respect to all
Real Properties, assuring the Agent that the applicable Mortgages,
as applicable, create valid and enforceable first priority mortgage
liens on the respective Real Properties, free and clear of all defects
and encumbrances except Permitted Liens which Mortgage Policies shall
be in form and substance satisfactory to the Agent and containing
such endorsements as shall be satisfactory to the Agent and for any
other matters that the Agent may request, and shall provide for
affirmative insurance and such reinsurance as the Agent may request,
all of the foregoing in form and substance satisfactory to the Agent;
(v) to the extent not previously received by the Agent,
certification from a registered engineer or land surveyor in a form
reasonably satisfactory to the Agent or other evidence acceptable to
the Agent that none of the improvements on the Real Properties are
located within any area designated by the Director of the Federal
Emergency Management Agency as a "special flood hazard" area or if
any improvements on the Mortgaged Properties are located within a
"special flood hazard" area, evidence of a flood insurance policy
from a company and in an amount satisfactory to the Agent for the
applicable portion of the premises, naming the Agent for the benefit
of the Lenders, as mortgagee;
(vi) to the extent not previously received by the Agent, evidence
satisfactory to the Agent that each of the Real Properties, and the
uses of the Real Properties, are in compliance with all applicable
laws, regulations and ordinances including without limitation health
and environmental protection laws, erosion control ordinances, storm
drainage control laws, doing business and/or licensing laws, zoning
laws (the evidence submitted as to zoning should include the zoning
designation made for each of the Real Properties, the permitted uses
of each such Real Properties under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building
setbacks) and laws regarding access and facilities for disabled
persons including, but not limited to, the federal Architectural
Barriers Act, the Fair Housing Amendments Act of 1988, the
Rehabilitation Act of 1973 and the Americans with Disabilities Act
of 1990.
(i) Availability. After giving effect to the initial Loans made on the
Effective Date, the lesser of (x) the Revolving Committed Amount or (y) the
Borrowing Base shall be at least $3,000,000 in excess of the sum of the
aggregate amount of the Revolving Loans outstanding plus the aggregate
amount of Swingline Loans outstanding.
(j) Evidence of Insurance. To the extent not previously received by the
Agent, receipt by the Agent of copies of insurance policies or certificates
of insurance of the Borrower and its Subsidiaries evidencing liability and
casualty insurance meeting the requirements set forth in the Credit
Documents, including, but not limited to, naming the Agent as sole loss
payee on behalf of the Lenders.
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(k) Corporate Structure. The corporate capital and ownership structure
of the Borrower and its Subsidiaries (after giving effect to the purchase
of the Acquired Assets) shall be satisfactory in form and substance to
the Agent.
(l) Certain Consents. Receipt by the Agent of evidence that (i) all
governmental, shareholder and material third party consents (including,
without limitation, Hart-Scott-Rodino clearance), (ii) evidence
satisfactory to the Agent that the consent of any manufacturers is not
required and (iii) written consent, if necessary in the sole discretion
of the Agent, of any existing lenders or bondholders and approvals
necessary or desirable in connection with the acquisition of the Acquired
Assets and the related financings and other transactions contemplated
hereby and expiration of all applicable waiting periods without any action
being taken by any authority that could reasonably be likely to restrain,
prevent or impose any material adverse conditions on the acquisition of
the Acquired Assets or such other transactions or that could reasonably
be likely to seek or threaten any of the foregoing, and no law or
regulation shall be applicable which in the judgment of the Agent could
reasonably be likely to have such effect.
(m) Material Adverse Effect. There shall not have occurred a change
since November 30, 1996 that has had or could reasonably be expected to
have a Material Adverse Effect, including specifically without limitation
any such change resulting from any matter not disclosed in the Purchase
Agreement or resulting from a change in status of any matter disclosed in
the Purchase Agreement (including matters related to litigation, tax,
accounting, labor, insurance and pension liabilities).
(n) Litigation. There shall not exist any (i) order, decree, judgment,
ruling or injunction which restrains the consummation of the acquisition
of the Acquired Assets in the manner contemplated by the Purchase
Agreement or (ii) pending or threatened action, suit, investigation or
proceeding which if adversely determined against the Borrower or any of
its Subsidiaries would have or would reasonably be expected to have a
Material Adverse Effect.
(o) Other Indebtedness. Receipt by the Agent of evidence that after the
acquisition of the Acquired Assets, the Borrower and its Subsidiaries shall
have no borrowed money Indebtedness other than (i) the Indebtedness under
the Credit Documents and Supplemental Credit Documents, (ii) the
Subordinated Debt and (iii) other indebtedness disclosed on Schedule 6.10
attached hereto.
(p) Solvency Opinion. Receipt by the Lenders of an opinion from an
independent auditor or appraiser acceptable to the Agent in usual and
customary form as to the financial condition, solvency and related matters
of the Borrower and its Subsidiaries, in each case after giving effect to
the acquisition of the Acquired Assets and the initial borrowings under
the Credit Documents and Supplemental Credit Documents.
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(q) Purchase Agreement. There shall not have been any material
modification, amendment, supplement or waiver to the Purchase Agreement
without the prior written consent of the Lenders, including, but not
limited to, any modification, amendment, supplement or waiver relating
to the amount or type of consideration to be paid in connection with the
acquisition of the Acquired Assets and the contents of all disclosure
schedules and exhibits, and the acquisition of the Acquired Assets shall
have been consummated in accordance with the terms of the Purchase
Agreement and all applicable law and the aggregate cash amount paid in
connection with such acquisition at the Closing Date shall not exceed $29
million. Receipt by the Agent of the final Purchase Agreement, together
with all exhibits and schedules thereto, certified by an officer of the
Borrower.
(r) Change in Market. The absence of any material adverse change in the
market for syndicated bank credit facilities similar in nature to the
transactions described herein or a material disruption of, or a material
adverse change in, financial, banking or capital market conditions.
(s) Officer's Certificate. The Agent shall have received a certificate
or certificates executed by the chief financial officer of the Borrower as
of the Effective Date stating that (A) the Borrower and each of the
Borrower's Subsidiaries are in compliance with all existing financial
obligations, (B) all governmental, shareholder and third party consents
and approvals, if any, with respect to the Credit Documents and
Supplemental Credit Documents and the transactions contemplated thereby
have been obtained, (C) no action, suit, investigation or proceeding is
pending or threatened in any court or before any arbitrator or governmental
instrumentality that purports to effect the Borrower, any of the Borrower's
Subsidiaries or any transaction contemplated by the Credit Documents or
the Supplemental Credit Documents, or could have or might be reasonably
expected to have a Material Adverse Effect, (D) the transactions
contemplated by the Purchase Agreement have been consummated in accordance
with the terms thereof, (E) the Projections (as defined in Section 5.1(c))
were prepared in good faith and using reasonable assumptions and (F)
immediately after giving effect to this Credit Agreement, the Supplemental
Credit Agreement, the other Credit Documents, the Supplemental Credit
Documents and all the transactions contemplated herein or therein to occur
on such date, (1) the Borrower and each of the Borrower's Subsidiaries is
Solvent, (2) no Default or Event of Default exists, (3) all representations
and warranties contained herein, in the other Credit Documents and the
Supplemental Credit Documents are true and correct in all material
respects, and (4) the Credit Parties are in compliance with each of the
financial covenants set forth in Section 7.12.
(t) Fees and Expenses. Payment by the Credit Parties of all fees and
expenses owed by them to the Lenders and the Agent, including, without
limitation, payment to the Agent of the fees set forth in the Fee Letter.
(u) Accountant Certificate. Receipt from Arthur Andersen of a
calculation satisfactory to the Agent calculating the Fixed Charge Coverage
Ratio (as defined in the Indenture) at an amount of at least 2.0 to 1.0
after giving effect to the acquisition of the Acquired Assets and the
incurrence of Indebtedness related thereto.
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(v) Other. Receipt by the Lenders of such other documents, instruments,
agreements or information as reasonably requested by any Lender, including,
but not limited to (after giving effect to the purchase of the Acquired
Assets), information regarding litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent), real estate leases,
material contracts, debt agreements, property ownership and contingent
liabilities of the Borrower and its Subsidiaries.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
In addition to the conditions precedent stated elsewhere herein, the New
Credit Agreement Lenders shall not be obligated to make, continue or convert
Loans unless:
(a) Notice. The Borrower shall have delivered (i) in the case of any new
Revolving Loan, a Notice of Borrowing, duly executed and completed, by the
time specified in Section 2.1 and (ii) in the case of any continuation or
conversion of a Loan, a duly executed and completed Notice of
Continuation/Conversion by the time specified in Section 2.2;
(b) Representations and Warranties. The representations and warranties
made by the Credit Parties in any Credit Document and any Supplemental
Credit Document are true and correct in all material respects at and as if
made as of such date;
(c) No Default. No Default or Event of Default shall exist or be
continuing either prior to or after giving effect thereto;
(d) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect; and
(e) Availability. Immediately after giving effect to the making of such
Loan (and the application of the proceeds thereof), the sum of the Revolving
Loans outstanding plus Swingline Loans outstanding shall not exceed the
Revolving Commitment Amount.
