EXECUTION COPY
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CSN, INC.
COLOR SPOT NURSERIES, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 20, 1997
BANQUE INDOSUEZ, NEW YORK BRANCH, as Administrative Agent
and
IBJ SCHRODER BANK & TRUST COMPANY, as Co-Agent
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TABLE OF CONTENTS
Page
SECTION 1. AMOUNT AND TERMS OF CREDIT....................................3
1.01. COMMITMENTS...................................................3
1.02. MINIMUM AMOUNT OF EACH BORROWING; MAXIMUM NUMBER
OF BORROWINGS.................................................5
1.03. NOTICE OF BORROWINGS..........................................6
1.04. DISBURSEMENT OF FUNDS.........................................6
1.05. NOTES.........................................................8
1.06. CONVERSIONS...................................................9
1.07. PRO RATA BORROWINGS..........................................10
1.08. INTEREST.....................................................11
1.09. INTEREST PERIODS.............................................12
1.10. SPECIAL PROVISIONS GOVERNING RESERVE ADJUSTED
EURODOLLAR LOANS.............................................13
1.11. CAPITAL REQUIREMENTS.........................................16
1.12. TOTAL LOAN COMMITMENTS; LIMITATIONS ON OUTSTANDING
LOAN AMOUNTS.................................................17
1.13. LETTERS OF CREDIT............................................17
SECTION 2. COMMITMENTS..................................................27
2.01. VOLUNTARY REDUCTION OF COMMITMENTS...........................27
2.02. ADJUSTMENTS; TERMINATION OF COMMITMENTS, ETC.................28
2.03. COMMITMENT FEE...............................................29
SECTION 3. PAYMENTS.....................................................29
3.01. SCHEDULED PAYMENTS...........................................29
3.02. VOLUNTARY PREPAYMENTS........................................30
3.03. MANDATORY PREPAYMENTS; REDUCTION OF COMMITMENTS..............31
3.04. APPLICATION OF MANDATORY PREPAYMENTS.........................35
3.05. REDUCTION OF TOTAL REVOLVING LOAN COMMITMENT, ETC............36
3.06. METHOD AND PLACE OF PAYMENT..................................36
3.07. NET PAYMENTS.................................................37
3.08. RESERVE ACCOUNT; PREPAYMENT COLLATERAL ACCOUNT...............39
SECTION 4. CONDITIONS PRECEDENT.........................................40
4.01. CONDITIONS PRECEDENT TO INITIAL LOANS........................40
4.02. CONDITIONS PRECEDENT TO ALL LOANS............................48
4.03. ADDITIONAL CONDITIONS PRECEDENT TO ACQUISITION TERM LOANS....49
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS...................52
5.01. STATUS.......................................................53
5.02. POWER AND AUTHORITY; BUSINESS................................53
5.03. NO VIOLATION.................................................53
5.04. LITIGATION...................................................54
5.05. USE OF PROCEEDS..............................................54
5.06. GOVERNMENTAL APPROVALS, ETC..................................55
5.07. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT..................................................56
5.08. TRUE AND COMPLETE DISCLOSURE.................................56
5.09. FINANCIAL CONDITION; FINANCIAL STATEMENTS; PROJECTIONS.......56
5.10. SECURITY INTERESTS...........................................58
5.11. TAX RETURNS AND PAYMENTS.....................................58
5.12. ERISA........................................................59
5.13. CAPITAL STOCK; SUBSIDIARIES, ETC.............................59
5.14. PROPRIETARY RIGHTS...........................................59
5.15. COMPLIANCE WITH LAWS, ETC....................................60
5.16. PROPERTIES...................................................60
5.17. SECURITIES...................................................61
5.18. COLLECTIVE BARGAINING AGREEMENTS; LABOR MATTERS..............62
5.19. RECAPITALIZATION DOCUMENTS, ETC..............................62
5.20. INDEBTEDNESS OUTSTANDING.....................................62
5.21. ENVIRONMENTAL PROTECTION.....................................62
5.22. ENVIRONMENTAL INVESTIGATIONS.................................65
5.23. INSURANCE....................................................65
5.24. GOVERNMENTAL REGULATION......................................65
5.25. ABSENCE OF EVENTS OF DEFAULT.................................65
5.26. PERFORMANCE OF AGREEMENTS....................................65
5.27. SECURITIES ACTIVITIES........................................65
5.28. WATER RIGHTS.................................................65
SECTION 6. AFFIRMATIVE COVENANTS........................................66
6.01. INFORMATION COVENANTS........................................66
6.02. BOOKS, RECORDS AND INSPECTIONS...............................70
6.03. MAINTENANCE OF PROPERTY; INSURANCE...........................71
6.04. PAYMENT OF TAXES.............................................71
6.05. CORPORATE FRANCHISES.........................................72
6.06. COMPLIANCE WITH STATUTES, ETC................................72
6.07. ERISA........................................................72
6.08. PERFORMANCE OF OBLIGATIONS...................................73
6.09. FISCAL YEAR; FISCAL QUARTERS.................................73
6.10. USE OF PROCEEDS..............................................73
6.11. INTEREST RATE PROTECTION.....................................73
6.12. NO FURTHER NEGATIVE PLEDGES, ETC.............................73
6.13. BANK MEETING.................................................74
6.14. ADDITIONAL COLLATERAL; FURTHER ASSURANCES....................74
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6.15. SECURITY INTERESTS...........................................75
6.16. ENVIRONMENTAL EVENTS.........................................76
6.17. ASSIGNMENT OF HOLDINGS' REMAINING ASSETS TO
THE BORROWER. ..............................................77
SECTION 7. NEGATIVE COVENANTS...........................................77
7.01. CAPITAL EXPENDITURES.........................................78
7.02. TOTAL INTEREST COVERAGE RATIO................................78
7.03. FIXED CHARGE COVERAGE RATIO..................................80
7.04. LEVERAGE RATIO...............................................81
7.05. MINIMUM CONSOLIDATED EBITDA. ................................82
7.07. INDEBTEDNESS.................................................85
7.08. INVESTMENTS..................................................86
7.09. PREPAYMENTS OF INDEBTEDNESS..................................87
7.10. DIVIDENDS, ETC...............................................87
7.11. DISPOSITION OF ASSETS........................................88
7.12. CONTINGENT OBLIGATIONS.......................................89
7.13. MERGER AND CONSOLIDATIONS....................................89
7.14. AMENDMENTS TO ORGANIZATIONAL DOCUMENTS.......................90
7.15. ERISA........................................................90
7.16. NO NON-WHOLLY OWNED SUBSIDIARIES.............................90
7.17. CHANGES IN BUSINESS..........................................90
7.18. AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS...................90
7.19. TRANSACTIONS WITH AFFILIATES.................................90
7.20. CAPITAL STRUCTURE............................................91
7.21. SALE AND LEASE-BACKS.........................................91
7.22. CLEAN-DOWN PERIOD. .........................................92
7.23. CERTAIN PAYMENTS.............................................92
SECTION 8. EVENTS OF DEFAULT............................................92
8.01. PAYMENTS.....................................................92
8.02. REPRESENTATIONS, ETC.........................................93
8.03. COVENANTS....................................................93
8.04. DEFAULT UNDER OTHER AGREEMENTS...............................93
8.05. BANKRUPTCY, ETC..............................................94
8.06. SECURITY DOCUMENTS; GUARANTEES...............................94
8.07. SUBORDINATION................................................94
8.08. JUDGMENTS....................................................95
8.09. OWNERSHIP....................................................95
8.10. CERTAIN ACTIONS FOLLOWING AN EVENT OF DEFAULT................95
SECTION 9. HOLDINGS GUARANTEE...........................................96
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9.01. GUARANTEE OF OBLIGATIONS.....................................96
9.02. CONTINUING OBLIGATION........................................96
9.03. WAIVERS WITH RESPECT TO OBLIGATIONS..........................97
9.04. BANKS' POWER TO WAIVE, ETC...................................99
9.05. INFORMATION REGARDING THE BORROWER, ETC......................99
9.06. CERTAIN GUARANTOR REPRESENTATIONS...........................100
9.07. SUBROGATION.................................................100
9.08. SUBORDINATION...............................................100
9.09. FURTHER ASSURANCES..........................................100
SECTION 10. DEFINITIONS................................................101
SECTION 11. THE AGENT..................................................131
11.01. APPOINTMENT................................................131
11.02. DELEGATION OF DUTIES.......................................131
11.03. EXCULPATORY PROVISIONS.....................................132
11.04. RELIANCE BY THE AGENT......................................132
11.05. NOTICE OF DEFAULT..........................................133
11.06. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS.......133
11.07. INDEMNIFICATION............................................133
11.08. THE AGENTS IN THEIR INDIVIDUAL CAPACITIES..................134
11.09. SUCCESSOR AGENT............................................134
11.10. RESIGNATION, TRANSFER BY AGENT.............................134
11.11. CO-AGENT...................................................135
SECTION 12. MISCELLANEOUS..............................................135
12.01. PAYMENT OF EXPENSES, ETC...................................135
12.02. RIGHT OF SETOFF............................................136
12.03. NOTICES....................................................137
12.04. BENEFIT OF AGREEMENT.......................................138
12.05. NO WAIVER; REMEDIES CUMULATIVE.............................140
12.06. PAYMENTS PRO RATA..........................................141
12.07. CALCULATIONS; COMPUTATIONS.................................141
12.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
SERVICE OF PROCESS.........................................142
12.09. COUNTERPARTS...............................................142
12.10. HEADINGS DESCRIPTIVE.......................................142
12.11. AMENDMENT OR WAIVER........................................143
12.12. SURVIVAL...................................................143
12.13. DOMICILE OF LOANS..........................................143
12.14. WAIVER OF JURY TRIAL.......................................143
12.15. INDEPENDENCE OF COVENANTS..................................143
12.16. REINSTATEMENT..............................................143
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SCHEDULES
Schedule A - List of Banks
Schedule 4.01(j) - Financial Statements
Schedule 4.01(l) - Litigation
Schedule 4.01(m) - Restrictions on Borrower's Ability to
Grant Liens
Schedule 4.01(p) - Required Consents
Schedule 4.03 - Designated Acquisitions
Schedule 5.10A - Prior Liens
Schedule 5.10B - Required Filings and Recordings
Schedule 5.13 - Subsidiaries
Schedule 5.16 - Real Property Owned and Leased
Schedule 5.17 - Capital Stock
Schedule 5.20 - Indebtedness
Schedule 5.21 - Environmental Exceptions
Schedule 5.23 - Insurance
Schedule 12.03 - Bank Addresses
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EXHIBITS
Exhibit 1.03-1 - Form of Notice of Revolving Loan
Borrowing
Exhibit 1.03-2 - Form of Notice of Acquisition Loan
Borrowing
Exhibit 1.05(a)(i) - Form of Term A Note
Exhibit 1.05(a)(ii) - Form of Term B Note
Exhibit 1.05(a)(iii) - Form of Revolving Note
Exhibit 1.05(a)(iv) - Form of Acquisition Term Note
Exhibit 4.01(b) - Form of Officer's Certificate
Exhibit 4.03(b)(iii)-1 - Form of Officer's Certificate --
Designated Acquisitions
Exhibit 4.03(b)(iii)-2 - Form of Officer's Certificate -
Unspecified Permitted Acquisitions
Exhibit 6.01(m) - Form of Borrowing Base Certificate
Exhibit 10A - Form of Security Agreement
Exhibit 10B - Form of Subsidiary Guarantee
Exhibit 10C - Form of Trademark Security Agreement
Exhibit 12.04(c) - Form of Assignment Agreement
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CSN, INC.
COLOR SPOT NURSERIES, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement is dated as of February 20,
1997, and amends and restates, in its entirety, the Credit Agreement dated as of
December 31, 1996 (the "ORIGINAL CREDIT AGREEMENT"), among Color Spot Nurseries,
Inc., a Delaware corporation, f/k/a Color Spot Watsonville, Inc. (the
"BORROWER"), CSN, Inc., a Delaware corporation, f/k/a Color Spot Nurseries, Inc.
("HOLDINGS" and, together with the Borrower, the "INITIAL BORROWERS"), the New
York branch of Banque Indosuez ("INDOSUEZ"), IBJ Schroder Bank & Trust Company
("IBJS") and the other lending institutions listed in Schedule A (each a
"BANK"), Indosuez, as the administrative agent (the "ADMINISTRATIVE AGENT") for
itself and the other Banks and IBJS as co- agent (the "CO-AGENT" and, together
with the Administrative Agent, the "AGENTS"). Unless otherwise defined herein,
all capitalized terms used herein are as defined in Section 10.