The delivery of each Notice of Borrowing and each Notice of
Extension/Conversion shall constitute a representation and warranty by the
Borrower of the correctness of the matters specified in subsections (b), (c),
(d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each New Credit
Agreement Lender that:
6.1 FINANCIAL CONDITION.
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The financial statements delivered to the Lenders pursuant to Section
5.1(c)(iv), (a) have been prepared in accordance with GAAP and (b) present
fairly (on the basis disclosed in the footnotes to such financial statements)
the consolidated and consolidating (as applicable) financial condition, results
of operations and cash flows of the Credit Parties and their Subsidiaries as of
such date and for such periods. Since November 30, 1996, there has been no sale,
transfer or other disposition by the Borrower or any of its Subsidiaries of any
material part of the business or property of the Borrower or any of its
Subsidiaries, and no purchase or other acquisition by any of them of any
business or property (including any capital stock of any other Person) material
in relation to the consolidated financial condition of the Borrower and its
Subsidiaries, in each case, which, is not reflected in the foregoing financial
statements or in the notes thereto.
6.2 NO MATERIAL CHANGE.
Since November 30, 1996, (a) there has been no development or event relating
to or affecting Borrower or any of its Subsidiaries which has had or would be
reasonably expected to have a Material Adverse Effect and (b) no dividends or
other distributions have been declared, paid or made upon the capital stock or
other equity interest in Borrower or any of its Subsidiaries nor, except as
otherwise permitted under this Credit Agreement, has any of the capital stock or
other equity interest in a Credit Party been redeemed, retired, purchased or
otherwise acquired for value.
6.3 ORGANIZATION AND GOOD STANDING.
The Borrower and each of its Subsidiaries (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
(or other jurisdiction) of its incorporation, (b) is duly qualified and in good
standing as a foreign corporation authorized to do business in every
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect and (c) has the requisite corporate power and authority to own its
properties and to carry on its business as now conducted and as proposed to be
conducted.
6.4 DUE AUTHORIZATION.
Each Credit Party (a) has the requisite corporate power and authority to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party and to incur the obligations herein and
therein provided for and (b) is duly authorized to, and has been authorized
by all necessary corporate action, to execute, deliver and perform this
Credit Agreement and the other Credit Documents to which it is a party.
6.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
55
Regulation U or Regulation X), order, writ, judgment, injunction, decree
or permit applicable to it, (c) violate, contravene or conflict with
contractual provisions of, or cause an event of default under, any
indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it may be
bound, the violation of which could have or might be reasonably expected
to have a Material Adverse Effect, or (d) result in or require the
creation of any Lien (other than those contemplated in or created in
connection with the Credit Documents) upon or with respect to its
properties.
6.6 CONSENTS.
No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority
or third party in respect of a Credit Party is required in connection
with the execution, delivery or performance of this Credit Agreement or
any of the other Credit Documents by a Credit Party, or if required,
such consent, approval and authorization has been obtained.
6.7 ENFORCEABLE OBLIGATIONS.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding
obligations of each Credit Party enforceable against such Credit Party
in accordance with their respective terms, except as may be limited by
bankruptcy or insolvency laws or similar laws affecting creditors'
rights generally or by general equitable principles.
6.8 NO DEFAULT.
Neither the Borrower nor any of its Subsidiaries is in default in
any respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which
it is a party or by which any of its properties is bound which default
would have or would be reasonably expected to have a Material Adverse
Effect. No Default or Event of Default has occurred or exists except as
previously disclosed to the New Credit Agreement Lenders.
6.9 OWNERSHIP.
The Borrower and each of its Subsidiaries is the owner of and has
good and marketable title to all of its assets and none of such assets
are subject to any Lien other than Permitted Liens.
6.10 INDEBTEDNESS.
The Borrower and its Subsidiaries have no Indebtedness except (a) as
disclosed in the financial statements referenced in Section 6.1, (b) as
set forth on Schedule 6.10 and (c) as otherwise permitted by this Credit
Agreement.
6.11 LITIGATION.
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Except as disclosed in Schedule 6.11, there are no actions, suits or
legal, equitable, arbitration or administrative proceedings, pending or,
to the knowledge of any Credit Party, threatened against the Borrower or
any of its Subsidiaries which, if adversely determined, would have or
would be reasonably expected to have a Material Adverse Effect.
6.12 TAXES.
Each of the Borrower and its Subsidiaries has filed, or caused to be
filed, all tax returns (federal, state, local and foreign) required to
be filed and paid (a) all amounts of taxes shown thereon to be due
(including interest and penalties) and (b) all other taxes, fees,
assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing by it,
except for such taxes (i) which are not yet delinquent or (ii) that are
being contested in good faith and by proper proceedings, and against
which adequate reserves are being maintained in accordance with GAAP. No
Credit Party is aware of any proposed tax assessments against it, any of
its Subsidiaries or any other Credit Party.
6.13 COMPLIANCE WITH LAW.
Each of the Borrower and its Subsidiaries is in compliance with all
Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to
it, or to its properties, unless such failure to comply would not have
or would not be reasonably expected to have a Material Adverse Effect.
No Requirement of Law would be reasonably expected to cause a Material
Adverse Effect.
6.14 ERISA.
Except as set forth on Schedule 6.14 or except as would not result
in a Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination Event
could reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, has occurred with
respect to any Plan; (iii) each Plan has been maintained, operated, and
funded in compliance with its own terms and in material compliance with the
provisions of ERISA, the Code, and any other applicable federal or state
laws; and (iv) no lien in favor or the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" under each
Single Employer Plan (determined within the meaning of Section 401(a)(2) of
the Code, utilizing the actuarial assumptions used to fund such Plans),
whether or not vested, did not, as of the last annual valuation date prior
to the date on which this representation is made or deemed made, exceed the
current value of the assets of such Plan allocable to such accrued
liabilities.
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(c) Neither the Borrower, nor any of its Subsidiaries nor any ERISA
Affiliate has incurred, or, to the best knowledge of the Credit Parties, are
reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, nor any
of its Subsidiaries nor any ERISA Affiliate has received any notification
that any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of ERISA),
and no Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject the
Borrower or any of its Subsidiaries or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Borrower or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other assumptions
which are reasonable with respect to the benefits provided and the employees
participating) of the liability of the Borrower and its Subsidiaries and
each ERISA Affiliate for post-retirement welfare benefits to be provided
to their current and former employees under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA), net of all assets
under all such Plans allocable to such benefits, are reflected on the
Financial Statements in accordance with FAS 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code
apply has been administered in compliance in all material respects with such
sections.
6.15 SUBSIDIARIES.
Set forth on Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 6.15 includes
jurisdiction of incorporation, the number of shares of each class of capital
stock or other equity interests outstanding, the number and percentage of
outstanding shares of each class owned (directly or indirectly) by such Credit
Party; and the number and effect, if exercised, of all outstanding options,
warrants, rights of conversion or purchase and all other similar rights with
respect thereto. The outstanding capital stock and other equity interests of all
such Subsidiaries is validly issued, fully paid and non-assessable and is owned
by each such Credit Party, directly or indirectly, free and clear of all Liens
(other than those arising under or contemplated in connection with the Credit
Documents and Supplemental Credit Documents). Other than as set forth in
Schedule 6.15, neither any Credit Party nor any Subsidiary thereof has
outstanding any securities convertible into or exchangeable for its capital
stock nor does any such Person have outstanding any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements providing for
58
the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to its capital stock.
6.16 USE OF PROCEEDS; MARGIN STOCK.
The proceeds of the Loans hereunder will be used solely for the purposes
specified in Section 7.10. None of the proceeds of the Loans will be used for
the purpose of purchasing or carrying any "margin stock" as defined in
Regulation U, Regulation X or Regulation G, or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
"margin stock" or any "margin security" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of
Regulation U, Regulation X, Regulation G or Regulation T. None of the Credit
Parties owns any "margin stock".
6.17 GOVERNMENT REGULATION.
No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of
1940 or the Interstate Commerce Act, each as amended. In addition, no Credit
Party is (a) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, or controlled by such a
company, or (b) a "holding company," or a "Subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "Subsidiary" or a
"holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended. No director, executive officer or principal
shareholder of the Borrower or any of its Subsidiaries is a director,
executive officer or principal shareholder of any Lender. For the purposes
hereof the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of Governors of the
Federal Reserve System.
6.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 6.18.
(i) each of the Real Properties and all operations at the Real
Properties are in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Law with respect to the Real
Properties or the businesses operated by the Borrower or any of its
Subsidiaries (the "Businesses"), and there are no conditions relating to
the Businesses or Real Properties that could give rise to liability under
any applicable Environmental Laws.
(ii) None of the Real Properties contains, or has previously contained,
any Hazardous Materials at, on or under the Real Properties in amounts or
concentrations that, if released, constitute or constituted a violation of,
or could give rise to liability under, Environmental Laws.
(iii) Neither the Borrower nor any of its Subsidiaries has received any
written or oral notice of, or inquiry from any Governmental Authority
regarding,
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any violation, alleged violation, non-compliance, liability or potential
liability regarding Hazardous Materials or compliance with Environmental
Laws with regard to any of the Real Properties, Leasehold Properties or
the Businesses, nor does the Borrower or any of its Subsidiaries have
knowledge or reason to believe that any such notice is being threatened.
(iv) Hazardous Materials have not been transported or disposed of from
the Real Properties, or generated, treated, stored or disposed of at, on or
under any of the Real Properties or any other location, in each case by, or
on behalf or with the permission of, the Borrower or any of its Subsidiaries
in a manner that would reasonably be expected to give rise to liability
under any applicable Environmental Law.
(v) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened, under any Environmental Law to which the Borrower or any of its
Subsidiaries is or will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Borrower or any of its
Subsidiaries, the Real Properties or the Businesses.
(vi) There has been no release or threat of release of Hazardous
Materials at or from the Real Properties or arising from or related to the
operations (including, without limitation, disposal) of the Borrower or any
of its Subsidiaries in connection with the Real Properties or otherwise in
connection with the Businesses.
(vii) Neither the Borrower nor any of its Subsidiaries has assumed any
liability of any Person (other than another Credit Party) under any
Environmental Law.
(b) The Borrower has adopted procedures that are designed to (i) ensure
that each Credit Party and their Subsidiaries, any of their operations and
each of the properties owned or leased by each Credit Party and their
Subsidiaries remains in compliance with applicable Environmental Laws and
(ii) minimize any liabilities or potential liabilities that each Credit Party
and their Subsidiaries, any of their operations and each of the properties
owned or leased by each Credit Party and their Subsidiaries may have under
applicable Environmental Laws.
6.19 INTELLECTUAL PROPERTY.
The Borrower and each of its Subsidiaries owns, or has the legal right to
use, all trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of them to conduct
its business as currently conducted except for those the failure to own or
have such legal right to use would not have or be reasonably expected
60
to have a Material Adverse Effect. Set forth on Schedule 6.19 is a list of
all Intellectual Property owned by the Borrower and its Subsidiaries or that
the Borrower or one of its Subsidiaries has the right to use (which list
shall identify the Person that owns or has the right to use each such item of
Intellectual Property). Except as provided on Schedule 6.19, no claim has
been asserted and is pending by any Person challenging or questioning the use
of any such Intellectual Property or the validity or effectiveness of any
such Intellectual Property, nor does any Credit Party know of any such claim,
and to the Credit Parties' knowledge the use of such Intellectual Property by
the Borrower or any of its Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that in the aggregate,
would not have or be reasonably expected to have a Material Adverse Effect.
6.20 SOLVENCY.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement and the Supplemental Credit Agreement,
will be Solvent.
6.21 INVESTMENTS.
All Investments of the Borrower and each of its Subsidiaries are either
Permitted Investments or otherwise permitted by the terms of this Credit
Agreement.
6.22 NO FINANCING OF CORPORATE TAKEOVERS.
No proceeds of the Loans hereunder have been or will be used to acquire,
directly or indirectly, any security in any transaction which is subject to
Sections 13 or 14 of the Securities Exchange Act of 1934, as amended
(including, without limitation, Sections 13(d) and 14(d) thereof) or to
refinance any Indebtedness used to acquire any such securities.
6.23 LOCATION OF COLLATERAL.
Set forth on Schedule 6.23(a) is a list of all Real Properties and
Leasehold Properties with street address, county and state where located. Set
forth on Schedule 6.23(b) is a list of all locations where any personal
property of a Credit Party is located, including county and state where
located. Set forth on Schedule 6.23(c) is the chief executive office and
principal place of business of each Credit Party.
6.24 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to
the New Credit Agreement Lenders nor any other document, certificate or
statement furnished to the New Credit Agreement Lenders by or on behalf of
any Credit Party in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein or herein
not misleading.
6.25 Licenses, etc.
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The Borrower and each of its Subsidiaries has obtained and holds in full
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted.
6.26 NO BURDENSOME RESTRICTIONS.
Neither the Borrower nor any Subsidiary of the Borrower is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, would have or be
reasonably expected to have a Material Adverse Effect.
6.27 BROKERS' FEES.
No Credit Party has any obligation to any Person in respect of any
finder's, broker's, investment banking or other similar fee in connection
with any of the transactions contemplated under the Credit Documents.
6.28 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any Subsidiary of the Borrower and
none of such Persons has suffered any strikes, walkouts, work stoppages or
other material labor difficulty within the last five years.
6.29 COLLATERAL DOCUMENTS.
The Collateral Documents create valid security interests in, and first
Liens on, the Collateral purported to be covered thereby, which security
interests and Liens are and will remain perfected security interests and
Liens, prior to all other Liens other than Permitted Liens. Each of the
representations and warranties made by the Borrower and its Subsidiaries in
the Collateral Documents is true and correct.
6.30 RELATED TRANSACTIONS.
The closing of the acquisition of the Acquired Assets will occur
simultaneously with the making of the initial Loans hereunder and under the
Supplemental Credit Agreement and no party has waived, without the consent of
the Required Lenders, any condition precedent to their obligations to close
as set forth in the Purchase Agreement. True and complete copies of the
Purchase Agreement have been delivered to each of the New Credit Agreement
Lenders, together with a true and complete copy of each document to be
delivered at the closing of the acquisition of the Acquired Assets.
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6.31 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM PURCHASE AGREEMENT.
As of the Closing Date, each of the representations and warranties made
in the Purchase Agreement by each of the parties thereto is true and correct
in all material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein, as qualified therein.
6.32 SENIOR DEBT.
(a) The Loans are Senior Debt under Article 10.02 of the Indenture,
meaning New Credit Agreement Lenders shall have all of the rights and
privileges of a holder of Senior Debt under the Indenture including, but not
limited to, the rights set forth in Article 10 of the Indenture, and (b) this
Credit Agreement is the New Credit Agreement (as defined in the Indenture).
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments
hereunder shall have terminated:
7.1 INFORMATION COVENANTS.
The Borrower will furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and in any event
within 120 days after the close of each fiscal year of the Borrower, a
consolidated and consolidating balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal year, together
with related consolidated and consolidating statements of operations and
retained earnings and of cash flows for such fiscal year, setting forth in
comparative form consolidated figures for the preceding fiscal year, all such
financial information described above to be in reasonable form and detail and
audited by independent certified public accountants of recognized national
standing reasonably acceptable to the Agent and whose opinion shall be to the
effect that such financial statements have been prepared in accordance with
GAAP (except for changes with which such accountants concur) and shall not be
limited as to the scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the Borrower
(other than the fourth fiscal quarter, in which case 120 days after the end
thereof) a consolidated balance sheet and income statement of the Borrower
and its Subsidiaries, as of the end of such fiscal quarter, together with
related consolidated statements of operations and retained earnings and of
cash flows for such fiscal quarter in each case setting forth in comparative
form
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consolidated figures for the corresponding period of the preceding fiscal
year, all such financial information described above to be in reasonable form
and detail and reasonably acceptable to the Agent, and accompanied by a
certificate of the chief financial officer of the Borrower to the effect that
such quarterly financial statements fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries and have been
prepared in accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Monthly Financial Statements. As soon as available and in any event
within 20 days after the end of each month of the Borrower (other than the
last month of the first three fiscal quarters in which case 45 days after the
end thereof), a consolidated balance sheet and income statement of the
Borrower and its Subsidiaries as at the end of such month together with (i)
related consolidated statements of operations and retained earnings for such
month in each case setting forth in comparative form consolidated figures for
the corresponding period of the preceding fiscal year and (ii) a separate
income statement for each Foreign Subsidiary (and such other financial
information as reasonably requested by the Agent or the Required Lenders),
all such financial information described above to be in reasonable form and
detail and reasonably acceptable to the Agent, and accompanied by a
certificate of the chief financial officer of the Borrower to the effect that
such monthly financial statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries and have been
prepared in accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(d) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate of
the chief financial officer of the Borrower substantially in the form of
Exhibit 7.1(d), (i) demonstrating compliance with the financial covenants
contained in Section 7.12 by calculation thereof as of the end of each such
fiscal period and (ii) stating that no Default or Event of Default exists, or
if any Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Borrower proposes to take with respect
thereto. The Borrower shall also deliver a copy of such certificate to the
Agency Services Address.
(e) Annual Business Plan and Budgets. At least 60 days after the end of
each fiscal year of the Borrower, beginning with the fiscal year ending
November 30, 1997, an annual business plan and budget of the Borrower and its
Subsidiaries containing, among other things, pro forma financial statements
for the next fiscal year.
(f) Borrowing Base Certificate. Within 20 days after the end of each
calendar month, a Borrowing Base Certificate as of the end of the immediately
preceding month, substantially in the form of Exhibit 7.1(f) and certified by
the chief financial officer of the Borrower to be true and correct as of such
date.
(g) Compliance With Certain Provisions of the Credit Agreement. Within
120 days after the end of each fiscal year of the Borrower, the Borrower
shall deliver a certificate, containing information regarding (i) the
calculation of Excess Cash Flow and
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(ii) the amount of any Asset Dispositions, Debt Issuances, Equity Issuances
and Recovery Events that were made during the prior fiscal year.
(h) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of the
accountants conducting the annual audit stating that they have reviewed this
Credit Agreement and stating further whether, in the course of their audit,
they have become aware of any Default or Event of Default and, if any such
Default or Event of Default exists, specifying the nature and extent thereof.
(i) Auditor's Reports. Promptly upon receipt thereof, a copy of any
"management letter" submitted by independent accountants to the Borrower or
any of its Subsidiaries in connection with any annual, interim or special
audit of the books of the Borrower or any of its Subsidiaries.
(j) Reports. Promptly upon transmission or receipt thereof, (a) copies of
any filings and registrations with, and reports to or from, the Securities
and Exchange Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as the Borrower or any of
its Subsidiaries shall send to its shareholders generally or to a holder of
any Indebtedness owed by the Borrower or any of its Subsidiaries in its
capacity as such a holder and (b) upon the written request of the Agent, all
reports and written information to and from the United States Environmental
Protection Agency, or any state or local agency responsible for environmental
matters, the United States Occupational Health and Safety Administration, or
any state or local agency responsible for health and safety matters, or any
successor agencies or authorities concerning environmental, health or safety
matters.