R E C I T A L S:
WHEREAS, the Original Credit Agreement was entered into on December 31,
1996 (the "EFFECTIVE DATE") in order (a) to finance a recapitalization of
Holdings pursuant to a Recapitalization and Stock Purchase Agreement dated as of
December 31,1996 (the "RECAPITALIZATION AGREEMENT") among Holdings, KCSN
Acquisition Company, L.P., a Delaware limited partnership ("KCSN"), Heller
Equity Capital Corporation, a Delaware corporation ("HELLER") and certain other
shareholders of Holdings, (b) to provide working capital for the Borrower and
its Subsidiaries and (c) with respect to the Acquisition Term Loans, to provide
financing for certain business acquisitions by the Borrower; and
WHEREAS, in connection with, and immediately following the consummation of,
the Recapitalization (i) substantially all of the assets of Holdings were
assigned to the Borrower, (ii) the Borrower's name was changed from Color Spot
Watsonville, Inc. to its current name of Color Spot Nurseries, Inc. and (iii)
Holdings' name was changed from Color Spot Nurseries, Inc. to its current name
of CSN, Inc.; and
WHEREAS, pursuant to the Original Credit Agreement (i) on the Effective
Date, the Initial Borrowers incurred Term A Loans in the aggregate principal
amount of $18,000,000 (collectively, the "EXISTING TERM A LOANS"), Term B Loans
in an aggregate principal amount of $16,250,000 (collectively, the "EXISTING
TERM B LOANS") and Revolving Loans in the aggregate principal amount of
$3,000,000; and (ii) thereafter, the Borrower has incurred Acquisition Term
Loans in the aggregate principal amount of $3,200,000 (collectively, the
"EXISTING ACQUISITION TERM LOANS"), all of which amounts remain outstanding as
of the date hereof; and
WHEREAS, Lone Star Growers Co., a Texas general partnership, ("TARGET"),
both of the partners of Target (collectively, "SELLERS"), Lone Star Growers,
L.P., a Delaware limited partnership, ("ACQUISITION"), all of the partnership
interests in which are held by the Borrower (which holds 99% of such partnership
interests as its limited partner) and by Lone Star, Inc., a Delaware corporation
and a Wholly Owned Subsidiary of the Borrower, ("Newco.") (which holds 1% of
such partnership interests as its general partner) and Holdings have entered
into a Merger Agreement dated as of February 20, 1997 (the "LS PURCHASE
AGREEMENT") pursuant to which Acquisition shall acquire 100% of the partnership
interests in Target and the Sellers shall acquire Capital Stock of Holdings
(such transaction, the "LS PURCHASE"); and
WHEREAS, upon the acquisition by Acquisition of all of the partnership
interests in Target, pursuant to applicable partnership law, Target shall cease
to have separate existence and all of the assets of Target shall become assets
of Acquisition by operation of law; and
WHEREAS, in connection with the foregoing, the Borrower desires to increase
the Banks' commitments under the Original Credit Agreement and to incur
additional Loans from the Banks (which Loans shall be guaranteed by Holdings,
Newco and Acquisition), and specifically (i) to replace the Existing Term A
Loans with Term A Loans in the aggregate principal amount of $25,000,000
(collectively, the "TERM A LOANS"); (ii) to replace the Existing Term B Loans
with Term B Loans in the aggregate principal amount of $35,000,000
(collectively, the "TERM B LOANS"); (iii) to replace the Existing Total
Revolving Loan Commitment with an increased Total Revolving Loan Commitment in
the amount of $27,500,000 (the "TOTAL REVOLVING LOAN COMMITMENT") and to replace
any Revolving Loans outstanding as of the Closing Date (collectively, the
"EXISTING REVOLVING LOANS") with Loans under such restated Total Revolving Loan
Commitment; [and (iv) to replace the Existing Acquisition Term Loans with
Acquisition Term Loans and to restate the Acquisition Term Loan Commitment as of
the date hereof; and
WHEREAS, the Borrower desires (a) to use the proceeds of the Term A Loans
and the Term B Loans (i) to replace and retire the Existing Term A Loans and the
Existing Term B Loans and (ii) to provide a portion of the consideration to be
paid by Acquisition for the LS Purchase; and (b) to use the proceeds of the
Revolving Loans (i) to provide a portion of the consideration for the LS
Purchase, (ii) to pay fees and expenses relating to the LS Purchase and related
transactions and (ii) to provide working capital for the Borrower and its
Subsidiaries; and
WHEREAS, the Banks are willing to make available the additional credit
facilities provided for herein on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
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SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01. COMMITMENTS. Subject to and upon the terms and conditions set forth
herein, each Bank severally agrees, (i) in the case of any Borrowing under the
Term A Portion or the Term B Portion on the Closing Date, (ii) in the case of
any Borrowing under the Revolving Portion at any time and from time to time on
and after the Closing Date and prior to the Revolving Loan Commitment
Termination Date and (iii) in the case of any Borrowings under the Acquisition
Portion from time to time on and after the Closing Date and prior to the
Acquisition Term Loan Commitment Termination Date in connection with the
refinancing of the Existing Acquisition Term Loans and with Permitted Business
Acquisitions, to make Loans to the Borrower, as specified below, which Loans
shall be drawn under the Loan Facility (including the Term A Portion, the Term B
Portion, the Revolving Portion and the Acquisition Portion thereof), as set
forth below:
(a) Loans under the Term A Portion of the Loan Facility (each a "TERM
A LOAN") shall be made to the Borrower on the Closing Date. The Term A
Loans (i) except as hereinafter provided, shall initially be Base Rate
Loans and, 30 days after the Closing Date or such earlier time as (x)
Indosuez shall have completed any intended syndication of its interest in
the Loans (as to which the Administrative Agent shall promptly notify the
Borrower) or (y) is otherwise assented to by the Administrative Agent,
shall, at the option of the Borrower, be Base Rate Loans or Reserve
Adjusted Eurodollar Loans; PROVIDED, HOWEVER, that, notwithstanding
anything to the contrary set forth above, in the event that the
Administrative Agent shall not have notified the Borrower that it has
completed any intended syndication as of the date on which the Borrower
becomes entitled to elect Reserve Adjusted Eurodollar Loans, then, for a
further period of one month (or such longer period as the Administrative
Agent and the Borrower agree), the Borrower shall only be entitled to elect
Reserve Adjusted Eurodollar Loans which have an Interest Period which
terminates on or before the end of such one-month period; and PROVIDED,
FURTHER, that all Term A Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type; and (ii) shall not exceed for any Bank
at any time outstanding the aggregate principal amount which equals the
Term A Loan Commitment of such Bank.
(b) Loans under the Term B Portion of the Loan Facility (each a "TERM
B LOAN") shall be made to the Borrower on the Closing Date. The Term B
Loans (i) except as hereinafter provided, shall initially be Base Rate
Loans and, 30 days after the Initial Closing Date or such earlier time as
(x) Indosuez shall have completed any intended syndication of its interest
in the Loans (as to which the Administrative Agent shall promptly notify
the Borrower) or (y) is otherwise assented to by the Administrative Agent,
shall, at the option of the Borrower, be Base Rate Loans or Reserve
Adjusted Eurodollar Loans; PROVIDED, HOWEVER, that, notwithstanding
anything to the contrary set forth above, in the event that the
Administrative Agent shall not have notified the Borrower that it has
completed any intended syndication as of the date on which the
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Borrower becomes entitled to elect Reserve Adjusted Eurodollar Loans, then,
for a further period of one month (or such longer period as the Borrower
and the Administrative Agent agree), the Borrower shall only be entitled to
elect Reserve Adjusted Eurodollar Loans which have an Interest Period which
terminates on or before the end of such one-month period; and PROVIDED,
FURTHER, that all Term B Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type; and (ii) shall not exceed for any Bank
at any time outstanding the aggregate principal amount which equals the
Term B Loan Commitment of such Bank.
(c) Loans under the Revolving Portion of the Loan Facility (each a
"REVOLVING LOAN") (i) shall be made to the Borrower at any time and from
time to time on and after the Closing Date; PROVIDED that the Revolving
Loans made on the Closing Date shall not exceed $5,000,000 (not including
Revolving Loans advanced to repay Existing Revolving Loans) and shall be
made for purposes of financing the LS Purchase, retiring existing
Indebtedness of the Target and paying related fees and expenses (PROVIDED,
HOWEVER, that the full amount of each of the Term A Loan Commitment and the
Term B Loan Commitment shall, after being utilized to repay the principal
amount of each of the Existing Term A Loans and the Existing Term B Loans,
be utilized for financing the LS Purchase, retiring existing Indebtedness
of the Target and paying related fees and expenses) and prior to the
Revolving Loan Commitment Termination Date; (ii) except as hereinafter
provided, shall initially be made as Base Rate Loans until 30 days after
the Closing Date or such earlier time as (x) Indosuez shall have completed
any intended syndication of its interest in the Loans (as to which the
Administrative Agent shall promptly notify the Borrower) or (y) is
otherwise assented to by the Administrative Agent, and thereafter, at the
Borrower's option and subject to the terms hereof, may be Base Rate Loans
or Reserve Adjusted Eurodollar Loans; PROVIDED, HOWEVER, that,
notwithstanding anything to the contrary set forth above, in the event that
the Administrative Agent shall not have notified the Borrower that it has
completed any intended syndication as of the date on which the Borrower
becomes entitled to elect Reserve Adjusted Eurodollar Loans, then for a
further period of one month (or such longer period as the Administrative
Agent and the Borrower agree), the Borrower shall only be entitled to elect
Reserve Adjusted Eurodollar Loans which have an Interest Period which
terminates on or before the end of such one-month period; and PROVIDED,
FURTHER, that all Revolving Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type; (iii) may be repaid and reborrowed in
accordance with the provisions hereof; (iv) shall not exceed for any Bank
at any time outstanding the Revolving Loan Commitment of such Bank at such
time; and (v) shall not be made pursuant to a particular Notice of
Borrowing if the sum of (a) the aggregate principal amount of Revolving
Loans then outstanding and (b) the then outstanding Letters of Credit
Usage, after giving effect to the Revolving Loan requested by the relevant
Notice of Borrowing, would exceed the lesser of the Borrowing Base as then
calculated pursuant to Section 6.01(m) or the Total Revolving Loan
Commitment.
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(d) Loans under the Acquisition Portion of the Loan Facility
(together with the Outstanding Acquisition Term Loans, each an "ACQUISITION
TERM LOAN") shall be made to the Borrower from time to time on or after the
Closing Date and prior to the Acquisition Term Loan Commitment Termination
Date (the date of each Borrowing of an Acquisition Term Loan other than the
Acquisition Term Loans made to replace the Existing Acquisition Term Loans,
an "ACQUISITION TERM LOAN CLOSING DATE") to refinance the Existing
Acquisition Term Loans and to effect Permitted Business Acquisitions.
Acquisition Term Loans (i) except as hereinafter provided, shall initially
be made as Base Rate Loans until 30 days after the Closing Date, with
respect to the Acquisition Term Loans made as of the Closing Date, and
until 30 days after the applicable Acquisition Term Loan Closing Date in
all other case, or, in each case, such earlier time as (x) Indosuez shall
have completed any intended syndication of its interest in the Acquisition
Term Loan made on such date (as to which the Administrative Agent shall
promptly notify the Borrower) or (y) is otherwise assented to by the
Administrative Agent, and thereafter, at the Borrower's option and subject
to the terms hereof, may be Base Rate Loans or Reserve Adjusted Eurodollar
Loans; PROVIDED, HOWEVER, that, notwithstanding anything to the contrary
set forth above, in the event that the Administrative Agent shall not have
notified the Borrower that it has completed any intended syndication as of
the date on which the Borrower becomes entitled to elect Reserve Adjusted
Eurodollar Loans, then for a further period of one month (or such longer
period as the Administrative Agent and the Borrower agree), the Borrower
shall only be entitled to elect Reserve Adjusted Eurodollar Loans which
have an Interest Period which terminates on or before the end of such
one-month period; and PROVIDED, FURTHER, that all Acquisition Term Loans
made by all Banks pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Loans of the same Type;
(ii) shall not exceed for any Bank at any time outstanding the Acquisition
Term Loan Commitment of such Bank at such time; and (iii) shall not be made
pursuant to a particular Notice of Borrowing if the aggregate principal
amount of Acquisition Term Loans then outstanding, after giving effect to
the Acquisition Term Loan requested by the relevant Notice of Borrowing,
would exceed the Total Acquisition Term Loan Commitment.
1.02. MINIMUM AMOUNT OF EACH BORROWING; MAXIMUM NUMBER OF BORROWINGS. The
minimum aggregate principal amount of any Loan shall be the Minimum Borrowing
Amount (other than a Borrowing of Revolving Loans consisting entirely of Base
Rate Loans such that the total amount of Revolving Loans to be outstanding after
giving effect to such Borrowing shall be equal to the Total Revolving Loan
Commitment) and Borrowings in excess thereof shall be in integral multiples of
$100,000; PROVIDED, HOWEVER, that (i) the Banks' Term A Loan Commitments and
Term B Loan Commitments shall terminate, on a pro rata basis, with respect to
any portion of the Total Term A Loan Commitments or the Total Term B Loan
Commitments, as the case may be, not utilized by the Borrower on the Closing
Date and (ii) the Banks' Acquisition Term Loan Commitments shall terminate, on a
pro rata basis, with respect to any portion of the Total Acquisition Term Loan
Commitments not utilized by the Borrower on or before the Acquisition
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Term Loan Commitment Termination Date. More than one Borrowing may be incurred
on any date; PROVIDED, HOWEVER, that at no time shall there be more than six
Borrowings of Reserve Adjusted Eurodollar Loans outstanding.
1.03. NOTICE OF BORROWINGS. Subject to Sections 1.01(c) and (d), after
the Closing Date, whenever the Borrower desires that the Banks make Reserve
Adjusted Eurodollar Loans under either the Revolving Portion or the Acquisition
Portion of the Loan Facility it shall give the Administrative Agent at the
Agent's Office at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of each such Borrowing of Reserve Adjusted
Eurodollar Loans; PROVIDED that notice given later than 1:00 P.M. (New York
time) shall be deemed to have been given on the following Business Day.
Whenever the Borrower desires that the Banks make Base Rate Loans under either
the Revolving Portion or the Acquisition Portion of the Loan Facility (except
for Loans under the Acquisition Portion made as of the Closing Date to replace
Existing Acquisition Term Loans) it shall give the Administrative Agent at the
Agent's office not later than 1:00 P.M. (New York time) on the date of such
Borrowing written notice (or telephonic notice promptly confirmed in writing) of
each such Borrowing of Base Rate Loans. Each such notice, which, in the case of
a Loan under the Revolving Portion of the Loan Facility, shall be substantially
in the form of Exhibit 1.03-1 (each a "NOTICE OF REVOLVING LOAN BORROWING") and,
in the case of a Loan under the Acquisition Portion of the Loan Facility (except
for Loans under the Acquisition Portion made as of the Closing Date to replace
Existing Acquisition Term Loans) shall be substantially in the form of Exhibit
1.03-2 (each a "NOTICE OF ACQUISITION LOAN BORROWING" and, together with a
Notice of Revolving Loan Borrowing, each a "NOTICE OF BORROWING"), shall be
irrevocable, shall be deemed a representation by the Borrower that all
conditions precedent to such Borrowing set forth in Section 4.02 and, in the
case of a Loan under the Acquisition Portion (except for Loans under the
Acquisition Portion made as of the Closing Date to replace Existing Acquisition
Term Loans) that all conditions set forth in Section 4.03, have been satisfied
and shall specify (i) the aggregate principal amount in Dollars of the Loans to
be made pursuant to such Borrowing, (ii) the date of Borrowing (which shall be a
Business Day), (iii) whether the respective Borrowing shall consist of Base Rate
Loans or Reserve Adjusted Eurodollar Loans and, if Reserve Adjusted Eurodollar
Loans, the Interest Period to be initially applicable thereto and (iv) the
account to which funds advanced under such Borrowing shall be deposited. The
Administrative Agent shall as promptly as practicable give each Bank written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Borrowing, of such Bank's proportionate share thereof and of the other matters
covered by the Notice of Borrowing.
1.04. DISBURSEMENT OF FUNDS.
(a) No later than 2:00 P.M. (New York time) on the date specified in
each Notice of Borrowing, each Bank will make available to the
Administrative Agent in New York its pro rata portion of each Borrowing
requested to be made on such date in the manner provided below.