(k) Notices. Upon a Credit Party obtaining knowledge thereof, such Credit
Party will give written notice to the Agent immediately of (a) the occurrence
of an event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the Borrower
proposes to take with respect thereto, and (b) the occurrence of any of the
following with respect to the Borrower or any of its Subsidiaries (i) the
pendency or commencement of any litigation, arbitral or governmental
proceeding against the Borrower or any of its Subsidiaries which if adversely
determined would have or would be reasonably expected to have a Material
Adverse Effect, or (ii) the institution of any proceedings against the
Borrower or any of its Subsidiaries with respect to, or the receipt of notice
by such Person of potential liability or responsibility for violation, or
alleged violation of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation of which
would have or would be reasonably expected to have a Material Adverse Effect.
(l) ERISA. Upon any of the Credit Parties or any ERISA Affiliate
obtaining knowledge thereof, Borrower will give written notice to the Agent
and each of the New Credit Agreement Lenders promptly (and in any event
within five Business Days) of: (i) any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably lead
to, a Termination Event; (ii) with respect to any
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Multiemployer Plan, the receipt of notice as prescribed in ERISA or otherwise
of any withdrawal liability assessed against the Borrower or any of its ERISA
Affiliates, or of a determination that any Multiemployer Plan is in
reorganization or insolvent (both within the meaning of Title IV of ERISA);
(iii) the failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower or any of its
Subsidiaries or ERISA Affiliate is required to contribute to each Plan
pursuant to its terms and as required to meet the minimum funding standard
set forth in ERISA and the Code with respect thereto; or (iv) any change in
the funding status of any Plan that could have a Material Adverse Effect;
together, with a description of any such event or condition or a copy of any
such notice and a statement by the principal financial officer of the
Borrower briefly setting forth the details regarding such event, condition,
or notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto. Promptly
upon request, the Borrower shall furnish the Agent and each of the Lenders
with such additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto required
to filed with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year" (within
the meaning of Section 3(39) of ERISA).
(m) Environmental.
(i) Upon the reasonable written request of the Agent, the Borrower will
furnish or cause to be furnished to the Agent, at the Borrower's expense, an
environmental assessment of reasonable scope, form and depth, (including,
where appropriate, invasive soil or groundwater sampling) by a consultant
reasonably acceptable to the Agent as to the nature and extent of the
presence of any Hazardous Materials on any property owned, leased or
operated by the Borrower or any of its Subsidiaries and as to the compliance
by the Borrower and each of its Subsidiaries with Environmental Laws. If the
Borrower fails to deliver such an environmental report within seventy-five
(75) days after receipt of such written request then the Agent may arrange
for same, and the Borrower hereby grants to the Agent and its
representatives access to the Real Properties and a license to undertake
such an assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment arranged for
by the Agent pursuant to this provision will be payable by the Borrower
on demand and added to the obligations secured by the Collateral Documents.
(ii) The Borrower and each of its Subsidiaries will conduct and complete
all investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Hazardous Materials on,
from, or affecting any real property owned or leased by the Borrower or its
Subsidiaries to the extent necessary to be in compliance with all
Environmental Laws and all other applicable federal, state, and local laws,
regulations, rules and policies and with the orders and directives of all
Governmental Authorities exercising
66
jurisdiction over such real property to the extent any failure would have
or be reasonably expected to have a Material Adverse Effect.
(n) Star Report. At the time of delivery of the financial statements
provided for in Section 7.1(b) above, a company-prepared report containing
information as to brand sales and advertising cost analysis for the fiscal
quarter of the Borrower most recently ending.
(o) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Borrower and its Subsidiaries as the Agent
or the Required Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, do all things necessary to preserve and keep in full force and effect in
all material respects its existence, rights, franchises and authority.
7.3 BOOKS AND RECORDS.
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, keep complete and accurate books and records of its transactions in
accordance with good accounting practices on the basis of GAAP (including the
establishment and maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and
its property (including, without limitation, Environmental Laws) if
noncompliance with any such law, rule, regulation, order or restriction would
have or reasonably be expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each of the Credit Parties will, and will cause its Subsidiaries to, pay
and discharge (a) all taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) except as prohibited
hereunder, all of its other Indebtedness as it shall become due; provided,
however, that a Credit Party or its Subsidiary shall not be required to pay
any such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) would give rise to an immediate right to
foreclose on a Lien securing such amounts or (ii) would have a Material
Adverse Effect.
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7.6 INSURANCE.
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including
worker's compensation insurance, liability insurance, casualty insurance and
business interruption insurance) in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice. All liability policies shall have
each New Credit Agreement Lender as an additional insured and all casualty
policies shall have the Agent, on behalf of the Lenders, as loss payee.
In the event there occurs any material loss, damage to or destruction of
the Collateral of any Credit Party or any part thereof, such Credit Party
shall promptly give written notice thereof to the Agent generally describing
the nature and extent of such damage or destruction. Subsequent to any loss,
damage to or destruction of the Collateral of any Credit Party or any part
thereof, such Credit Party, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for
that purpose, at such Credit Party's cost and expense, will promptly repair
or replace the Collateral of such Credit Party so lost, damaged or destroyed;
provided, however, that such Credit Party shall not be obligated to repair or
replace any Collateral so lost, damaged or destroyed to the extent the
failure to make such repair or replacement (a) is desirable to the proper
conduct of the business of such Credit Party in the ordinary course and
otherwise is in the best interest of such Credit Party and (b) would not
materially impair the rights and benefits of the Agent or the New Credit
Agreement Lenders under this Credit Agreement or any other Credit Document.
In the event a Credit Party shall receive any insurance proceeds, as a result
of any loss, damage or destruction, in a net amount in excess of $100,000,
such Credit Party will immediately pay over such proceeds to the Agent as
cash collateral for the Credit Party Obligations. The Agent agrees to release
such insurance proceeds to such Credit Party for replacement or restoration
of the portion of the Collateral of such Credit Party lost, damaged or
destroyed if, (A) within 120 days from the date the Agent receives such
insurance proceeds, the Agent has received written application for such
release from such Credit Party together with evidence reasonably satisfactory
to it that the Collateral lost, damaged or destroyed has been or will be
replaced or restored to its condition (or by Collateral having a value at
least equal to the condition of the asset subject to the loss, damage or
destruction) immediately prior to the loss, destruction or other event giving
rise to the payment of such insurance proceeds and (B) on the date of such
release no Default or Event of Default exists. If the conditions in the
preceding sentence are not met, the Agent shall, on the first Business Day
subsequent to the date 120 days after it received such insurance proceeds,
apply such insurance proceeds as a mandatory prepayment of the Credit Party
Obligations for application in accordance with the terms of Section 3.3(b)(v)
and Section 3.3(c). All insurance proceeds shall be subject to the security
interest of the New Credit Agreement Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 7.6, as Schedule 7.6 may be amended from time to time by written
notice to the Agent.
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7.7 MAINTENANCE OF PROPERTY.
Each of the Credit Parties will, and will cause its Subsidiaries to,
maintain and preserve its properties and equipment in good repair, working
order and condition, normal wear and tear excepted, and will make, or cause
to be made, in such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto as may be needed or proper, to the extent and in the manner customary
for companies in similar businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
Each of the Credit Parties will, and will cause its Subsidiaries to,
perform in all material respects all of its obligations under the terms of
all material agreements, indentures, mortgages, security agreements or other
debt instruments to which it is a party or by which it is bound.
7.9 COLLATERAL.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire or
lease any real property or (b) acquire any intellectual property, securities
instruments, chattel paper or other personal property required to be
delivered to the Agent as Collateral hereunder or under any of the Collateral
Documents, the Borrower shall immediately notify the Agent of same. Each
Credit Party shall take such action (including, but not limited to, the
actions set forth in Sections 5.1(g) and (h)), as requested by the Agent and
at its own expense, to ensure that the Lenders have a first priority
perfected Lien in all owned real property (and in such leased real property
as requested by the Agent or the Required Lenders) and all personal property
of the Credit Parties (whether now owned or hereafter acquired), subject only
to Permitted Liens. Each Credit Party shall adhere to the covenants regarding
the location of personal property as set forth in the Security Agreements.
7.10 USE OF PROCEEDS.
The Credit Parties will use proceeds of the Loans solely (a) to refinance
on the Closing Date the existing Indebtedness of the Borrower under the Prior
New Credit Agreement, (b) to provide working capital and (c) for general
corporate purposes.
7.11 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause its Subsidiaries to, permit representatives appointed by
the Agent or any Lender, including, without limitation, independent accountants,
agents, attorneys and appraisers to visit and inspect such Credit Party's (or
its Subsidiary's) property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees and
representatives of the Credit Parties and their Subsidiaries. The Credit
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Parties agree that the Agent, and its representatives, may conduct an annual
audit of the Collateral, at the expense of the Borrower.
7.12 FINANCIAL COVENANTS.
(a) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including August 31, 1997,
1.25 to 1.0;
(ii) From September 1, 1997 to and including August 31, 1998,
1.30 to 1.0; and
(iii) From September 1, 1998 and thereafter, 1.40 to 1.0.
(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of
the end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including August 31, 1998,
1.10 to 1.0; and
(ii) From September 1, 1998 and thereafter, 1.20 to 1.0.
(c) Leverage Ratio. The Leverage Ratio, as of the end of each fiscal
quarter, shall be less than or equal to:
(i) From the Effective Date to and including August 31, 1997,
6.50 to 1.0;
(ii) From September 1, 1997 to and including May 31, 1998,
6.0 to 1.0;
(iii) From June 1, 1998 to and including August 31, 1998,
5.50 to 1.0;
(iv) From September 1, 1998 to and including May 31, 1999,
5.0 to 1.0; and
(v) From June 1, 1999 and thereafter, 4.50 to 1.0.
(d) Senior Leverage Ratio. The Senior Leverage Ratio, as of the end of
each fiscal quarter, shall be less than or equal to:
(i) From the Effective Date to and including August 31, 1997,
4.0 to 1.0;
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(ii) From September 1, 1997 to and including May 31, 1998,
3.25 to 1.0;
(iii) From June 1, 1998 to and including August 31, 1998,
3.0 to 1.0; and
(iv) From September 1, 1998 and thereafter, 2.50 to 1.0.
(e) Net Worth. At all times Net Worth shall be no less than negative
Three Million ($3,000,000) increased on a cumulative basis by an amount equal
to, (i) as of the last day of each fiscal quarter, 50% of Net Income for the
fiscal quarter then ended (without deductions for any losses) plus (ii) 100%
of the Net Cash Proceeds from any Equity Issuance subsequent to the Closing
Date (other than the issuance of shares of capital stock of the Borrower in
connection with the Borrower's purchase of the Acquired Assets).
(f) Appraised Brand Value. As of the end of each fiscal quarter of the
Borrower, with respect to the Borrower and its Subsidiaries on a consolidated
basis, the most recent appraised value of all brands or product lines of the
Borrower and its Subsidiaries on a consolidated basis on such date shall be
greater than or equal to 110% of Funded Debt on such date.
7.13 ADDITIONAL CREDIT PARTIES.
At the time any Person becomes a Subsidiary of a Credit Party, the
Borrower shall so notify the Agent and promptly thereafter (but in any event
within 30 days after the date thereof) shall cause such Person to (a) if it
is a Domestic Subsidiary, execute a Joinder Agreement in substantially the
same form as Exhibit 7.13, (b) cause all of the capital stock of such Person
(if such Person is a Domestic Subsidiary) or 65% of the capital stock of such
Person (if such Person is a Foreign Subsidiary) to be delivered to the Agent
(together with undated stock powers signed in blank) and pledged to the Agent
pursuant to an appropriate pledge agreement in substantially the form of the
Pledge Agreement and otherwise in a form acceptable to the Agent, (c) if such
Person is a Domestic Subsidiary, pledge all of its assets to the Lenders
pursuant to a security agreement in substantially the form of the Security
Agreements and otherwise in a form acceptable to the Agent, (d) if such
Person has any Subsidiaries, (i) deliver all of the capital stock of such
Domestic Subsidiaries and 65% of the capital stock of such Foreign
Subsidiaries (together with undated stock powers signed in blank) to the
Agent and (ii) execute a pledge agreement in substantially the form of the
Pledge Agreement and otherwise in a form acceptable to the Agent, (e) if such
Person owns or leases any real property in the United States of America,
execute any and all necessary mortgages, deeds of trust, deeds to secure
debt, leasehold mortgages, collateral assignments of leaseholds or other
appropriate real estate collateral documentation in a form acceptable to the
Agent and (f) deliver such other documentation as the Agent may reasonably
request in connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, real estate title insurance policies,
environmental reports, landlord waivers, certified resolutions and other
organizational and authorizing documents of such Person and favorable
opinions of counsel to such Person (which
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shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form, content
and scope reasonably satisfactory to the Agent.
7.14 INTEREST RATE PROTECTION AGREEMENTS.
The Borrower shall, within 30 days of the Closing Date, have in place
interest rate protection agreements, in form and substance acceptable to the
Agent, protecting against fluctuations in interest rates which agreements
shall provide coverage for a period of three (3) years, and in a notional
amount of at least fifty percent (50%) of the outstanding principal amount of
the Term Loans.
7.15 OWNERSHIP OF SUBSIDIARIES.
The Borrower shall at all times own 100% of the capital stock of its
Subsidiaries (other than to the extent necessary for Chattem (U.K.) Limited
and HBA Insurance Limited to qualify for incorporation in their respective
countries of incorporation, any nominal qualifying shares owned by any
necessary governmental authorities) and may not sell, transfer or otherwise
dispose of any shares of capital stock of any of its Subsidiaries.
7.16 APPRAISAL REPORTS.
The Borrower and its Subsidiaries shall provide the Agent, upon the
request of the Agent and at the expense of the Borrower, with asset appraisal
reports with respect to the real and personal property of the Borrower and
its Subsidiaries including, without limitation, appraisals of brand values
(provided, however, the Borrower shall not be required to pay for more than
one appraisal of brand values per year). In the event the Agent needs more
than one asset appraisal report of the real and personal property of the
Borrower and its Subsidiaries during any year, the Agent shall have the right
to pay and arrange for such report.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments
hereunder shall have terminated:
8.1 INDEBTEDNESS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement, the other
Credit Documents and the Supplemental Credit Documents;
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(b) the Subordinated Debt;
(c) Indebtedness existing as of the Closing Date as referenced in
Section 6.10 (and renewals, refinancings or extensions thereof on
terms and conditions no more favorable, in the aggregate, to such
Person than such existing Indebtedness and in a principal amount not
in excess of that outstanding as of the date of such renewal,
refinancing or extension);
(d) Indebtedness owing by one Credit Party to another Credit Party;
(e) purchase money Indebtedness (including Capital Leases) incurred
by the Borrower or any of its Subsidiaries to finance the purchase of fixed
assets; provided that (i) the total of all such Indebtedness for all such
Persons taken together shall not exceed an aggregate principal amount of
$2,000,000.00 at any one time outstanding (including any such Indebtedness
referred to in subsection (c) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and (iii)
no such Indebtedness shall be refinanced for a principal amount in excess
of the principal balance outstanding thereon at the time of such
refinancing;
(f) obligations of the Credit Parties evidenced by the interest rate
protection agreements referred to in Section 7.14; and
(g) Indebtedness incurred by Foreign Subsidiaries not to exceed
$500,000.00, in the aggregate, at any one time outstanding (including
any such Indebtedness referred to in subsection (c) above).
8.2 LIENS.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Closing Date or
engage in any business other than the business conducted as of the Closing
Date, which with respect to Signal shall be limited to the ownership of
trademarks and tradenames for the purpose of licensing such trademarks and
tradenames to the Borrower.
8.4 CONSOLIDATION AND MERGER.
No Credit Party will, nor will it permit its Subsidiaries to, enter into
any transaction of merger or consolidation or liquidate, wind up or dissolve
itself (or suffer any liquidation or
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dissolution); provided that notwithstanding the foregoing provisions of this
Section 8.4, the following actions may be taken if (a) the Agent is given
prior written notice of such action, and the Credit Parties execute and
deliver such documents, instruments and certificates as the Agent may request
in order to maintain the perfection and priority of the Liens on the assets
of the Credit Parties and (b) after giving effect thereto no Default or Event
of Default exists:
(i) any Credit Party may be merged or consolidated with or into the
Borrower or any Credit Party (other than the Borrower) may be merged or
consolidated with or into any other Credit Party; provided that if such
transaction shall be between the Borrower and another Credit Party, the
Borrower shall be the continuing or surviving corporation; and
(ii) any Foreign Subsidiary may merge or consolidate with any other
Foreign Subsidiary.
8.5 SALE OR LEASE OF ASSETS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or any part of its business or assets whether
now owned or hereafter acquired, including, without limitation, inventory,
receivables, real property, leasehold interests, equipment and securities
other than (a) any inventory or other assets sold, leased or disposed of (or
simultaneously replaced with like goods) in the ordinary course of business,
(b) obsolete, idle or worn-out assets no longer used or useful in its
business, (c) the sale, lease or transfer or other disposal by a Credit Party
other than the Borrower of any or all of its assets to the Borrower or to any
other Credit Party, or (d) sales of product lines (or the right to produce a
consumer product or products) provided that the dispositions permitted under
this subparagraph (d) during the term of this Credit Agreement shall be
limited to product lines (or the right to produce a consumer product or
products) having sales for the twelve-month period ending on the fiscal
quarter ending immediately preceding the sale in an aggregate amount of
$4,000,000 or less.
8.6 Advances, Investments and Loans.
No Credit Party will, nor will it permit any of its Subsidiaries to, make
any Investments except for Permitted Investments.
8.7 DIVIDENDS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, (a) declare or pay any dividends (whether cash or
otherwise) or make any other distribution upon any shares of its capital
stock of any class other than the payment of dividends by the Subsidiaries of
the Borrower to the Borrower or (b) other than Permitted Investments
purchase, redeem or otherwise acquire or retire or make any provisions for
redemption, acquisition or retirement of any shares of its capital stock of
any class or any warrants or options to purchase any such shares.
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8.8 TRANSACTIONS WITH AFFILIATES.
Except as set forth on Schedule 8.8, no Credit Party will, nor will it
permit its Subsidiaries to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder, Subsidiary or Affiliate other than on terms
and conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
8.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
change its fiscal year or materially change its articles or certificate of
incorporation or its bylaws without the prior written consent of the Required
Lenders.
8.10 PREPAYMENTS OF INDEBTEDNESS.
No Credit Party will, nor will it permit any of its Subsidiaries to, (a)
amend or modify (or permit the amendment or modification of) any of the terms
of any Indebtedness if such amendment or modification would add or change any
terms in a manner adverse to the Lenders, including but not limited to,
shortening final maturity or average life to maturity of such Indebtedness or
requiring any payment to be made sooner than originally scheduled or
increasing the interest rate applicable thereto or change any subordination
provision thereof, (b) during the existence of a Default or Event of Default,
or if a Default or Event of Default would be caused as a result thereof make
(or give any notice with respect thereto) any voluntary or optional payment
or prepayment or redemption or acquisition for value of (including, without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness.