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(b) Each Bank shall make available all amounts it is to fund under
any Borrowing on or after the Closing Date in immediately available funds
to the Administrative Agent to the account specified therefor by the
Administrative Agent (or, if no account is so specified at the Agent's
Office), and the Administrative Agent will make such funds available to the
Borrower no later than 4:00 P.M. (New York time) on the date specified in
the Notice of Borrowing by depositing to the account specified therefor by
the Borrower (or, if no account is so specified to its account at the
Agent's Office) the aggregate of the amounts so made available in the type
of funds received. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of any such Borrowing that such Bank
does not intend to make available to the Administrative Agent its portion
of the Borrowing or Borrowings to be made on such date, the Administrative
Agent may assume that such Bank has made such amount available to the
Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, may (in its sole discretion and
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 Administrative Agent by such Bank and the Administrative
Agent has made available such corresponding amount to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount
from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the
Administrative Agent shall promptly notify the Borrower, and the Borrower
shall on such Business Day pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to
recover from such Bank 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 Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, (i) if paid by such Bank, at a rate per annum equal
to the overnight Federal Funds Rate or (ii) if paid by the Borrower (and/or
any other Credit Party), at a rate per annum equal to the then applicable
rate of interest, calculated in accordance with Section 1.08, for the
respective Loans. The Administrative Agent shall also be entitled to
recover from any Bank an amount equal to any other losses incurred by the
Administrative Agent as a result of the failure of such Bank to provide any
amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitments hereunder or to prejudice any rights
which the Borrower or any other Credit Party may have against any Bank as a
result of any default by such Bank hereunder.
1.05. NOTES.
(a) The Borrower's obligation to pay the principal of and interest on
all the Loans made to it by each Bank are or shall be evidenced, as the
case may be, (i) in the case of Term A Loans, by a promissory note (each, a
"TERM A NOTE"), substantially in the form of Exhibit 1.05(a)(i), duly
executed and delivered by the Borrower, with blanks appropriately
-7-
completed in conformity herewith, (ii) in the case of Term B Loans, by a
promissory note (each, a "TERM B NOTE"), substantially in the form of
Exhibit 1.05(a)(ii), duly executed and delivered by the Borrower, with
blanks appropriately completed in conformity herewith, (iii) in the case of
Revolving Loans, by a promissory note (each, a "REVOLVING NOTE"),
substantially in the form of Exhibit 1.05(a)(iii), duly executed and
delivered by the Borrower, with blanks appropriately completed in
conformity herewith; and (iv) in the case of Acquisition Term Loans, by a
promissory note (each, an "ACQUISITION TERM NOTE"), substantially in the
form of Exhibit 1.05(a)(iv), duly executed and delivered by the Borrower
with blanks appropriately completed in conformity herewith.
(b) The Term A Notes issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank, (iii) be dated the
Closing Date, (iv) be in a stated principal amount equal to the Term A Loan
Commitment of such Banks, and be payable in the aggregate principal amount
of the Term A Loans evidenced thereby, (v) mature, with respect to each
Term A Loan evidenced thereby, on the Term A Loan Maturity Date, (vi) be
subject to mandatory prepayment as provided in Section 3.03, (vii) bear
interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and the Reserve Adjusted Eurodollar Loans, as the
case may be, evidenced thereby, and (viii) be entitled to the benefits of
this Agreement and other applicable Credit Documents. On the Closing Date,
upon delivery of the Term A Notes the Old Term A Notes shall be returned to
the Borrower marked "Canceled".
(c) The Term B Notes issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank, (iii) be dated the
Closing Date, (iv) be in a stated principal amount equal to the Term B Loan
Commitment of such Bank, and be payable in the aggregate principal amount
of the Term B Loans evidenced thereby, (v) mature, with respect to each
Term B Loan evidenced thereby, on the Term B Loan Maturity Date, (vi) be
subject to mandatory prepayment as provided in Section 3.03, (vii) bear
interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and the Reserve Adjusted Eurodollar Loans, as the
case may be, evidenced thereby, and (viii) be entitled to the benefits of
this Agreement and other applicable Credit Documents. On the Closing Date,
upon delivery of the Term B Notes the Old Term B Notes shall be returned to
the Borrower marked "Canceled".
(d) The Revolving Notes issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank, (iii) be dated the
Closing Date, (iv) be in a stated principal amount equal to the Revolving
Loan Commitment of such Bank, and be payable in the aggregate principal
amount of the outstanding Revolving Loans evidenced thereby, (v) mature,
with respect to each Revolving Loan evidenced thereby, on the Revolving
Loan Maturity Date, (vi) be subject to mandatory prepayment as provided in
Section 3.03, (vii) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and the Reserve Adjusted
Eurodollar Loans, as the case
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may be, evidenced thereby, and (viii) be entitled to the benefits of this
Agreement and the other applicable Credit Documents. On the Closing Date,
upon delivery of the Revolving Notes the Old Revolving Notes shall be
returned to the Borrower marked "Canceled".
(e) The Acquisition Term Note of the Borrower issued to each Bank
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Bank, (iii) be dated the Closing Date, (iv) be in a stated principal amount
equal to the Acquisition Term Loan Commitment of such Bank and be payable
in the aggregate principal amount of the outstanding Acquisition Term Loans
evidenced thereby, (v) mature, with respect to each Acquisition Term Loan
evidenced thereby, on the Acquisition Term Loan Maturity Date, (vi) be
subject to mandatory prepayment as provided in Section 3.03, (vii) bear
interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and the Reserve Adjusted Eurodollar Loans, as the
case may be, evidenced thereby, and (viii) be entitled to the benefits of
this Agreement and the other applicable Credit Documents. On the Closing
Date, upon delivery of the Acquisition Term Notes the Old Acquisition Term
Notes shall be returned to the Borrower marked "Canceled". At any time
after the Acquisition Term Loan Commitment Termination Date, at the
Borrower's option or at the request of the Administrative Agent, each
Acquisition Term Note shall be exchanged for a note in the form of Exhibit
1.05(a)(iv) and meeting the above requirements, except that such
replacement note should be in a stated principal amount equal to the
aggregate principal amount of the Acquisition Term Loans made by such Bank
(or its assignor).
(f) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of the Loans evidenced thereby. Failure to
make any such notation shall not affect the obligations of the Borrower or
any other Credit Party hereunder or under any other applicable Credit
Document in respect of such Loans.
1.06. CONVERSIONS; CONTINUATIONS. The Borrower shall have the option to
convert on any Business Day commencing 30 days after the Initial Closing Date or
such earlier date as Indosuez shall have completed any intended syndication of
its interest in the Loans (as to which the Administrative Agent shall promptly
notify the Borrower), all or a portion (which portion shall not be less than the
Minimum Borrowing Amount) of the outstanding Loans owing by the Borrower
pursuant to a single Portion of the Loan Facility into a Borrowing or Borrowings
pursuant to such Portion of another Type of Loan, or to continue all or a
portion of such Borrowings as the same Type of Loan; PROVIDED, HOWEVER, that,
notwithstanding anything to the contrary set forth above, in the event that the
Administrative Agent shall not have notified the Borrower that it has completed
any intended syndication as of the date on which the Borrower becomes entitled
to elect Reserve Adjusted Eurodollar Loans, then for a further period of one
month, the Borrower shall only be entitled to elect Reserve Adjusted Eurodollar
Loans which have an Interest Period which terminates on or before the end of
such one-month period; and PROVIDED, FURTHER, that (a) except as otherwise
provided in Section 1.10(b), Reserve Adjusted
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Eurodollar Loans may be converted into Base Rate Loans or continued as Reserve
Adjusted Eurodollar Loans only on the last day of an Interest Period applicable
to such Reserve Adjusted Eurodollar Loans, (b) no such partial conversion of
Reserve Adjusted Eurodollar Loans shall reduce the outstanding principal amount
of Reserve Adjusted Eurodollar Loans under the Loan Facility (or portion
thereof) made pursuant to a single Borrowing to less than the Minimum Borrowing
Amount, (c) a Loan may only be converted into or continued as Reserve Adjusted
Eurodollar Loans if no Default or Event of Default is in existence on the date
of the conversion or continuation, (d) Borrowings resulting from conversions or
continuations pursuant to this Section 1.06 shall be limited in amount and
number as provided in Section 1.02 and (e) all or a portion of the outstanding
principal amount of Base Rate Loans may not be converted into Reserve Adjusted
Eurodollar Loans if such Base Rate Loans or portion thereof will mature within
one month of such proposed conversion. Each such conversion/continuation shall
be effected by the Borrower by giving the Administrative Agent at the Agent's
Office prior to 11:00 A.M. (New York time) at least three Business Days' (or on
the same Business Day in the case of a conversion into Base Rate Loans) prior
written notice (or telephonic notice promptly confirmed in writing) (each a
"NOTICE OF CONVERSION/CONTINUATION"), specifying the Loans to be so converted or
continued, the Type of Loans into which such Loans will be converted or
continued, the proposed conversion/continuation date, and, if to be converted
into or continued as Reserve Adjusted Eurodollar Loans, the Interest Period to
be initially applicable thereto. The Administrative Agent shall give each Bank
notice as promptly as practicable of any such proposed conversion or
continuation affecting any of its Loans. Notwithstanding the foregoing or the
provisions of Section 1.09, if a Default or Event of Default is in existence at
the time any Interest Period in respect of any Borrowing of Reserve Adjusted
Eurodollar Loans is to expire, such Loans may not be continued as Reserve
Adjusted Eurodollar Loans but instead shall be automatically converted on the
last day of such Interest Period into Base Rate Loans, unless the Administrative
Agent shall otherwise elect. If no Notice of Conversion/Continuation has been
duly delivered with respect to a Reserve Adjusted Eurodollar Loan on or before
the third Business Day prior to the last day of the Interest Period applicable
thereto, such Reserve Adjusted Eurodollar Loan shall be automatically converted
into a Base Rate Loan.
1.07. PRO RATA BORROWINGS. All Borrowings under this Agreement shall be
loaned by the Banks pro rata on the basis of their Term A Loan Commitments,
their Term B Loan Commitments, their Revolving Loan Commitments or their
Acquisition Term Loan Commitments, as the case may be. No Bank shall be
responsible for any default by any other Bank in its obligation to make Loans
hereunder, and each Bank shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08. INTEREST.
(a) The unpaid principal amount of each Base Rate Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise), or unless sooner converted into a Reserve
Adjusted Eurodollar Loan, at a rate per annum
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equal to the sum of (i) the Base Rate in effect from time to time PLUS
(ii) the Base Rate Margin.
(b) The unpaid principal amount of each Reserve Adjusted Eurodollar
Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise), or unless sooner converted
into a Base Rate Loan, at a rate per annum equal to the sum of (i) the
relevant Eurodollar Rate PLUS (ii) the Eurodollar Rate Margin.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest (A) in the case of
Base Rate Loans, at a rate per annum equal to the sum of (1) the Base Rate
in effect from time to time PLUS (2) the Base Rate Margin PLUS (3) 2% per
annum, and (B) in the case of Reserve Adjusted Eurodollar Loans, at a rate
per annum equal to the sum of (1) the relevant Eurodollar Rate PLUS (2) the
Eurodollar Rate Margin PLUS (3) 2% per annum.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the
last Business Day of each March, June, September and December commencing
March 31, 1997; (ii) in respect of each Reserve Adjusted Eurodollar Loan,
in arrears on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three-month intervals after the first day of such Interest
Period; and (iii) in respect of each Loan, on any prepayment (on the
amounts prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07.
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Reserve Adjusted Eurodollar Loans for any Interest Period,
shall promptly notify the Borrower and the Banks thereof. Such
determination shall, absent manifest error, be final, conclusive and
binding upon all parties hereto.
1.09. INTEREST PERIODS. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion/Continuation in respect of the making of,
conversion into, or continuation of, a Borrowing of Reserve Adjusted Eurodollar
Loans, it shall have the right to elect, by giving the Administrative Agent
written notice (or telephonic notice promptly confirmed in writing), the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a period of one, two, three or six months.
Notwithstanding anything to the contrary contained above:
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(a) the initial Interest Period for any Borrowing of Reserve Adjusted
Eurodollar Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing of Base Rate Loans) and each
Interest Period occurring thereafter (including continuations thereof) in
respect of such Borrowing shall commence on the date on which the next
preceding Interest Period expires;
(b) if any Interest Period relating to a Borrowing of Reserve
Adjusted Eurodollar Loans begins on a date for which there is no
numerically corresponding date in the calendar month in which such Interest
Period ends, such Interest Period shall end on the last Business Day of
such calendar month;
(c) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, HOWEVER, that if any Interest Period in
respect of a Reserve Adjusted Eurodollar Loan would otherwise expire on a
day which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(d) no Interest Period shall extend beyond, as applicable, the Term A
Loan Maturity Date (in the case of Term A Loans), the Term B Loan Maturity
Date (in the case of Term B Loans), the Revolving Loan Maturity Date (in
the case of Revolving Loans) or the Acquisition Term Loan Maturity Date (in
the case of Acquisition Term Loans); and
(e) no Interest Period with respect to any Borrowing of Reserve
Adjusted Eurodollar Loans shall extend beyond any date upon which the
Borrower is required to make a scheduled payment of principal with respect
to the Term A Loans, the Term B Loans or the Acquisition Term Loans, as the
case may be, if, after giving effect to the selection of such Interest
Period, the aggregate principal amount of Term A Loans, Term B Loans or
Acquisition Term Loans, as the case may be, maintained as Reserve Adjusted
Eurodollar Loans with Interest Periods ending after such date of scheduled
payment of principal would exceed the amount of Term A Loans, Term B Loans
or Acquisition Term Loans, as the case may be, permitted to be outstanding
after such scheduled payment of principal.
1.10. SPECIAL PROVISIONS GOVERNING RESERVE ADJUSTED EURODOLLAR LOANS.
Notwithstanding other provisions of this Agreement, the following provisions
shall govern with respect to Reserve Adjusted Eurodollar Loans as to the matters
covered:
(a) On an Interest Rate Determination Date, the Administrative Agent
shall determine (which determination shall, absent demonstrable error, be
final, conclusive and binding upon all parties hereto) the interest rate
which shall apply to the Reserve Adjusted Eurodollar Loans for which an
interest rate is then being determined for the applicable
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Interest Period and shall promptly give notice thereof (in writing or by
telephone promptly confirmed in writing) to the Borrower and to each Bank.