8.11 SUBORDINATED DEBT.
No Credit Party will (a) make or offer to make any principal payments
with respect to the Subordinated Debt, (b) redeem or offer to redeem any of
the Subordinated Debt, or (c) deposit any funds intended to discharge or
defease any or all of the Subordinated Debt. The Subordinated Debt may not be
amended or modified in any material manner without the prior written consent
of the Required Lenders, it being specifically understood and agreed that no
amendment to Article 4 or Article 10 of the Indenture shall be made without
the prior written consent of the Required Lenders.
8.12 LIMITATIONS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Person to (a) pay dividends or make
any other distribution on any of such Person's capital stock, (b) pay any
Indebtedness owed to the Borrower or any other Credit Party, (c) make loans
or advances to any
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other Credit Party, (c) make loans or advances to any other Credit Party or
(d) transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment provisions in any lease governing a leasehold interest, (ii)
this Credit Agreement, the other Credit Documents and the Supplemental Credit
Documents and (iii) the Indenture.
8.13 SALE LEASEBACKS.
No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly become or remain liable as lessee or as guarantor or
other surety with respect to any lease, of any property (whether real or
personal or mixed), whether now owned or hereafter acquired, (a) which such
Credit Party or Subsidiary has sold or transferred or is to sell or transfer
to any other Person other than a Credit Party or (b) which such Credit Party
or Subsidiary intends to use for substantially the same purpose as any other
property which has been sold or is to be sold or transferred by such Credit
Party or Subsidiary to any Person in connection with such lease.
8.14 NEGATIVE PLEDGES.
Other than as set forth in Section 4.12 of the Indenture, none of the
Credit Parties will, nor will it permit any of its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of
any security for such obligation if security is given for some other
obligation.
8.15 CAPITAL EXPENDITURES.
The Credit Parties and their Subsidiaries will not make Capital
Expenditures, in any fiscal year, that would exceed $3,500,000.00 in the
aggregate.
8.16 OPERATING LEASES.
Neither the Borrower nor any of its Subsidiaries shall create, incur,
assume or permit to exist obligations under Operating Leases which require
aggregate annual payments in excess of $1,500,000.00.
8.17 PAYMENT BLOCKAGE NOTICE.
The Borrower (i) covenants and agrees that it will not give the Payment
Blockage Notice (as defined in the Indenture) without the consent of the
Required Lenders and (ii) hereby designates and appoints the Agent, as
attorney-in-fact of the Borrower, irrevocably and with full power of
substitution, to deliver any Payment Blockage Notice that the Borrower has
the right to deliver pursuant to the terms of the Indenture; provided that
the foregoing appointment shall terminate at such time as the Loans, together
with interest, fees and other obligations hereunder, have been paid in full
and the Commitments hereunder shall have terminated.
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SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall:
(i) default in the payment when due of any principal of any of the
Loans; or
(ii) default, and such default shall continue for three or more
days, in the payment when due of any interest on the Loans or of
any fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement made or
deemed to be made by any Credit Party herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material respect
on the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of any term, covenant
or agreement contained in Sections 7.2, 7.4, 7.5, 7.6, 7.9, 7.10, 7.12,
7.13, 7.14, 7.15, 7.16 or 8.1 through 8.17 inclusive; or
(ii) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 7.1 and such default shall
continue unremedied for a period of five Business Days after the earlier of
an officer of a Credit Party becoming aware of such default or notice
thereof given by the Agent; or
(iii) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in subsections (a), (b)
or (c)(i) or (ii) of this Section 9.1) contained in this Credit Agreement
and such default shall continue unremedied for a period of at least 30 days
after the earlier of an officer of a Credit Party becoming aware of such
default or notice thereof given by the Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default in the due
performance or observance of any term, covenant or agreement in any of the
other Credit
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Documents and such default shall continue unremedied for a period of at least
30 days after the earlier of an officer of a Credit Party becoming aware of
such default or notice thereof given by the Agent, or (ii) any Credit
Document shall fail to be in full force and effect or to give the Agent
and/or the New Credit Agreement Lenders the security interests, liens,
rights, powers and privileges purported to be created thereby.
(e) Guaranties. The guaranty given by the Credit Parties hereunder or by
any Additional Credit Party hereafter or any provision thereof shall cease to
be in full force and effect, or any guarantor thereunder or any Person acting
by or on behalf of such guarantor shall deny or disaffirm such Guarantor's
obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following with respect
to the Borrower or any of its Subsidiaries (i) a court or governmental agency
having jurisdiction in the premises shall enter a decree or order for relief
in respect of the Borrower or any of its Subsidiaries in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of any of the Borrower or any of
its Subsidiaries or for any substantial part of its property or ordering the
winding up or liquidation of its affairs; or (ii) an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect is commenced against the Borrower or any of its Subsidiaries and
such petition remains unstayed and in effect for a period of 60 consecutive
days; or (iii) the Borrower or any of its Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) the Borrower or any of its Subsidiaries shall
admit in writing its inability to pay its debts generally as they become due
or any action shall be taken by such Person in furtherance of any of the
aforesaid purposes.
(g) Defaults under Other Agreements. With respect to any Indebtedness
(other than Indebtedness outstanding under this Credit Agreement) of the
Borrower or any of its Subsidiaries in a principal amount in excess of
$500,000.00, including, without limitation, the Subordinated Debt and any
indebtedness under the Supplemental Credit Agreement (i) a Credit Party shall
(A) default in any payment (beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness, or (B) default (after
giving effect to any applicable grace period) in the observance or
performance of any term, covenant or agreement relating to such Indebtedness
or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or permit,
the holder or holders of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to whether any notice or
lapse of time is required) any such Indebtedness to become due prior to its
stated maturity; or (ii) any such Indebtedness shall be declared due and
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payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof.
(h) Judgments. One or more judgments, orders, or decrees shall be entered
against any one or more of the Borrower or any of its Subsidiaries involving a
liability of $500,000.00 or more, in the aggregate, (to the extent not paid or
covered by insurance provided by a carrier who has acknowledged coverage) and
such judgments, orders or decrees shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (i) the last day on which
such judgment, order or decree becomes final and unappealable or (ii) 30 days.
(i) ERISA. Any of the following events or conditions: (A) any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of the Borrower or
any of their Subsidiaries or any ERISA Affiliate in favor of the PBGC or a
Plan; (B) a Termination Event shall occur with respect to a Single Employer
Plan, which is, in the reasonable opinion of the Agent, likely to result in
the termination of such Plan for purposes of Title IV of ERISA; (C) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (i) the termination of such Plan for purposes of Title IV
of ERISA, or (ii) the Borrower or any of its Subsidiaries or any ERISA
Affiliate incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency or (within the meaning of Section 4245 of ERISA) such Plan; or (D)
any prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility shall occur
which may subject the Borrower or any of its Subsidiaries or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code, or under any agreement or other instrument
pursuant to which the Borrower or any of its Subsidiaries or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability.
(j) Ownership. There shall occur a Change of Control.
(k) Subordinated Debt. (i) Any holder of the Subordinated Debt alleges (or
any Governmental Authority with applicable jurisdiction determines) that the New
Credit Agreement Lenders or Supplemental Credit Lenders are not holders of
Senior Debt (as defined in the Indenture) or (ii) the subordination provisions
in the Indenture shall, in whole or in part, terminate, cease to be effective or
cease to be legally valid, binding and enforceable against any holder of the
Subordinated Debt.
(l) Business. The Borrower commences to engage in any material respect in a
line of business or activity other than the business of manufacturing and
marketing of brand name over-the-counter pharmaceuticals, dietary supplements,
functional toiletries and cosmetics.
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(m) Indenture/Change of Control. There shall occur (i) a Change of
Control (as defined in the Indenture) under the Indenture or (ii) a Change of
Control Triggering Event (as defined in the Indenture) under the Indenture.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived in writing by the
Required Lenders (or the Lenders as may be required hereunder), the Agent shall,
upon the request and direction of the Required Lenders, by written notice to the
Borrower, take any of the following actions:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and any
accrued interest in respect of all Loans and any and all other indebtedness
or obligations of any and every kind owing by a Credit Party to any of the
Lenders hereunder to be due whereupon the same shall be immediately due and
payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Credit Parties.
(c) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents, including, without
limitation, all rights and remedies existing under the Collateral Documents,
all rights and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Agent or the Lenders, which notice or other action is expressly
waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has a separate right of payment and shall be considered a
separate "creditor" holding a separate "claim" within the meaning of Section
101(5) of the Bankruptcy Code or any other insolvency statute.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT.
Each New Credit Agreement Lender hereby designates and appoints NationsBank
of Tennessee, N.A. as Agent of such New Credit Agreement Lender to act as
specified herein and
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the other Credit Documents, and each such New Credit Agreement Lender hereby
authorizes the Agent, as the agent for such New Credit Agreement Lender, to
take such action on its behalf under the provisions of this Credit Agreement
and the other Credit Documents and to exercise such powers and perform such
duties as are expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere herein and
in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any New Credit Agreement Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Agent. The provisions of this
Section are solely for the benefit of the Agent and the New Credit Agreement
Lenders and none of the Credit Parties shall have any rights as a third party
beneficiary of the provisions hereof. In performing its functions and duties
under this Credit Agreement and the other Credit Documents, the Agent shall
act solely as the agent of the New Credit Agreement Lenders and does not
assume and shall not be deemed to have assumed any obligation or relationship
of agency or trust with or for any Credit Party.
10.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties hereunder or under the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for
its or such Person's own gross negligence or willful misconduct) or (b)
responsible in any manner to any of the New Credit Agreement Lenders for any
recitals, statements, representations or warranties made by any of the Credit
Parties contained herein or in any of the other Credit Documents or in any
certificate, report, document, financial statement or other written or oral
statement referred to or provided for in, or received by the Agent under or
in connection herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit Documents,
or for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be responsible to any New Credit Agreement
Lender for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Credit Agreement, or any of the other
Credit Documents or for any representations, warranties, recitals or
statements made herein or therein or made by the Borrower or any Credit Party
in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection
herewith or therewith furnished or made by the Agent to the New Credit
Agreement Lenders or by or on behalf of the Credit Parties to the Agent or
any New Credit Agreement Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds
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of the Loans or of the existence or possible existence of any Default or
Event of Default or to inspect the properties, books or records of the Credit
Parties. The Agent is not a trustee for the New Credit Agreement Lenders and
owes no fiduciary duty to the Lenders.
10.4 RELIANCE ON COMMUNICATIONS.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Agent with reasonable care). The Agent may deem
and treat the New Credit Agreement Lenders as the owner of its interests
hereunder for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Agent in accordance with Section
11.3(b). The Agent shall be fully justified in failing or refusing to take any
action under this Credit Agreement or under any of the other Credit Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the Agent has received
notice from a Lender or a Credit Party referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Lenders. The Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each New Credit Agreement Lender expressly acknowledges that neither the
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates has made any representations or warranties to it and that no act
by the Agent or any affiliate thereof hereinafter taken, including any review of
the affairs of any Credit Party, shall be deemed to constitute any
representation or warranty by the Agent to any New Credit Agreement Lender. Each
New Credit Agreement Lender represents to the Agent that it has, independently
and without reliance upon the Agent or any other New Credit Agreement Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the
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business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Credit Parties and made its own
decision to make its Loans hereunder and enter into this Credit Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Agent or any other New Credit Agreement Lender, and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit analysis, appraisals and decisions in taking or not
taking action under this Credit Agreement, and to make such investigation as
it deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of
the Credit Parties. Except for notices, reports and other documents expressly
required to be furnished to the New Credit Agreement Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
New Credit Agreement Lender with any credit or other information concerning
the business, operations, assets, property, financial or other conditions,
prospects or creditworthiness of the Credit Parties which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective percentage of the
Commitments (or if the Commitments have expired or been terminated, in
accordance with the respective principal amounts of outstanding Loans and
Participation Interest of the New Credit Agreement Lenders), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following payment in
full of the Credit Party Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no New Credit
Agreement Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any other Credit
Party as though the Agent were not the Agent hereunder. With respect to the
Loans made and all obligations owing to it, the Agent shall have the same rights
and powers under this Credit Agreement as any New Credit Agreement Lender and
may exercise the same as though it were not the Agent, and the terms
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"New Credit Agreement Lender" and "New Credit Agreement Lenders" shall
include the Agent in its individual capacity.
10.9 SUCCESSOR AGENT.
The Agent may, at any time, resign upon 20 days written notice to the New
Credit Agreement Lenders. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 45 days after the notice of resignation, then the retiring
Agent shall select a successor Agent provided such successor is a New Credit
Agreement Lender hereunder or a commercial bank organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $400,000,000. Upon the acceptance of any appointment as the
Agent hereunder by a successor, such successor Agent shall thereupon 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 as an Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
the Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default and the commencement of remedies described in Section
9.2, each New Credit Agreement Lender is authorized at any time and from time to
time, without presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by such New Credit Agreement Lender (including, without
limitation branches, agencies or Affiliates of such New Credit Agreement Lender
wherever located) to or
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for the credit or the account of any Credit Party against obligations and
liabilities of such Credit Party to the New Credit Agreement Lenders
hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Agent or the New Credit Agreement Lenders shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event
of Default even though such charge is made or entered on the books of such
Lender subsequent thereto. The Credit Parties hereby agree that any Person
purchasing a participation in the Loans and Commitments hereunder pursuant to
Section 11.3(c) or 3.9 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a New Credit Agreement
Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto; provided that none of the Credit Parties may assign and transfer
any of its interests without the prior written consent of the Lenders; and
provided further that the rights of each New Credit Agreement Lender to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 11.3. Notwithstanding
the above, nothing herein shall restrict, prevent or prohibit any New Credit
Agreement Lender from (i) pledging its Loans hereunder to a Federal Reserve Bank
in support of borrowings made by such Lender from such Federal Reserve Bank, or
(ii) granting assignments or participation in such Lender's Loans and/or
Commitments hereunder to its parent company and/or to any Affiliate of such New
Credit Agreement Lender or to any existing New Credit Agreement Lender or
Affiliate thereof.
(b) Assignments. Each New Credit Agreement Lender may, with the prior
written consent of the Borrower and the Agent (provided that no consent of
the Borrower shall be required during the existence and continuation of an
Event of Default), which consent shall not be unreasonably withheld or
delayed, assign all or a portion of its rights and obligations hereunder
pursuant to an assignment agreement substantially in the form of Exhibit 11.3
to one or more Eligible Assignees; provided that (i) any such assignment
shall be in a minimum aggregate amount of $5,000,000 of the Loans and Tranche
A Supplemental Term Loans of such New Credit Agreement Lender or Commitments
and Tranche A Supplemental Term Loan Committed Amount of such New Credit
Agreement Lender and in integral multiples of $1,000,000 above such amount
(or the remaining amount of Loans and Tranche A Supplemental Term Loans or
Commitments and Tranche A Supplemental Term Loan Committed Amount held by
such New Credit Agreement Lender), (ii) each such assignment shall be of a
constant, not varying, percentage of all of the assigning New Credit
Agreement Lender's rights and obligations under the Loans or Commitment being
assigned and (iii) unless otherwise agreed to by the Borrower and the Agent,
such New Credit Agreement Lender proposing to assign all or a portion of its
Tranche A Term Loan Committed Amount or Revolving Committed Amount shall be
required to assign to such Eligible Assignee or Assignees (to the extent held
by such New Credit Agreement Lender) an identical percentage of the Tranche A
Term Loan Committed Amount, the Revolving Committed Amount and the Tranche A
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Supplemental Term Loan Committed Amount of such New Credit Agreement Lender.
Any assignment hereunder shall be effective upon (i) satisfaction of the
conditions set forth above, (ii) delivery to the Agent of a duly executed
assignment agreement together with a transfer fee of $3,500 payable to the
Agent for its own account and (iii) the recordation of an appropriate entry
with respect to such assignment in the Register pursuant to this Section
11.3. Upon the effectiveness of any such assignment, the assignee shall
become a "New Credit Agreement Lender" for all purposes of this Credit
Agreement and the other Credit Documents and, to the extent of such
assignment, the assigning New Credit Agreement Lender shall be relieved of
its obligations hereunder to the extent of the Loans and Commitment
components being assigned. Along such lines the Borrower agrees that upon
notice of any such assignment and surrender of the appropriate Note or Notes,
it will promptly provide to the assigning New Credit Agreement Lender and to
the assignee separate promissory notes in the amount of their respective
interests substantially in the form of the original Note or Notes (but with
notation thereon that it is given in substitution for and replacement of the
original Note or Notes or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with this
Section 11.3(b), the assigning New Credit Agreement 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 New Credit Agreement
Lender warrants that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim; (ii) except as set forth
in clause (i) above, such assigning New Credit Agreement Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto or the financial condition of any Credit
Party or the performance or observance by any Credit Party of any of its
obligations under this Credit Agreement, any of the other Credit Documents or
any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such assignment agreement; (iv) such assignee confirms that it has received
a copy of this Credit Agreement, the other Credit Documents and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such assignment agreement; (v) such assignee
will independently and without reliance upon the Agent, such assigning New
Credit Agreement Lender or any other New Credit Agreement 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 Credit Agreement and the other Credit Documents; (vi) such assignee
appoints and authorizes the Agent to take such action on its behalf and to
exercise such powers under this Credit Agreement or any other Credit Document as
are delegated to the Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with
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their terms all the obligations which by the terms of this Credit Agreement
and the other Credit Documents are required to be performed by it as a New
Credit Agreement Lender.