(b) In the event that (i) in the case of clause (A) below, the
Administrative Agent or (ii) in the case of clause (B) or (C) below, any
Bank shall have determined (which determination shall, absent demonstrable
error, be final, conclusive and binding upon all parties hereto):
(A) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after the
Closing Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate;
(B) at any time that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Reserve Adjusted Eurodollar Loans or its obligation to
make Reserve Adjusted Eurodollar Loans because of any change since the
Closing Date (including any changes proposed or published prior to the
Closing Date, except that any such proposed or published changes as to
which the Administrative Agent had actual knowledge prior to the
Closing Date shall only be included if the Administrative Agent has
notified the Borrower of such proposed or published changes in writing
on or before the Closing Date) in any applicable law, governmental
rule, regulation, guideline, request or order (or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline, request or order) (such as, for example, but not limited to
a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included
in the computation of the Eurodollar Rate) and excluding any change in
the basis of taxation of payments to any Bank of the principal or
interest on the Notes or any other amounts payable hereunder, such
changes being provided for exclusively by Section 3.07; or
(C) at any time that the making or continuance of any Reserve
Adjusted Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any applicable law, governmental rule,
regulation, guideline, request or order (or would conflict with any
such applicable law, governmental rule, regulation, guideline, request
or order, whether or not having the force of law and even though the
failure to comply therewith would not be unlawful);
then, and in any such event, the Administrative Agent in the case of clause
(A) above or such Bank in the case of clause (B) or (C) above shall on such
date give notice (by tele phone confirmed in writing) in accordance with
Section 1.10(h) to the Borrower of the Loan affected and, in the case of
clause (B) or (C) to the Administrative Agent, of such
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determination (which notice the Administrative Agent shall promptly
transmit to each of the other Banks). Thereafter (1) in the case of clause
(A) above, Reserve Adjusted Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the
Banks that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing or Notice
of Conversion/Continuation given by the Borrower with respect to the
borrowing of or conversion into (including continuance of) Reserve Adjusted
Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (2) in the case of clause (B) above, the Borrower shall
pay to such Bank, within 10 Business Days of written demand therefor, such
additional amounts as shall be required to compensate such Bank for such
increased costs or reductions in amounts receivable hereunder (a written
notice pursuant to Section 1.10(h) as to the additional amounts owed to
such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent demonstrable error, be final,
conclusive and binding upon all parties hereto) and (3) in the case of
clause (C) above, the Borrower shall take one of the actions specified in
Section 1.10(d) as promptly as possible and, in any event, within the time
period required by law.
(c) At any time that any Reserve Adjusted Eurodollar Loan is affected
by the circumstances described in Section 1.10(b)(B), the Borrower may
either (i) if a Notice of Borrowing or Notice of Conversion/Continuation
has been given with respect to the affected Reserve Adjusted Eurodollar
Loan, cancel such Notice of Borrowing or Notice of Conversion/Continuation
by giving the Administrative Agent telephonic notice (promptly confirmed in
writing) thereof on the same date (if the Borrower has been notified by not
later than 3:00 P.M. (New York time) or the next Business Day if otherwise)
that the Borrower was notified by a Bank pursuant to Section 1.10(b)(B) or
(C), or (ii) if the affected Reserve Adjusted Eurodollar Loan is then
outstanding, upon at least one Business Day's notice to the Administrative
Agent, either require the affected Bank to convert each such Reserve
Adjusted Eurodollar Loan into a Base Rate Loan, or prepay such Reserve
Adjusted Eurodollar Loan; PROVIDED, HOWEVER, that if more than one Bank is
affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(c); and PROVIDED, FURTHER, that the Borrower
shall compensate any such affected Banks as set forth in Section 1.10(f).
(d) At any time that any Reserve Adjusted Eurodollar Loan is affected
by the circumstances described in Section 1.10(b)(C), the Borrower shall
either (i) if a Notice of Borrowing or Notice of Conversion/Continuation
has been given with respect to the affected Reserve Adjusted Eurodollar
Loan, be deemed to have canceled said Notice of Borrowing or Notice of
Conversion/Continuation or (ii) if the affected Reserve Adjusted Eurodollar
Loan is then outstanding, either permit the affected Bank to convert each
such Reserve Adjusted Eurodollar Loan into a Base Rate Loan, or prepay such
Reserve Adjusted Eurodollar Loan; PROVIDED, HOWEVER, that if more than one
Bank is affected at any time, then all affected Banks must be treated the
same pursuant to this Section
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1.10(d); and PROVIDED, FURTHER, that the Borrower shall compensate any such
affected Banks as set forth in Section 1.10(f).
(e) Each Bank agrees that, as promptly as practicable after it has
actual knowledge of the occurrence of any event or the existence of a
condition that would cause it to be an affected Bank under Section
1.10(b)(B) or (C), it will, to the extent not inconsistent with such Bank's
internal policies or any legal or regulatory restrictions, use reasonable
efforts to make, fund or maintain the affected Reserve Adjusted Eurodollar
Loans of such Bank through another lending office of such Bank if as a
result thereof the additional moneys which would otherwise be required to
be paid in respect of such Loans pursuant to Section 1.10(b)(B) would be
materially reduced or the illegality or other adverse circumstances which
would otherwise require conversion or prepayment of such Loans pursuant to
Section 1.10(b)(C) would cease to exist, and if, as determined by such
Bank, in its reasonable discretion, the making, funding or maintaining of
such Loans through such other lending office would not otherwise adversely
affect such Loans or such Bank. The Borrower hereby agrees to pay all
reasonable out-of-pocket expenses incurred by any Bank in utilizing another
lending office of such Bank pursuant to this Section 1.10(e).
(f) The Borrower shall compensate each Bank, within 10 Business Days
after a written request by such Bank (which request shall be accompanied by
a written notice pursuant to Section 1.10(h) setting forth in reasonable
detail the calculation of such amounts), for all reasonable out-of-pocket
losses, expenses and liabilities (including, without limitation, such
factors as any interest paid by such Bank to lenders of funds borrowed by
it to make or carry its Reserve Adjusted Eurodollar Loans and any loss
sustained by such Bank in connection with re-employment of such funds
(based upon the difference between the amount earned in connection with the
re-employment of such funds and the amount payable by the Borrower if such
funds had been borrowed or remained outstanding)) ("BREAKAGE COSTS") which
such Bank may sustain with respect to the Borrower's Reserve Adjusted
Eurodollar Loans: (i) if for any reason (other than a default or error by
such Bank) a Borrowing of any Reserve Adjusted Eurodollar Loan does not
occur on a date specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation or in a telephonic request for borrowing or
conversion or continuation, or a successive Interest Period in respect of
any such Reserve Adjusted Eurodollar Loan does not commence after notice
therefor is given pursuant to Section 1.06; or (ii) subject to Section
3.08, if any payment, prepayment or conversion (as required by Section
3.01, 3.02 or 3.03(a) through (e), inclusive, or 3.03(h) or (j), by
acceleration or otherwise) of any of such Bank's Reserve Adjusted
Eurodollar Loans occurs on a date which is not the last day of the Interest
Period applicable to that Loan; or (iii) if any prepayment of any such
Bank's Reserve Adjusted Eurodollar Loans is not made on any date specified
in a notice of prepayment given by the Borrower; or (iv) as a consequence
of any other failure by the Borrower to repay such Bank's Reserve Adjusted
Eurodollar Loans when required by the terms of this Agreement.
-15-
(g) Any Bank claiming any additional amounts payable pursuant to this
Section 1.10 agrees to use reasonable efforts (consistent with such Bank's
internal policies and with legal and regulatory restrictions) to designate
a different lending office if the making of such a designation would avoid
the need for, or reduce the amount of, any such additional amounts and
would not, in the reasonable judgment of such Bank, be in any way otherwise
disadvantageous to such Bank.
(h) Each Bank shall notify the Borrower of any event occurring after
the date hereof entitling such Bank to compensation under this Sections
1.10(a) through (g) as promptly as practicable, but in any event within 90
days after such Bank obtains actual knowledge thereof; PROVIDED, HOWEVER,
that if any Bank fails to give such notice within 90 days after it obtains
actual knowledge of such an event, such Bank shall, with respect to
compensation payable pursuant to this Section 1.10 in respect of any costs
or other amounts resulting from or relating to such event, only be entitled
to payment under this Section 1.10 for such costs or other amounts from and
after the date 90 days prior to the date that such Bank does give such
notice. Each Bank will furnish to the Borrower a certificate setting forth
in reasonable detail the basis and amount of each request by such Bank for
compensation under this Section 1.10. Determinations by any Bank for
purposes of this Section 1.10, including of the effect of any regulatory
change pursuant to Section 1.10(b)(B) on its costs of maintaining Loans or
its obligation to make Loans, or on amounts receivable by it in respect of
Loans, and of the amounts required to compensate such Bank under this
Section 1.10, shall be made on a reasonable basis.
1.11. CAPITAL REQUIREMENTS.
(a) If any Bank shall have determined in good faith that the adoption
or effectiveness after the Closing Date of any applicable law, governmental
rule, regulation, guideline, request or order regarding capital adequacy,
or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank or such Bank's parent 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 the capital or assets of
such Bank or such Bank's parent as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such Bank's parent could
have achieved but for such adoption, effectiveness or change or as a
consequence of an increase in the amount of capital required to be
maintained by such Bank as a consequence of such Bank's obligations
hereunder (including in each case, without limitation, with respect to any
of such Bank's Commitments or any Loan), then from time to time, within 15
Business Days after demand by such Bank (with a copy to the Administrative
Agent), the Borrower shall pay to such Bank such additional amount or
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amounts as will compensate such Bank or such Bank's parent, as the case may
be, for such reduction.
(b) Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to Section 1.11(a), will give prompt
written notice thereof to the Borrower, but in any event within 90 days
after such Bank obtains actual knowledge of an event described in Section
1.11(a) pursuant to which additional amounts will be payable thereunder;
PROVIDED, HOWEVER, that if any Bank fails to give such notice within 90
days after it obtains actual knowledge of such an event, such Bank shall,
with respect to compensation payable pursuant to this Section 1.11 in
respect of any costs or other amounts resulting from or relating to such
event, be entitled to payment under this Section 1.11 only for such costs
or other amounts from and after the date 90 days prior to the date that
such Bank does give such notice. Each Bank will furnish to the Borrower a
certificate setting forth in reasonable detail the basis and amount of each
request by such Bank for compensation under this Section 1.11.
Determinations by any Bank for purposes of this Section 1.11, including of
the effect of any regulatory change pursuant to Section 1.11(a) on its rate
of return or in the amount of capital required to be maintained by it, and
of the amounts required to compensate such Bank under this Section 1.11,
shall be made on a reasonable basis.
1.12. TOTAL LOAN COMMITMENTS; LIMITATIONS ON OUTSTANDING LOAN AMOUNTS. As
of the Closing Date, the amount of (a) the Total Commitment is $102,500,000, (b)
the Total Term A Loan Commitment is $25,000,000, (c) the Total Term B Loan
Commitment is $35,000,0000, (d) the Total Revolving Loan Commitment is
$27,500,000 and (e) the Total Acquisition Term Loan Commitment is $15,000,000.
Anything contained in this Agreement to the contrary notwithstanding, (i) in no
event shall the sum of the aggregate principal amount of all outstanding Term A
Loans, Term B Loans, Revolving Loans and Acquisition Term Loans of any Bank at
any time exceed such Bank's portion of the Total Commitment, (ii) in no event
shall the sum of the aggregate principal amount of all Term A Loans, Term B
Loans, Revolving Loans and Acquisition Term Loans from all Banks at any time
exceed the Total Commitment, (iii) in no event shall the Total Utilization of
the Revolving Loan Commitment exceed the Total Revolving Loan Commitment and
(iv) in no event shall the Total Utilization of the Acquisition Term Loan
Commitment exceed the Total Acquisition Term Loan Commitment.
1.13. LETTERS OF CREDIT
(a) LETTERS OF CREDIT; PARTICIPATION; ADDITIONAL COLLATERAL UPON
DEFAULT.
(i) Subject to the terms and conditions of this Agreement, so
long as no Default or Event of Default exists hereunder, and in
reliance upon the representations and warranties of the Borrower set
forth herein and in the other Credit Documents, in addition to
requesting that the Banks make Revolving Loans pursuant to Section
1.03, the Borrower may request, from time to time,
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in accordance with the provisions of this Section 1.13, that one or
more Issuing Banks issue Letters of Credit for the account of the
Borrower; PROVIDED, THAT:
(x) the Borrower shall not request that any Bank issue any
Letter of Credit and a Bank shall not be required to issue
any Letter of Credit, if after giving effect to such
issuance the sum of (a) the Letters of Credit Usage on the
date of such issuance, after giving effect to the issuance
of all Letters of Credit subject to outstanding requests for
issuance of a Letter of Credit, plus (b) the aggregate
principal amount of Revolving Loans then outstanding, after
giving effect to the making of all Revolving Loans then
requested by all outstanding but unfunded Notices of
Borrowing, would exceed the lesser of (x) the Borrowing Base
as shown in the Borrowing Base Certificate that was last
required to be delivered pursuant to Section 6.01 or (y) the
Total Revolving Loan Commitment; and
(y) In no event shall any Issuing Bank issue any Letter of
Credit having an expiration date which is (x) later than
thirty (30) Business Days prior to the Revolving Loan
Maturity Date, after giving effect to any possible renewal
of such Letter of Credit, or (y) more than one year after
its date of issuance; PROVIDED that, subject to the
foregoing clause (ii)(x), this clause (ii)(y) shall not
prevent any Issuing Bank from issuing a Letter of Credit
which is subject to renewal for periods not exceeding one
year per renewal; and
(z) In no event shall any Issuing Bank issue any Letter of
Credit if, after giving effect to such issuance and the
issuance of all other requested Letters of Credit, the then
outstanding Letters of Credit Usage in respect of all
Letters of Credit would exceed $2,000,000.
(ii) Upon the issuance of any Letter of Credit, a participation
therein, in an amount equal to each Bank's PRO RATA share (determined
on the basis of such Bank's Revolving Loan Commitment ) (such
participation of each Bank in each Letter of Credit being hereinafter
referred to as its "Letter of Credit Participation"), shall
automatically be deemed granted by the Issuing Bank to each Bank on
the date of such issuance and the Banks shall automatically be
obligated, as set forth in Section 1.13(e), to reimburse the Issuing
Bank to the extent of such pro rata share for all obligations incurred
by the Issuing Bank to third parties in respect of such Letter of
Credit not reimbursed by the Borrower. The Issuing Bank will send to
each Bank (and the Administrative Agent if the Issuing Bank is
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not the Administrative Agent) a confirmation regarding the
participations in Letters of Credit outstanding during such month.
(iii) Notwithstanding the foregoing, upon the occurrence and
during the continuation of any Event of Default hereunder, the
Administrative Agent or the Required Banks may, by notice to the
Borrower, require that any outstanding Letters of Credit be cash
collateralized, and upon receipt of such notice, the Borrower shall,
within five Business Days of such notice, deliver to the
Administrative Agent an amount equal to the sum of (x) the maximum
aggregate amount that is or at any time thereafter may become
available to be drawn under any such outstanding Letters of Credit and
(y) the aggregate amount of all drawings under such Letters of Credit
which have been honored by Issuing Banks with respect thereto and not
theretofore reimbursed by the Borrower; PROVIDED, that any such cash
collateralized Letters of Credit shall be excluded from the
calculation of Letters of Credit Usage for purposes of determining the
availability of Revolving Loans under Section 1.13(a)(x) and for
purposes of Section 3.03(a) or (b).
(iv) The Administrative Agent is hereby authorized and directed
in the event of such Event of Default and requirement of cash
collateral to create a segregated cash collateral account bearing
interest payable to the Borrower at a rate per annum equal to the
Federal Funds Rate (a "LETTER OF CREDIT CASH COLLATERAL ACCOUNT"), and
to deposit in such account any amounts received from the Borrower
pursuant to the foregoing. Funds on deposit from time to time in any
Letter of Credit Cash Collateral Account (the "LETTER OF CREDIT CASH
COLLATERAL") shall be held by the Administrative Agent for the benefit
of the Banks hereunder, including Issuing Banks, in respect of their
participation in Letters of Credit and as Banks hereunder and as
security for the payment and performance of the Obligations in
accordance with the Security Documents, including the Borrower's
obligations under Section 1.13(d), shall be subject to the sole
dominion and control of the Administrative Agent and the Borrower
shall have no right of withdrawal from the Letter of Credit Cash
Collateral Account. Notwithstanding any provision in this Agreement or
in any Security Document, after payment of any costs of collection and
reasonable expenses of the Administrative Agent in connection with the
establishment of the Letter of Credit Cash Collateral Account, Letter
of Credit Cash Collateral shall be applied by the Administrative Agent
as follows: FIRST, to reimburse any Banks (including any Issuing
Banks) for any drawings (or participation in such) on such Letters of
Credit which have not been repaid by the Borrower, such reimbursement
to be made from time to time until no Letters of Credit are
outstanding; SECOND, only after no Letters of Credit remain
outstanding and any unreimbursed drawings (or participations in such)
of any Bank (including any Issuing Bank) have been fully repaid and
all fees payable under this Section 1.13 have been paid, to the
payment, in accordance with the Security
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Documents, of any of the remaining Obligations then due and payable;
and FINALLY, after its application in accordance with the foregoing,
returned to the Borrower.
(b) REQUEST FOR ISSUANCE Whenever the Borrower desires the issuance
of a Letter of Credit it shall deliver to the Administrative Agent, at the
Agent's Office, an application requesting issuance of a Letter of Credit no
later than 1:00 P.M. (New York time) at least three Business Days, or such
shorter period as may be agreed to by any Issuing Bank in any particular
instance, in advance of the proposed date of issuance. The request for
issuance with respect to any Letter of Credit shall specify (i) the
proposed date of issuance (which shall be a business day under the laws of
the jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the
face amount of such Letter of Credit, (iii) the expiration date of such
Letter of Credit and (iv) the name and address of the beneficiary of such
Letter of Credit. As soon as practicable after delivery of such request
for issuance of a Letter of Credit, the Issuing Bank for such Letter of
Credit shall be determined as provided in Section 1.13(c). Prior to the
date of issuance, the Borrower shall specify a precise description of the
documents and the verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit which, if presented by such
beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Bank to make payment under the Letter of Credit;
PROVIDED that the Issuing Bank, in its sole judgment, may require such
changes in any such documents and certificates as it reasonably believes to
be necessary to comply with laws, customs or practices or to achieve
clarity; and PROVIDED, FURTHER, that no Letter of Credit shall require
payment against a conforming draft to be made thereunder earlier than 1:00
P.M. in the time zone of the Issuing Bank on the Business Day (which shall
be a business day under the laws of the jurisdiction of the Issuing Bank)
next succeeding the Business Day (which shall be a business day under the
laws of the jurisdiction of the Issuing Bank) that such draft is presented.
In determining whether to pay under the Letter of Credit, the Issuing Bank
shall be responsible only to determine that the documents and certificates
required to be delivered under the Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of
Credit. Without limiting the foregoing, the determination of whether a
demand has been made prior to the expiration of a Letter of Credit and
whether a demand is in proper and sufficient form for compliance with the
Letter of Credit shall be made by the Issuing Bank in accordance with
Section 1.13(k). The Issuing Bank is authorized without reference to or
approval by the Borrower to set forth the terms appearing on the relevant
application for the Letter of Credit in the Letter of Credit and to modify
or alter such terms in such language as the Issuing Bank may deem
appropriate, with such variations from such terms as such Bank may, in
accordance with Section 1.13(k), determine are necessary to comply with
laws, customs or practices or to achieve clarity and are not materially
inconsistent with such terms. Promptly after receipt of a request for
issuance of a Letter of Credit and the determination of the Issuing Bank
thereof, the Administrative Agent shall notify each Bank of the proposed
issuance, the identity of the Issuing Bank and the amount of each other
Bank's respective participation therein, determined in accordance with
Section 1.13(a)(ii).
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(c) DETERMINATION OF ISSUING BANK. Upon receipt by the
Administrative Agent of a request for issuance pursuant to Section 1.13(b)
with respect to a Letter of Credit, in the event that Indosuez elects to
issue such Letter of Credit, the Administrative Agent shall so notify the
Borrower, and Indosuez shall be the Issuing Bank with respect thereto. In
the event that Indosuez, in its sole discretion, elects not to issue such
Letter of Credit, the Administrative Agent shall promptly so notify the
Borrower, and the Borrower may request any other Bank to issue such Letter
of Credit. Each such Bank so requested to issue such Letter of Credit
shall promptly notify the Borrower and the Administrative Agent whether or
not, in its sole discretion, it has elected to issue such Letter of Credit
and any such Bank that so elects to issue such Letter of Credit shall be
the Issuing Bank with respect thereto. In the event that all other Banks
shall have declined to issue such Letter of Credit, notwithstanding the
prior election of Indosuez not to issue such Letter of Credit, Indosuez
shall be obligated to issue the Letter of Credit requested by the Borrower
and shall be the Issuing Bank with respect to such Letter of Credit;
PROVIDED that Indosuez shall not be obligated to issue any Letter of Credit
for which the initial stated amount is less than $5,000. No Issuing Bank
shall issue any Letter of Credit denominated in a currency other than
Dollars.
(d) PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the event
of any request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Bank shall notify the Borrower and the Administrative
Agent on or before the date on which such Issuing Bank intends to honor
such drawing, and the Borrower shall reimburse such Issuing Bank on the day
on which such drawing is honored in an amount in same day funds equal to
the amount of such drawing: PROVIDED that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless the Borrower shall
have notified the Administrative Agent and such Issuing Bank prior to 1:00
p.m. (New York time) on the Business Day of the date of such drawing that
the Borrower intends to reimburse such Issuing Bank for the amount of such
drawing with funds other than the proceeds of Revolving Loans, the Borrower
shall be deemed to have timely given a Notice of Borrowing to the
Administrative Agent requesting the Banks to make Revolving Loans that are
Base Rate Loans on the date on which such drawing is honored in an amount
equal to the amount of such drawing, and (ii) subject to availability under
the Borrowing Base, the Banks shall, on the date of such drawing, make
Revolving Loans that are Base Rate Loans in the amount of such drawing, the
proceeds of which shall be applied directly by the Administrative Agent to
reimburse such Issuing Bank for the amount of such drawing; and PROVIDED
FURTHER that if for any reason, Revolving Loans are not made to so
reimburse such Issuing Bank in an amount equal to the amount of such
drawing, the Borrower shall reimburse such Issuing Bank, within one
Business Day (which shall be a business day under the laws of jurisdiction
of such Issuing Bank) following the receipt of notice from the
Administrative Agent that such Revolving Loans have not been made, in an
amount in same day funds equal to the excess of the amount of such drawing
over the
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amount of such Revolving Loans, if any, that are so received, plus accrued
interest on such amount at the rate set forth in Section 1.13(f)(i)(A).
(e) PAYMENT BY BANKS. In the event that (i) the Borrower shall fail
to reimburse an Issuing Bank as provided in Section 1.13(d) in an amount
equal to the amount of any drawing honored by such Issuing Bank under a
Letter of Credit issued by it, and (ii) the Revolving Loans are not made in
payment of such reimbursement obligation as provided in Section 1.13(d),
such Issuing Bank shall promptly notify each Bank of the unreimbursed
amount of such drawing and of such Bank's respective participation therein.
Each Bank shall make available to such Issuing Bank an amount equal to its
respective participation in same day funds, at the office of such Issuing
Bank specified in such notice, not later than 1:00 P.M. (New York time) on
the Business Day (which shall be a business day under the laws of the
jurisdiction of such Issuing Bank) after the date notified by such Issuing
Bank. In the event that any Bank fails to make available to such Issuing
Bank the amount of such Bank's participation in such Letter of Credit as
provided in this Section 1.13(e), such Issuing Bank shall be entitled to
recover such amount on demand from such Bank together with interest at the
customary rate set by the Administrative Agent for the correction of errors
among banks for three Business Days and thereafter at the Base Rate. Each
Issuing Bank shall distribute to each other Bank which has paid all amounts
payable by it under this Section 1.13(e) with respect to any Letter of
Credit issued by such Issuing Bank such other Bank's PRO RATA share of all
payments received by such Issuing Bank from the Borrower in reimbursement
of drawings honored by such Issuing Bank under such Letter of Credit when
such payments are received. Nothing in this Section 1.13(e) shall be
deemed to relieve any Bank of its obligation to pay all amounts payable by
it under this Section 1.13(e) with respect to any Letter of Credit issued
by an Issuing Bank or to prejudice any rights that the Borrower or any
other Bank may have against a Bank as a result of any default by such Bank
hereunder and no Bank shall be responsible for the failure of any other
Bank to pay its PRO RATA share payable under this Section 1.13(e).
(f) COMPENSATION.
(i) the Borrower agrees to pay the following amounts with
respect to all Letters of Credit:
(A) with respect to drawings made under any Letter of
Credit, interest, payable on demand, on the amount paid by such
Issuing Bank in respect of each such drawing from and including
the date of the drawing through the date such amount is
reimbursed by the Borrower (including any such reimbursement out
of the proceeds of Revolving Loans pursuant to Section 1.13(d))
at a rate which is equal to the interest rate then applicable to
Revolving Loans that are Base Rate Loans for the period from the
date of such drawing to and including the first Business Day
after the date of such drawing and thereafter at a rate equal to
2% PER ANNUM in
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excess of the rate of interest otherwise payable under this
Agreement for Revolving Loans that are Base Rate Loans during
such period; and
(B) with respect to the amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary
and processing charges in accordance with such Issuing Bank's
standard schedule for such charges in effect at the time of such
amendment, transfer or drawing, as the case may be.
(ii) the Borrower agrees to pay to the Administrative Agent for
distribution to each Bank in respect of all Letters of Credit
outstanding such Bank's PRO RATA share of a commission equal to 2% PER
ANNUM of the maximum amount available from time to time to be drawn
under such outstanding Letters of Credit, payable in arrears on and
through the last Business Day of each March, June, September and
December commencing March 31, 1997 and calculated on the basis of a
365-day year and the actual number of days elapsed. Upon the
happening and during the continuance of an Event of Default described
in Section 8.01, the commission referred to in the preceding sentence
shall be 4% PER ANNUM.
(iii) the Borrower agrees to pay to each Issuing Bank in respect
of each Letter of Credit issued by each such Issuing Bank on the date
of issuance an amount equal to the greater of (A) 1/2 of 1% of the
maximum amount available at any time to be drawn under such Letter of
Credit or (B) $1,500.
Amounts payable under clauses (i) (A) and (ii) of this Section
1.13(f) shall be paid to the Administrative Agent for the benefit of
the Banks. The Administrative Agent shall promptly distribute to each
Bank its PRO RATA share of such amount. Amounts payable under clauses
(i) (B) and (iii) of this Section 1.13(f) shall be paid to the
Administrative Agent, and thereupon paid over to the Issuing Bank.
(g) OBLIGATIONS ABSOLUTE. The obligation of the Borrower to
reimburse each Issuing Bank for drawings made under the Letters of Credit
issued by it and the obligations of the Banks under Section 1.13(e) shall
be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set off, defense or other right
that the Borrower or any other Person may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any persons
or entities for whom any such beneficiary or transferee may be
acting), such Issuing Bank, any Bank or any other
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Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction;
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect, if not apparent from the
documents presented;
(iv) payment by such Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other
document that does not comply with the terms of such Letter of Credit
unless such Issuing Bank shall have acted in bad faith or with willful
misconduct or gross negligence in issuing such payment;
(v) any other circumstance or happening whatsoever that is
similar to any of the foregoing; or
(vi) the fact that a Default or Event of Default shall have
occurred and be continuing.