(c) Participations. Each New Credit Agreement Lender may sell, transfer,
grant or assign participations in all or any part of such New Credit Agreement
Lender's interests and obligations hereunder; provided that (i) such selling New
Credit Agreement Lender shall remain a "New Credit Agreement Lender" for all
purposes under this Credit Agreement (such selling New Credit Agreement Lender's
obligations under the Credit Documents remaining unchanged) and the participant
shall not constitute a New Credit Agreement Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or waiver
relating to this Credit Agreement or the other Credit Documents except to the
extent any such amendment or waiver would (A) reduce the principal of or rate of
interest on or fees in respect of any Loans in which the participant is
participating, (B) postpone the date fixed for any payment of principal
(including extension of the Revolving Loan Maturity Date or Tranche A Term Loan
Maturity Date or the date of any mandatory prepayment), interest or fees in
which the participant is participating, or (C) release all or substantially all
of the collateral or guaranties (except as expressly provided in the Credit
Documents) supporting any of the Loans or Commitments in which the participant
is participating, (iii) sub-participations by the participant (except to an
Affiliate, parent company or Affiliate of a parent company of the participant)
shall be prohibited, (iv) any such participations shall be in a minimum
aggregate amount of $5,000,000 of the Loans and Tranche A Supplemental Term
Loans of such New Credit Agreement Lender or Commitments and Tranche A
Supplemental Term Loan Committed Amount of such New Credit Agreement Lender and
in integral multiples of $1,000,000 in excess thereof and (v) unless otherwise
agreed to by the Borrower and the Agent, such selling New Credit Agreement
Lender proposing to grant or assign a participation in the Tranche A Term Loan
Committed Amount or Revolving Committed Amount shall be required to grant or
assign a participation to such participant, in like percentage, of the Revolving
Committed Amount, the Tranche A Term Loan Committed Amount and the Tranche A
Supplemental Term Loan Committed Amount, as applicable, of such New Credit
Agreement Lender. In the case of any such participation, the participant shall
not have any rights under this Credit Agreement or the other Credit Documents
(the participant's rights against the selling New Credit Agreement Lender in
respect of such participation to be those set forth in the participation
agreement with such New Credit Agreement Lender creating such participation) and
all amounts payable by the Borrower hereunder shall be determined as if such New
Credit Agreement Lender had not sold such participation; provided, however, that
such participant shall be entitled to receive additional amounts under Section
3.15 to the same extent that the New Credit Agreement Lender from which such
participant acquired its participation would be entitled to the benefit of such
cost protection provisions.
(d) Registration. The Agent, acting for this purpose solely on behalf of the
Borrower, shall maintain a register (the "Register") for the recordation of the
names and addresses of the Lenders and the principal amount of the Loans owing
to each New Credit Agreement Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the New
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Credit Agreement Lenders shall treat each Person whose name is recorded in
the Register as the owner of a Loan or other obligation hereunder for all
purposes of this Credit Agreement and the other Credit Documents,
notwithstanding notice to the contrary. Any assignment of any Loan or other
obligation hereunder shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available
for inspection by the Borrower or any New Credit Agreement Lender at any
reasonable time and from time to time upon reasonable prior notice.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any New Credit Agreement
Lender in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower or any
Credit Party and the Agent or any New Credit Agreement Lender shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies provided herein
are cumulative and not exclusive of any rights or remedies which the Agent or
any New Credit Agreement Lender would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle any Credit Party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the New Credit Agreement Lenders to any
other or further action in any circumstances without notice or demand.
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs and
expenses of (i) the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, special counsel to the Agent and the fees and expenses of counsel for the
Agent in connection with collateral or foreign issues), and any amendment,
waiver or consent relating hereto and thereto including, but not limited to, any
such amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement and (ii) the Agent and the New Credit Agreement
Lenders in connection with enforcement of the Credit Documents and the documents
and instruments referred to therein (including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Agent and each of the New Credit Agreement Lenders) and (b)
indemnify each New Credit Agreement Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not any New Credit
Agreement Lender is a party thereto) related to (i) the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation,
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litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of gross
negligence or willful misconduct on the part of the Person to be
indemnified), (ii) any Environmental Claim and (iii) any claims for
Non-Excluded Taxes.
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement, nor any other Credit Document, nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the Credit Parties; provided that
no such amendment, change, waiver, discharge or termination shall
(a) without the consent of each Lender affected thereby,
(i) extend the final maturity of any Loan or extend or waive any
Principal Amortization Payment of any Loan or any portion thereof,
(ii) reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default increase
in interest rates) thereon or fees hereunder,
(iii) reduce or waive the principal amount of any Loan,
(iv) increase the Commitment of a Lender over the amount thereof in
effect (it being understood and agreed that a waiver of any Default or Event
of Default or mandatory reduction in the Commitments shall not constitute a
change in the terms of any Commitment of any Lender),
(v) release all or substantially all of the Collateral securing the
Credit Party Obligations hereunder (provided that the Agent may, without
consent from any other Lender, release any Collateral that is sold or
transferred by a Credit Party in conformance with Section 8.5),
(vi) release the Borrower or substantially all of the other Credit
Parties from its obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section or Section
3.7, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a), 11.2, 11.3 or 11.5,
(viii) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower (or another
Credit Party) of any of its rights and obligations under (or in respect of)
the Credit Documents except as permitted thereby; and
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(b) without the consent of Lenders holding in the aggregate more than 50% of
the outstanding Tranche A Term Loans, extend the time for or the amount or the
manner of application of proceeds of any mandatory prepayment required by
Section 3.3(b)(ii), (iii), (iv), (v) or (vi) hereof. No provision of Section 10
may be amended without the consent of the Agent.
(c) Notwithstanding the above, the right to deliver a Payment Blockage
Notice (as defined in the Indenture) shall reside solely with the Agent, and the
Agent shall deliver such Payment Blockage Notice only upon the direction of the
Required Lenders.
(d) Notwithstanding the fact that the consent of all the Lenders is required
in certain circumstances as set forth above, (x) each Lender is entitled to vote
as such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans and each Lender acknowledges that the provisions of Section 1126(c) of the
Bankruptcy Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts, each of
which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 DEFAULTING LENDER.
Each New Credit Agreement Lender understands and agrees that if such New
Credit Agreement Lender is a Defaulting Lender then it shall not be entitled to
vote on any matter requiring the consent of the Required Lenders or to object to
any matter requiring the consent of all the Lenders; provided, however, that all
other benefits and obligations under the Credit Documents shall apply to such
Defaulting Lender.
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.
All indemnities set forth herein and all representations and warranties made
herein shall survive the execution and delivery of this Credit Agreement, the
making of the Loans, the repayment of the Loans and other obligations and the
termination of the Commitments hereunder.
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11.11 GOVERNING LAW; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TENNESSEE. Any legal action or proceeding with respect to this Credit
Agreement or any other Credit Document may be brought in the courts of the
State of North Carolina or the State of Tennessee or of the United States for
the Western District of North Carolina or the Eastern District of Tennessee
and, by execution and delivery of this Credit Agreement, each Credit Party
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each Credit
Party further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at the
address for notices pursuant to Section 11.1, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right
of a Lender to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against a Credit Party in
any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Credit Agreement or any
other Credit Document brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
11.12 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.13 TIME.
All references to time herein shall be references to Eastern Standard Time
or Eastern Daylight Time, as the case may be, unless specified otherwise.
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11.14 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 ENTIRETY.
This Credit Agreement together with the other Credit Documents represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.16 BINDING EFFECT.
This Credit Agreement shall become effective at such time when all of the
conditions set forth in Section 5.1 have been satisfied or waived by the Lenders
and it shall have been executed by the Borrower, the Guarantors and the Agent,
and the Agent shall have received copies hereof (telefaxed or otherwise) which,
when taken together, bear the signatures of each New Credit Agreement Lender,
and thereafter this Credit Agreement shall be binding upon and inure to the
benefit of the Borrower, the Guarantors, the Agent and each New Credit Agreement
Lender and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above
written.
BORROWER:
CHATTEM, INC.,
a Tennessee corporation
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
--------------------------------
Title: EVP and CEO
--------------------------------
GUARANTOR:
SIGNAL INVESTMENT & MANAGEMENT CO.,
a Delaware corporation
By: /s/ Robert E. Bosworth
--------------------------------
Name: Robert E. Bosworth
--------------------------------
Title: PRES.
--------------------------------
NEW CREDIT AGREEMENT
LENDERS:
NATIONSBANK OF TENNESSEE, N.A.,
individually in its capacity as a New
Credit Agreement Lender and in its
capacity as Agent
By: /s/ Thomas E. Wilson
--------------------------------
Name: Thomas E. Wilson
--------------------------------
Title: EVP
--------------------------------
Signature page to Amended and Restated Credit Agreement dated June 26, 1997
among Chattem, Inc., as Borrower, each of the Borrower's Domestic
Subsidiaries, as Guarantors, the New Credit Agreement Lenders, and
NationsBank of Tennessee, N.A., as agent for the New Credit Agreement Lenders.
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ David T. McNeely
----------------------------------
Name: David T. McNeely
----------------------------------
Title: Authorized Agent
----------------------------------
CREDITANSTALT BANKVEREIN
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
FIRST AMERICAN NATIONAL BANK
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Signature page to Amended and Restated Credit Agreement dated June 26, 1997
among Chattem, Inc., as Borrower, each of the Borrower's Domestic
Subsidiaries, as Guarantors, the New Credit Agreement Lenders, and
NationsBank of Tennessee, N.A., as agent for the New Credit Agreement Lenders.
THE FIRST NATIONAL BANK OF CHICAGO
By: ------------------------------
Name: ----------------------------
Title: ---------------------------
CREDITANSTALT BANKVEREIN
By: /s/ Robert M. Biringer By: /s/ W. Craig Stamm
----------------------------- ------------------------------
Name: Robert M. Biringer Name: W. Craig Stamm
--------------------------- ----------------------------
Title: Executive Vice-President Title: Senior Associate
------------------------- ---------------------------
FIRST AMERICAN NATIONAL BANK
By: ------------------------------
Name: ----------------------------
Title: ---------------------------
Signature page to Amended and Restated Credit Agreement dated June 26, 1997
among Chattem, Inc., as Borrower, each of the Borrower's Domestic
Subsidiaries, as Guarantors, the New Credit Agreement Lenders, and
NationsBank of Tennessee, N.A., as agent for the New Credit Agreement Lenders
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
CREDITANSTALT BANKVEREIN
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
FIRST AMERICAN NATIONAL BANK
By: /s/ Mary E. Buckner
--------------------------------
Name: MARY E. BUCKNER
------------------------------
Title: VICE-PRESIDENT
------------------------------