(h) ADDITIONAL PAYMENTS. If by reason of (a) any change after the
Effective Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by an
judicial or regulatory authority of any law, regulation, rule, decree or
regulatory requirement or (b) compliance by an Issuing Bank or any Bank
with any direction, request or requirement (whether or not having the force
of law) of any Governmental Authority or monetary authority including,
without limitation, Regulation D, any reserve, deposit or similar
requirement is or shall be applicable, imposed or modified in respect of
any Letter of Credit issued by such Issuing Bank or participation therein
purchased by any Bank and the result of the foregoing is to increase the
cost to such Issuing Bank or any Bank of issuing, making or maintaining any
Letter of Credit or of purchasing or maintaining any participation therein,
or to reduce the amount receivable in respect thereof by such Issuing Bank
or any Bank, then and in any such case such Issuing Bank or such Bank
shall, after the additional cost is incurred or the amount received is
reduced, notify the Borrower and the Borrower shall pay within 10 Business
Days after demand such amounts as such Issuing Bank or such Bank may
specify to be necessary to compensate such Issuing Bank or such Bank for
such additional cost or reduced receipt, together with interest on such
amount from the date demanded until payment in full thereof at a rate PER
ANNUM equal at all times to the rate applicable to Revolving Loans that are
Base Rate Loans then in effect; PROVIDED that if any Bank fails to give
such notice within 90 days after it obtains actual knowledge of such an
event, such Bank shall, with respect to compensation payable pursuant to
this Section 1.13(h) in respect of any costs or other amounts resulting
from or relating to such event, only be entitled to payment under this
Section 1.13(h) for such costs or other amounts incurred
-24-
from and after the date 90 days prior to the date that such Bank does give
such notice; and PROVIDED, FURTHER, that each Bank agrees that, as promptly
as practicable after it becomes aware of the existence of the foregoing
conditions, it will, to the extent not inconsistent with such Bank's
internal policies or any legal or regulatory restrictions, use reasonable
efforts to issue, make or maintain the affected Letter of Credit or
purchase or maintain any participation therein through another lending
office of such Bank if as a result thereof the additional moneys which
would otherwise be required to be paid to compensate for such additional
cost or reduced receipt with respect to such Letter of Credit pursuant to
this Section 1.13(h) would be reduced and if, as determined by such Bank,
in its reasonable discretion, the issuance, making or maintaining of such
Letter of Credit or the purchasing or maintaining of any participation
therein through such other lending office would not otherwise materially
adversely affect such Letter of Credit or such Bank. Each Bank will
furnish to the Borrower a certificate setting forth in reasonable detail
the basis and amount of each request by such Bank for compensation under
this Section 1.13(h). Determinations by any Bank for purposes of this
Section 1.13(h), including of the effect of any regulatory change pursuant
to Section 1.13(h) on its costs of making or maintaining Letters of Credit
(or purchasing or maintaining participation therein), or on amounts
receivable by it in respect of Letters of Credit, and of the amounts
required to compensate such Bank under this Section 1.13(h), shall be made
on a reasonable basis. A certificate in reasonable detail as to the amount
of such increased cost or reduced receipt, submitted to the Borrower and
the Administrative Agent by the Issuing Bank or any Bank, as the case may
be, shall, except for demonstrable error, be final, conclusive and binding
for all purposes.
(i) INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES. In addition to
amounts payable as elsewhere provided in this Section 1.13, without
duplication, the Borrower hereby agrees to protect, indemnify, pay and save
each Issuing Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and allocated costs of internal counsel) which
such Issuing Bank may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of the Letters of Credit or (ii) the failure
of such Issuing Bank to honor a drawing under any Letter of Credit, in each
case as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental Authority.
As between the Borrower and each Issuing Bank, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by such Issuing Bank by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
such Issuing Bank shall not be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance
of any such Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or
-25-
assigning or purporting to transfer or assign any such Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in part,
that may prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of any such Letter of Credit to comply fully
with conditions required in order to draw upon such Letter of Credit; (iv)
for errors, omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, whether or
not they are in cipher; (v) for errors in the translation or interpretation
of technical terms; (vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the
proceeds of any drawing under such Letter of Credit; (viii) for any
consequences arising from causes beyond the control of such Issuing Bank or
its correspondents, including, without limitation, any act or omission of
any Governmental Authority; and (ix) for any error, neglect, default,
suspension or insolvency of any Issuing Bank's correspondents or any
consequence thereof, PROVIDED, in each case, that the Issuing Bank acts in
good faith. None of the above shall affect, impair, or prevent the vesting
of any of such Issuing Bank's rights or powers hereunder. Any Issuing Bank
shall have the right to transmit the terms of the Letter of Credit without
translating them. If the Letter of Credit provides that payment is to be
made by the Issuing Bank's correspondent, neither the Issuing Bank nor such
correspondent shall be responsible for the failure of any document
specified in the Letter of Credit to come into the Issuing Bank's hands or
for any delay in connection therewith, and the Borrower's obligation to
reimburse the Issuing Bank for payments made or obligations incurred shall
not be affected by such failure or delay in the receipt by the Issuing Bank
of any or all of such documents whether sent to such Bank in one or
multiple mailings. No Issuing Bank shall be liable for any failure by such
Bank or anyone else to pay or accept any draft or other demands for payment
or acceptance under the Letter of Credit resulting from any censorship,
law, control or restriction rightfully or wrongfully exercised by any de
facto or de jure Governmental Authority or from any other cause beyond such
Bank's control or the control of such Bank's correspondents, agents or
sub-agents or for any loss or damage to the Borrower or anyone else
resulting from any such failure to pay or accept, all such risks being
expressly assumed by the Borrower.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any
Issuing Bank in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not result
in such Issuing Bank incurring any liability to the Borrower. Without
limiting the generality of the foregoing, the Issuing Bank and its
correspondents may, without incurring any responsibility or liability, (i)
act in reliance upon any oral, telephonic, telegraphic, telex, telecopier,
electronic or written request, application (including an application for
issuance of a Letter of Credit) or notice believed in good faith to have
been authorized by the Borrower, whether or not given or signed by an
authorized person, and (ii) receive, accept and pay any drafts or other
documents and instruments (otherwise in order) signed by, or issued to, the
receiver, executor, administrator,
-26-
liquidator, guardian or conservator of anyone named in the Letter of Credit
as the person by whom drafts and other documents and instruments are to be
made or issued.
Notwithstanding anything to the contrary contained in this Section
1.13(i), the Borrower shall have no obligation to indemnify any Issuing
Bank or any Bank in respect of any liability incurred by such Issuing Bank
or such Bank arising out of the gross negligence, bad faith or willful
misconduct of such Issuing Bank or such Bank or out of the wrongful
dishonor by such Issuing Bank or such Bank of a proper demand for payment
under the Letters of Credit issued by it.
(j) COMPUTATION OF INTEREST. Interest payable pursuant to this
Section 1.13 shall be computed on the basis of a 360 day year and the
actual number of days elapsed.
(k) UNIFORM CUSTOMS AND PRACTICE. This Section 1.13 shall be subject
to the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce as in force on the date of issuance of
each Letter of Credit ("UCP") and the UCP shall in all respects be deemed a
part hereof as fully as if incorporated herein. The provisions of this
Section 1.13 shall, where possible, be construed so as to be consistent
with the UCP; PROVIDED that to the extent the provisions of the UCP are not
consistent with the provisions of this Section 1.13 the provisions of the
UCP shall control. Notwithstanding the provisions of Section 12.08 hereof,
in the event of any conflict between the UCP and Article 5 of the UCC, the
UCP shall govern as to the provisions of this Section 1.13.
SECTION 2. COMMITMENTS.
2.01. VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in writing)
to the Administrative Agent at the Agent's Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), the Borrower
shall have the right, without premium or penalty, to terminate irrevocably the
unutilized portion of either or both of (x) the Total Revolving Loan Commitments
and (y) the Total Acquisition Term Loan Commitments, in each case, in part or in
whole; PROVIDED, HOWEVER, that (a) any such termination shall proportionately
and permanently reduce the Revolving Loan Commitment or Acquisition Term Loan
Commitment, as applicable, of each of the Banks and (b) any partial reduction of
the Total Revolving Loan Commitments or the Total Acquisition Term Loan
Commitments pursuant to this Section 2.01 shall, in each case, be in the amount
of at least $500,000 and integral multiples of $100,000 in excess of that
amount; PROVIDED, FURTHER, that (x) the Total Revolving Loan Commitment shall
not be reduced to an amount less than the sum of (a) the aggregate Revolving
Loans then outstanding and (b) the aggregate Letters of Credit Usage and (y) the
Total Acquisition Term Loan Commitment shall not be reduced to an amount less
than the aggregate Acquisition Term Loans then outstanding.
2.02. ADJUSTMENTS; TERMINATION OF COMMITMENTS, ETC.
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(a) The Total Revolving Loan Commitment shall terminate on the
earlier of (i) the Revolving Loan Commitment Termination Date and (ii) the
voluntary reduction by the Borrower pursuant to Section 2.01 of the
Revolving Loan Commitment to zero.
(b) The Total Acquisition Term Loan Commitment shall terminate on the
earlier of (i) on the Acquisition Term Loan Commitment Termination Date and
(ii) the voluntary reduction by the Borrower pursuant to Section 2.01 of
the Acquisition Term Loan Commitment to zero and any amounts not borrowed
with respect to the Acquisition Term Loan on or before such date shall
cease to be available.
(c) Each of the Term A Loan Commitments and the Term B Loan
Commitments shall terminate as of the close of business on the Closing
Date, and any amounts not borrowed with respect to each of the Term A Loan
and the Term B Loan on the Closing Date shall cease to be available.
(d) The Total Commitment shall be reduced by the amount of any
reduction in the cash purchase price to be paid by Acquisition to
consummate the LS Purchase; PROVIDED, HOWEVER, that such reduction of the
Total Commitment shall be applied (i) first to reduce the Total Term A Loan
Commitment and the Total Term B Loan Commitment in each case on a pro rata
basis and in inverse order of maturity, and (ii) then, only after the Total
Term A Loan Commitment has been reduced to $18,000,000 and the Total Term B
Loan Commitment has been reduced to $16,250,000, to reduce the Total
Revolving Loan Commitment and the Total Acquisition Term Loan Commitment in
such proportions as the Agents and the Borrower may agree.
(e) Each reduction to or termination of the Total Term A Loan
Commitment, the Total Term B Loan Commitment, the Total Revolving Loan
Commitment or the Total Acquisition Term Loan Commitment pursuant to this
Section 2.02 shall apply proportionately to the Term A Loan Commitment, the
Total Term B Loan Commitment, the Revolving Loan Commitment or the
Acquisition Term Loan Commitment, as the case may be, of each Bank.
2.03. COMMITMENT FEE. The Borrower agrees to pay the Administrative Agent
a commitment fee (the "COMMITMENT FEE") for the account of each Bank for the
period from and including the Closing Date (the accrued commitment fees provided
for under the Original Credit Agreement having been paid in full as of the
Closing Date) to but not including the date on which both the Total Revolving
Loan Commitment and the Total Acquisition Term Loan Commitment have been
terminated, computed at a rate equal to 1/2% per annum on the daily average
Unutilized Commitment of such Bank. The Commitment Fee shall be due and payable
in arrears on the last Business Day of each March, June, September and December
commencing March 31, 1997 (for the period from the Closing Date through March
31, 1997), on the earlier of (x) the Revolving Loan Commitment Termination Date
or (y) the date on which both the Total
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Revolving Loan Commitments and the Total Acquisition Term Loan Commitments have
been terminated pursuant to the terms of this Agreement (for the period from the
date through which the Commitment Fee has been paid in full in accordance with
this Section 2.03 to and including the Revolving Loan Commitment Termination
Date or the date of such earlier termination, as the case may be). The
calculation of Commitment Fees shall be based on the actual number of days
elapsed over a year of 360 days.
SECTION 3. PAYMENTS.
3.01. SCHEDULED PAYMENTS.
(a) The Borrower shall cause to be paid Scheduled Term A Loan
Principal Payments on the Term A Loan in the amounts and at the times
specified in the definition of Scheduled Term A Loan Principal Payments set
forth in Section 10 until the Term A Loan is paid in full. Principal
amounts repaid in respect of the Term A Loan shall not be available for
reborrowing.
(b) The Borrower shall cause to be paid Scheduled Term B Loan
Principal Payments on the Term B Loan in the amounts and at the times
specified in the definition of Scheduled Term B Loan Principal Payments set
forth in Section 10 until the Term B Loan is paid in full. Principal
amounts repaid in respect of the Term B Loan shall not be available for
reborrowing.
(c) The Borrower shall cause to be paid Scheduled Acquisition Term
Loan Principal Payments on the Acquisition Term Loans in the amounts and at
the times specified in the definition of Scheduled Acquisition Term Loan
Principal Payments set forth in Section 10 until the Acquisition Term Loan
are paid in full. Principal amounts repaid in respect of the Acquisition
Term Loans shall reduce any outstanding Acquisition Term Loan Commitments
and shall not be available for reborrowing.
(d) Except for earlier maturity of any Loan due to acceleration
pursuant to the terms of this Agreement, the entire remaining principal
balance, and accrued interest thereon, together with any other amounts then
due and payable hereunder, shall be paid in full (i) with respect to the
Term A Loans, on the Term A Loan Maturity Date, (ii) with respect to the
Term B Loans, on the Term B Loan Maturity Date, (iii) with respect to the
Revolving Loans, on the Revolving Loan Maturity Date and (iv) with respect
to the Acquisition Term Loans, on the Acquisition Term Loan Maturity Date.
(e) If, in order to comply with Section 3.01(a), (b), (c) or (d), the
Borrower is required to repay Reserve Adjusted Eurodollar Loans prior to
the end of any applicable Interest Period, the Borrower shall compensate
each Bank for all losses, expenses and liabilities incurred by such Bank in
connection with each such repayment in accordance with Section 1.10(f).
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3.02. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
the Term A Loans, the Term B Loans, the Revolving Loans or the Acquisition Term
Loans, in whole or in part from time to time, without premium or penalty, on the
following terms and conditions: (a) the Borrower shall give the Administrative
Agent at the Agent's Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, the amount of such
prepayment and whether such prepayment is in respect of the Revolving Loans, in
the case of Reserve Adjusted Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which such Reserve Adjusted Eurodollar Loans were made,
which notice shall be given by the Borrower at least one Business Day prior to
the date of such prepayment and which notice shall promptly be transmitted by
the Administrative Agent to each of the Banks; (b) each partial prepayment of a
Borrowing shall be in an aggregate principal amount of at least $100,000 and in
integral multiples of $100,000 in excess of that amount (or, if less, in an
amount equal to the entire remaining principal balance of the Loan or the
Borrowing so repaid); PROVIDED, HOWEVER, that no partial prepayment of Reserve
Adjusted Eurodollar Loans made pursuant to a single Borrowing under the Loan
Facility (or portion thereof) shall reduce the outstanding Loans made pursuant
to such Borrowing to an amount less than the Minimum Borrowing Amount (other
than $0); and (c) Reserve Adjusted Eurodollar Loans may only be prepaid pursuant
to this Section 3.02 on the last day of an Interest Period applicable thereto.
Voluntary prepayments of Loans other than specified prepayments of the Revolving
Loans shall first be applied pro rata (i) first, if made (x) prior to the
Acquisition Term Loan Commitment Termination Date to the outstanding principal
amount of each of the Term A Loans and the Term B Loans to reduce all remaining
Scheduled Term A Loan Principal Payments and all remaining Scheduled Term B Loan
Principal Payments, in each case on a pro rata basis and in order of maturity,
or (y) on or after the Acquisition Term Loan Commitment Termination Date, to the
outstanding principal amount of each of the Term A Loans, the Term B Loans and
the Acquisition Term Loan to reduce all remaining Scheduled Term A Loan
Principal Payments, all remaining Scheduled Term B Loan Principal Payments and
all remaining Scheduled Acquisition Term Loan Principal Payments, in each case
on a pro rata basis and in order of maturity, (ii) second, if made (x) prior to
the Acquisition Term Loan Commitment Termination Date, to the then outstanding
principal amount of the Acquisition Term Loans if any; PROVIDED that any amount
so prepaid pursuant to this subclause (x) shall permanently reduce the
Acquisition Term Loan Commitments and any amounts so prepaid shall not be
available for reborrowing, and (y) if made on or after the Acquisition Term Loan
Commitment Termination Date, to reduce the outstanding principal amount of the
Revolving Loans and (iii) third, to reduce the outstanding principal amount of
the Revolving Loans.
3.03. MANDATORY PREPAYMENTS; REDUCTION OF COMMITMENTS.
(a) The Borrower shall prepay the outstanding principal amount of (x)
the Revolving Loans on any date on which the sum of the aggregate
outstanding principal amount of such Loans (after giving effect to any
other repayments or prepayments on such date) and the then outstanding
Letters of Credit Usage exceeds the Total Revolving Loan Commitment, in an
amount equal to the amount of such excess, or (y) the Acquisition
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Term Loans on any date on which the aggregate outstanding principal amount
of such Loans (after giving effect to any other repayments or prepayments
on such date) exceeds the Total Acquisition Term Loan Commitment, in an
amount equal to the amount of such excess.
(b) If the sum of (x) the aggregate principal amount of outstanding
Revolving Loans plus (y) the then outstanding Letters of Credit Usage
exceeds the Borrowing Base as set forth in the Borrower's most recent
Borrowing Base Certificate required to be delivered pursuant to Section
6.01(m) (such amount is referred to as the "EXCESS"), then the Borrower
shall prepay such Loans in a principal amount equal to the Excess no later
than two Business Days after the Borrower has delivered, or was required to
deliver, such Borrowing Base Certificate to the Administrative Agent and
the Banks.
(c) Subject to the provisions of Section 3.04:
(i) As promptly as practicable, but in any event within five
Business Days of the date of receipt by Holdings and/or any of its
Subsidiaries, of Net Cash Proceeds (PROVIDED, HOWEVER, that with
respect to any Net Cash Proceeds of the sale of equity securities of
Holdings or any of its Subsidiaries, Section 3.03(e) will govern and
that with respect to any Net Cash Proceeds from any damage to, or
loss, destruction or condemnation of Assets, Section 3.03(f) will
govern), the Borrower shall remit to the Administrative Agent an
amount equal to 100% of such Net Cash Proceeds, specifying any portion
of such proceeds (such portion, the "REPLACEMENT ASSET AMOUNT")
intended by the Borrower to be used within 120 days of receipt (or
such longer period as may be consented to by the Agent) for replacing
productive assets of a kind then used or usable in the business of
Holdings and its Subsidiaries (in each case, to the extent permitted
by the Security Documents); PROVIDED, HOWEVER, that if the property
sold constituted Collateral, any such replacement property shall be
made subject to the Lien of the Security Documents.
(ii) The Replacement Asset Amount of such Net Cash Proceeds
shall be deposited in the Reserve Account and the remaining portion,
if any, of such Net Cash Proceeds shall be applied by the
Administrative Agent as provided in Section 3.04(a). During a period
of 120 days from the date such Replacement Asset Amount is deposited
in the Reserve Account, the Administrative Agent shall release amounts
in such Reserve Account from time to time as the Borrower provides
evidence to the Administrative Agent of the purchase of such
replacement assets (whether or not purchased with proceeds of
Revolving Loans), and after the end of such 120-day period or upon the
occurrence of an Event of Default of the type specified in Section
8.01 or 8.05 or the taking by the Administrative Agent of any of the
actions set forth in Section 8.10, the Administrative Agent shall
apply all amounts remaining in such Reserve Account relating to such
Replacement Asset
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Amount, to the prepayment of the Loans in the manner provided in
Section 3.04(a).
(d) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by Holdings and/or any of its Subsidiaries of Net Financing
Proceeds after the Effective Date (excluding the proceeds of the Initial
Loans), the Borrower shall prepay the Loans in an amount equal to 100% of
such Net Financing Proceeds, to be applied as provided in Section 3.04(a).
(e) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by Holdings and/or any of its Subsidiaries of Net Cash Proceeds
from the sale after the Closing Date of equity securities of Holdings or
any of its Subsidiaries (other than proceeds from the issuance of capital
stock (i) of Holdings pursuant to any pension, stock option, profit sharing
or other employee benefit plan or agreement of Holdings and/or any of its
Subsidiaries in the ordinary course of business or (ii) by a Subsidiary of
the Borrower to another Subsidiary of the Borrower or to the Borrower), the
Borrower shall prepay the Loans in an amount equal to 100% of such proceeds
(net of underwriting discounts and commissions and other costs and expenses
directly associated therewith), to be applied as provided in
Section 3.04(a).
(f) Subject to the provisions of Section 3.04:
(i) As promptly as practicable, but in any event within five
Business Days of the date of receipt by Holdings and/or any of its
Subsidiaries of any proceeds due to damage to, or loss, destruction or
condemnation of Assets (collectively, "LOSS PROCEEDS"), the Borrower
shall remit to the Administrative Agent an amount equal to 100% of
such Loss Proceeds, specifying any portion of such proceeds (such
portion, the "ASSET RESTORATION AMOUNT") intended by the Borrower to
be used within 180 days of receipt of such Loss Proceeds (or such
longer period as may be consented to by the Agent) for rebuilding,
repairing or replacing productive assets of a kind then used or usable
in the business of Holdings and its Subsidiaries (in the case of
Holdings, to the extent permitted under Section 6.17 and, in each
case, to the extent permitted by the Security Documents); PROVIDED,
HOWEVER, that if the property sold constituted Collateral, any such
replacement property shall be made subject to the Lien of the Security
Documents.
(ii) The Asset Restoration Amount of such Loss Proceeds shall be
deposited in the Reserve Account and the remaining portion, if any, of
such Loss Proceeds shall be applied by the Administrative Agent as
provided in Section 3.04(a). During a period of 180 days (or such
longer period as has been consented to by the Administrative Agent)
from the date such Asset Restoration Amount is deposited in the
Reserve Account, the Administrative Agent shall
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release amounts in such Reserve Account from time to time as the
Borrower provides evidence to the Administrative Agent of the repair,
restoration or purchase of such replacement assets, which evidence may
consist of a purchase order or other irrevocable commitment to
purchase such replacement assets, (whether or not purchased with
proceeds of Revolving Loans), and after the end of such 180-day period
or upon the occurrence of an Event of Default of the type specified in
Section 8.01 or 8.05 or the taking by the Administrative Agent of any
of the actions set forth in Section 8.10, the Administrative Agent
shall apply all amounts remaining in the Reserve Account relating to
such Asset Restoration Amount, if any, in the manner provided in
Section 3.04(a).
(g) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by Holdings and/or any of its Subsidiaries of any surplus assets of
any Pension Plan returned to Holdings and/or any of its Subsidiaries, the
Borrower shall prepay the Loans in an amount equal to 100% of such surplus
assets, to be applied as provided in Section 3.04(a).
(h) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by Holdings and/or any of its Subsidiaries of any tax refund which
is not promptly applied by Holdings and/or any of its Subsidiaries to the
payment of future tax liabilities, the Borrower shall prepay the Loans in
an amount equal to 100% of such tax refund, to be applied as provided in
Section 3.04(a).
(i) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within five Business Days of the date of
receipt by Holdings and/or any of its Subsidiaries of the proceeds of any
cash indemnification payment pursuant to the Recapitalization Documents or
pursuant to the LS Purchase Documents, the Borrower shall prepay the Loans
in an amount equal to the total of (i) 100% of such cash indemnification
payment MINUS (ii) any out-of-pocket losses actually incurred and paid by
Holdings and/or any of its Subsidiaries as a result of the situation, event
or occurrence that gave rise to such indemnification payments MINUS (iii)
any costs and expenses reasonably incurred or reasonably expected to be
incurred by Holdings and/or any of its Subsidiaries in remedying the
situation, event or occurrence that gave rise to such indemnification
payments or in recovering such indemnity (PROVIDED, HOWEVER, that such
costs and expenses are incurred or reasonably expected to be incurred by
Holdings and/or any of its Subsidiaries within 180 days of Holdings and/or
any of its Subsidiaries having notice of the situation, event or occurrence
that gave rise to such indemnification payment), to be applied as provided
in Section 3.04(a). The Borrower hereby agrees to notify the
Administrative Agent immediately of its receipt of any such indemnification
payment received pursuant to any Recapitalization Document or LS Purchase
Document, which notice will be accompanied or followed by an Officers'
Certificate setting forth in reasonable detail the out-of-pocket losses and
costs and expenses incurred or reasonably expected to be incurred in
connection therewith.
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(j) Subject to the provisions of Section 3.04, as promptly as
practicable, but in any event within 100 days after the last day of each
fiscal year of the Borrower, commencing with the fiscal year ending on or
about June 30, 1998, the Borrower shall prepay the Loans in an amount equal
to 75% of Excess Cash Flow for such fiscal year, to be applied as provided
in Section 3.04(a).
(k) Notwithstanding anything to the contrary contained in paragraphs
(c) through (j) above, in the event that any prepayment otherwise required
under such paragraphs would aggregate less than $100,000 at any time, such
prepayment shall not be required hereunder but shall be deferred until a
date not later than the fifth Business Day following the date when all such
prepayments required under such paragraphs aggregate $100,000 or more.
(l) If, in order to comply with any of Sections 3.03(a) through (f),
(h) or (j) (including as deferred pursuant to 3.03(k) except where the
amount which causes all prepayments to aggregate $100,000 or more are not
prepayments required under any of such Sections 3.03(a) through (e), (h) or
(j)), the Borrower is required to repay Reserve Adjusted Eurodollar Loans
prior to the end of any applicable Interest Period, (x) if there is no
Default or Event of Default then in existence, the Administrative Agent
shall, immediately upon receipt of funds required to be remitted to the
Administrative Agent pursuant to any such sections, deposit such funds into
the Prepayment Collateral Account (as defined in Section 3.08 hereof), and
shall immediately notify the Borrower that repayments would be made prior
to the end of an Interest Period and that Breakage Costs would be payable
by the Borrower pursuant to this Agreement in connection therewith and the
Borrower, upon the receipt of any such notice from the Agent, shall
immediately deliver written instructions to the Administrative Agent which
shall direct the Administrative Agent either (i) to, at the end of the
earliest to expire Interest Period, apply the entire balance of the
Prepayment Collateral Account to the repayment of the Loans in accordance
with Section 3.04(a) or (ii) to proceed with such repayment, in which event
the Borrower shall compensate each Bank for all Breakage Costs incurred by
such Bank in connection with each such repayment in accordance with Section
1.10(f) or (y) if there is then pending a Default or Event of Default, any
such prepayment shall be immediately applied to the repayment of the Loans
and the Borrower shall compensate each Bank for all Breakage Costs incurred
by such Bank in connection with each such repayment in accordance with
Section 1.10(f).
3.04. APPLICATION OF MANDATORY PREPAYMENTS.
(a) Prepayments under Section 3.03 (other than Section 3.03(a) or
(b)) shall be applied without penalty or premium (other than Breakage
Costs, if any, and if so provided in Section 3.03), in the following
manner: (i) first, if made (x) prior to the Acquisition Term Commitment
Termination Date, pro rata to the outstanding principal amount of each
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of the Term A Loans and the Term B Loans to reduce the remaining Scheduled
Term A Loan Principal Payments and the remaining Scheduled Term B Loan
Principal Payments, in each case in inverse order of maturity, or (y) on or
after the Acquisition Term Loan Commitment Termination Date, pro rata to
the outstanding principal amount of each of the Term A Loans, the Term B
Loans and the Acquisition Term Loans to reduce the remaining Scheduled Term
A Loan Principal Payments, the remaining Scheduled Term B Loan Principal
Payments and the remaining Scheduled Acquisition Term Loan Principal
Payments, in each case in inverse order of maturity, (ii) second, if made
(x) prior to the Acquisition Term Loan Commitment Termination Date, to the
outstanding principal amount of the Acquisition Term Loans, (provided that
any amount so prepaid shall permanently reduce the Acquisition Term Loan
Commitments) or (y) on or after the Acquisition Term Loan Commitment
Termination Date, to repay Revolving Loans, and (iii) third, to repay
Revolving Loans; PROVIDED, HOWEVER, that prepayments required by
Sections 3.03(a) shall be applied solely to repay Revolving Loans or
Acquisition Term Loans, as applicable, and prepayments required by Section
3.03(b) shall be applied solely to repay Revolving Loans.
(b) With respect to each prepayment of Loans required by Section 3.03
(other than Sections 3.03(a) and (b)), the Borrower shall give the
Administrative Agent one Business Day's notice and may designate the Types
of Loans and the specific Borrowing or Borrowings which are to be prepaid;
PROVIDED, HOWEVER, that (i) if any prepayment of Reserve Adjusted
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than
the Minimum Borrowing Amount, such Borrowing shall immediately be converted
into Base Rate Loans; and (ii) each prepayment of any Loans made pursuant
to a single Borrowing shall be applied to the prepayment of such Loans on a
pro rata basis. In the absence of a designation by the Borrower, the
Administrative Agent shall, subject to the above, make such designation in
its sole discretion. All prepayments shall include payment of accrued
interest on the principal amount so prepaid, shall be applied to the
payment of interest before application to principal and shall include
amounts payable, if any, and if provided for in Section 3.03(m), under
Section 1.10(f).
(c) Notwithstanding Sections 3.04(a) and (b), (i) in the absence of a
specific designation from the Borrower, all prepayments to be applied
pursuant to Section 3.04(a) shall be applied first to the prepayment in
full of that portion of any Loan constituting Base Rate Loans before
application of any of such prepayments to the prepayment of Reserve
Adjusted Eurodollar Loans; (ii) if (A) Breakage Costs would otherwise be
imposed by applying such prepayments to any portion of the Term A Loan, the
Term B Loan or the Acquisition Term Loan constituting Reserve Adjusted
Eurodollar Rate Loans, and (B) Revolving Loans constituting Base Rate Loans
in an amount not less than the required prepayment are then outstanding,
such prepayments shall be applied instead to the prepayment of Revolving
Loans constituting Base Rate Loans, and the prepayment of Reserve Adjusted
Eurodollar Rate Loans otherwise required under Section 3.04(a) shall
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be deferred until the last day of the applicable Interest Period with
respect to each of such Reserve Adjusted Eurodollar Loans; and (iii) the
Administrative Agent may, in its discretion, establish reserves against the
amount of Revolving Loans which the Borrower is otherwise entitled to
borrow hereunder in an amount equal to the amount of any such deferred
prepayment and in the event that the Borrower does not otherwise make such
prepayment on the last day of such Interest Period as provided herein, may
cause Revolving Loans to be made on the Borrower's behalf and apply the
proceeds thereof to such prepayment.
3.05. REDUCTION OF TOTAL REVOLVING LOAN COMMITMENT, ETC. Each prepayment
made pursuant to Section 3.03 with respect to the Revolving Loans or, if prior
to the Acquisition Term Loan Commitment Termination Date, the Acquisition Term
Loans (in each case, other than any prepayment made pursuant to Section 3.03(a)
or (b)) shall permanently reduce the Total Revolving Loan Commitment or Total
Acquisition Term Loan Commitment, as applicable, and shall, on a pro rata basis,
reduce the applicable Revolving Loan Commitment or Acquisition Term Loan
Commitment of each Bank. Principal amounts repaid in respect of the Term A
Loans, the Term B Loans or the Acquisition Term Loans shall not be available for
reborrowing.
3.06. METHOD AND PLACE OF PAYMENT.
(a) Except as otherwise specifically provided herein, all payments
under this Agreement shall be made to the Agent, for the ratable account of
the Banks entitled thereto, not later than 2:00 P.M. (New York time) on the
date when due and shall be made in immediately available funds in lawful
money of the United States of America to the account specified therefor by
the Administrative Agent or if no account has been so specified at the
Agent's Office, it being understood that written notice by the Borrower to
the Administrative Agent to make a payment from the funds in the Borrower's
account at the Agent's Office shall constitute the making of such payment
to the extent of such funds held in such account. The Administrative Agent
will thereafter cause to be distributed on the same day (if payment is
actually received by the Administrative Agent in New York City prior to
2:00 P.M. (New York time) on such day) funds relating to the payment of
principal or interest or fees ratably to the Banks entitled to receive any
such payment in accordance with the terms of this Agreement. If and to the
extent that any such distribution shall not be so made by the
Administrative Agent in full on the same day (if payment is actually
received by the Administrative Agent prior to 2:00 P.M. (New York time) on
such day), the Administrative Agent shall pay to each Bank its ratable
amount thereof and each such Bank shall be entitled to receive from the
Agent, upon demand, interest on such amount at the Federal Funds Rate for
each day from the date such amount is paid to the Administrative Agent
until the date the Administrative Agent pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the Borrower
later than 2:00 P.M. (New York time) shall be deemed to have been made on
the next
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succeeding Business Day. Whenever any payment to be made hereunder shall
be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such
extension, except that with respect to Reserve Adjusted Eurodollar Loans,
if such next succeeding applicable Business Day is not in the same month as
the date on which such payment would otherwise be due hereunder or under
any Note, the due date with respect thereto shall be the next preceding
applicable Business Day.
3.07. NET PAYMENTS.
(a) Except as provided in Section 3.07(d), all payments by the
Borrower under this Agreement or under any Credit Documents shall be made
without setoff or counterclaim and in such amounts as may be necessary in
order that all such payments (after deduction or withholding for or on
account of any present or future Taxes), shall not be less than the amounts
otherwise specified to be paid under this Agreement and/or any other Credit
Documents. A certificate as to the calculation of any additional amounts
payable to a Bank under this Section 3.07 submitted to the Borrower by such
Bank shall, absent demonstrable error, be final, conclusive and binding for
all purposes upon all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, the Borrower shall, within 30
days after it is required by law to remit such deduction or withholding to
any relevant taxing authority, furnish to each Bank such cer tificates,
receipts and other documents as may be required (in the reasonable judgment
of such Bank) to establish any tax credit to which such Bank may be
entitled.
(b) Without prejudice to (but without duplication of the benefits of)
the provisions of Section 3.07(a), and except as provided in Section
3.07(d), if any Bank, or the Administrative Agent on its behalf, is
required by law to make any payment on account of Taxes on or in relation
to any sum received or receivable under this Agreement and/or any other
Credit Documents by such Bank, or the Administrative Agent on its behalf,
or any liability for Taxes in respect of any such payment is imposed,
levied or assessed against any Bank, or the Administrative Agent on its
behalf, the Borrower will promptly indemnify such person against such Tax
payment or liability, together with any interest, penalties and reasonable
expenses (including counsel fees and expenses) payable or incurred in
connection therewith, including any Taxes of any Bank arising by virtue of
payments under this Section 3.07(b), computed in a manner consistent with
Section 3.07(a). A certificate by such Bank, or the Administrative Agent
on its behalf, as to the calculation and amount of such payments shall,
absent demonstrable error, be final, conclusive and binding upon all
parties hereto for all purposes, provided that such certificate is
delivered to the Borrower no later than 90 days after the earlier of the
date on which such Bank or the Administrative Agent makes payment of such
Taxes or the date on which the applicable Governmental Authority makes
written demand for payment of such Taxes.
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(c)(i) Each Bank that is organized under the laws of any jurisdiction
other than the United States or any State thereof (including the District
of Columbia) (a "FOREIGN BANK") agrees to furnish to the Borrower and the
Administrative Agent, prior to the date it receives any payment under this
Agreement or other Credit Documents, two signed copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 or any successor form thereto (wherein such Foreign Bank validly
claims entitlement to a complete exemption from U.S. federal withholding
tax on interest paid by Borrower hereunder). Each Foreign Bank that is not
a bank described in Section 881(c)(3)(A) of the Code and cannot deliver
U.S. Internal Revenue Service Form 1001 entitling it to a complete
exemption from withholding tax or U.S. Internal Revenue Service Form 4224
pursuant to this Section 3.07(c)(i) agrees to furnish to the Borrower and
the Administrative Agent two copies of U.S. Internal Revenue Service Form
W-8, or successor form (wherein such Foreign Bank makes the certifications
necessary to entitle it to a complete exemption from United States
withholding tax on interest paid by the Borrower hereunder).
(ii) In addition, each Foreign Bank that delivers forms pursuant to
Section 3.07(c) agrees to provide subsequently to the Borrower and the
Administrative Agent additional signed copies of such forms, or any
successor forms thereto (wherein such Bank claims entitlement to a complete
exemption from or reduced rate of U.S. federal withholding tax on interest
paid by the Borrower hereunder), as may be reasonably requested in writing
by the Borrower or the Agent. A Foreign Bank shall be required to furnish
a form under this Section 3.07(c)(ii) only if it is entitled to claim an
exemption from or a reduced rate of withholding tax under applicable law.
A Bank that is not entitled to claim an exemption from or a reduced rate of
withholding under applicable law at the time that a request to provide
forms is received from the Borrower or the Agent, shall so inform the
Borrower and the Administrative Agent in writing.
(d) The Borrower shall not be required to pay any increased amount on
account of Taxes pursuant to Section 3.07(a) or (b) to any Bank or
Administrative Agent (i) to the extent that such Taxes would not have been
payable if the Bank had furnished a form (properly and accurately completed
in all material respects) which it was otherwise required to furnish in
accordance with Section 3.07(c), (ii) if the Bank was not able to furnish a
form (properly and accurately completed in all material respects) which it
was required to furnish in accordance with Section 3.07(c)(i), or (iii) if
the Bank failed to comply with applicable certification, information,
documentation or other reporting requirements concerning the nationality,
residence, identity or connections with the United States of such Bank if
such compliance is required by statute or regulation of the United States
as a precondition to relief or exemption from such Taxes.
(e) With respect to any Taxes imposed on a Bank which are paid or
reimbursed by Borrower in accordance with the provisions of this Section
3.07, each Bank receiving the benefit of such payments of Taxes hereby
agrees to pay to the Borrower any amounts
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refunded to such Bank (including any interest thereon) which such Bank
reasonably determines to be a refund in respect of such Taxes.
(f) If any Bank shall be entitled to payments under this Section
3.07, such Bank shall, within a reasonable time after becoming entitled to
such payments, (unless otherwise required by a Governmental Authority or as
a result of any law, rule, regulation, order or similar directive
applicable to such Bank), designate a different lending office from that
initially selected by such Bank to which payments are to be made under this
Agreement or under any other Credit Document, if such designation would
avoid the need for (or materially reduce the amount of) such payments and
would not, in the reasonable opinion of such Bank, be otherwise
disadvantageous to such Bank.
3.08. RESERVE ACCOUNT; PREPAYMENT COLLATERAL ACCOUNT.
(a) The Administrative Agent shall establish and maintain a special
reserve account (the "RESERVE ACCOUNT") for the deposit of amounts
constituting the Replacement Asset Amount of Net Cash Proceeds pursuant to
Section 3.03(c)(ii) and the Asset Restoration Amount of Loss Proceeds
pursuant to Section 3.03(f)(ii), and such Reserve Account shall be subject
to the sole dominion and control of the Administrative Agent and the
Borrower shall have no right of withdrawal from the Reserve Account. Funds
in the Reserve Account shall be invested in Cash Equivalents and interest
earned on such investments shall be remitted to the Borrower not less
frequently than once a month; PROVIDED, HOWEVER, that upon the occurrence
of an Event of Default and the declaration by the Administrative Agent in
accordance with Section 8 that the Loans are immediately due and payable,
the Administrative Agent shall apply all amounts then on deposit in the
Reserve Account towards the payment of the Obligations in such order and in
such manner as it shall in its discretion determine, and any excess amount
remaining after such payment shall be remitted to the Borrower.
(b) The Administrative Agent shall establish in its own name as
Administrative Agent and maintain for the benefit of the Banks a special
purpose collateral account (the "PREPAYMENT COLLATERAL ACCOUNT"). The
Administrative Agent shall deposit in the Prepayment Collateral Account
funds which the Borrower shall have requested to be so deposited pursuant
to Section 3.03(l). All funds from time to time on deposit in the
Prepayment Collateral Account shall be under the exclusive control of the
Administrative Agent and shall be invested in Cash Equivalents, and such
Prepayment Collateral Account shall be subject to the sole dominion and
control of the Administrative Agent and the Borrower shall have no right of
withdrawal from the Prepayment Collateral Account. The funds (including
all interest earned from the investment thereof) in the Prepayment
Collateral Account shall be subject to withdrawal solely by the
Administrative Agent (i) for the purpose of effecting payments required
pursuant to Section 3.03 and (ii) upon the occurrence of an Event of
Default and the declaration by the Administrative Agent in accordance with
Section 8 that the Loans are immediately due and payable, for application
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to the payment of the Obligations in such order and in such manner as the
Administrative Agent in its discretion shall determine. The Borrower shall
have no legal, equitable or beneficial interest in the Prepayment
Collateral Account, except for its right to ensure that the funds in such
account shall be applied to the prepayment of the Loans as required by this
Agreement.
SECTION 4. CONDITIONS PRECEDENT.
4.01. CONDITIONS PRECEDENT TO INITIAL LOANS. The obligations of the Banks
to make the Initial Loans are subject, at the time of the making of such Loans
(except as otherwise hereinafter indicated), to the satisfaction of the
following conditions:
(a) CREDIT DOCUMENTS.
(i) This Agreement and each other Credit Document (to the extent
not previously executed and delivered) shall (A) have been, on or
before the Closing Date, duly authorized, executed and delivered by
each of the parties signatory thereto and (B) constitute the legal,
valid and binding obligation of each Credit Party, enforceable in
accordance with its terms (subject to bankruptcy and principles of
equity).
(ii) There shall have been delivered to the Administrative Agent
for the account of each of the Banks the Term A Notes, the Term B
Notes, the Revolving Notes and the Acquisition Term Notes, each duly
executed by the Borrower in the amount and maturity and as otherwise
provided herein.
(b) OFFICERS' CERTIFICATE. The Agents shall have received a
certificate dated the Closing Date signed by the appropriate officer(s) of
the Borrower on behalf of the Borrower in substantially the form of Exhibit
4.01(b) stating that (i) all of the applicable conditions set forth in this
Section 4.01 (in each case disregarding any reference therein that such
condition be deemed satisfactory by the Agents, the Administrative Agent
and/or the Required Banks) have been either satisfied or waived in writing
by the Agents, and the Required Banks as of such date, (ii) immediately
before and after giving effect to the Initial Loans, all representations
and warranties contained herein or in any other Credit Document (except as
expressly amended hereunder or under another Credit Document) shall be true
and correct in all material respects, (iii) no Default or Event of Default
has occurred or will have occurred after giving effect to the Initial Loans
and (iv) since June 30, 1996 no material adverse change in the business,
assets, prospects, properties or condition (financial or otherwise) of
Holdings and its Subsidiaries shall have occurred; PROVIDED, HOWEVER, that,
solely for the purpose of determining the rights of the Credit Parties
against any party to the Recapitalization Documents or the LS Purchase
Documents, the giving of any such certificate shall not be deemed a waiver
of the rights of, nor an admission of the truth thereof by, any Credit
Party or any other party
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indemnified by the Redeeming Shareholders or the Sellers or against any
other party to any Recapitalization Document or any LS Purchase Document.
(c) OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion dated the Closing Date addressed to each of the Banks
from each of (i) Brownstein Hyatt Farber & Strickland, P.C., counsel to the
Credit Parties, (ii) Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., and
(iii) Cox & Smith, Incorporated, counsel to the Sellers, in each case, in
form and substance reasonably acceptable to the Administrative Agent.
(d) CORPORATE PROCEEDINGS. All corporate and legal proceedings and
all instruments and agreements in connection with the LS Purchase, the
execution of this Agreement and the other Credit Documents and all related
transactions shall be reasonably satisfactory in form and substance to the
Agents, and the Administrative Agent shall have received all information
and copies of all certificates, documents and papers, including records of
corporate proceedings and governmental approvals, if any, which the Agents
may have reasonably requested from the Credit Parties or in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate or governmental authorities. Without limiting the
foregoing, the Administrative Agent shall have received from each Credit
Party:
(i) resolutions of the board of directors (or of the board of
directors of the general partner) of each such Person which shall
include, without limitation, (1) resolutions approving such documents
and actions as are contemplated by this Agreement, the LS Purchase
Documents and any related transactions to the extent such Person is a
party thereto and (2) resolutions as to the due authorization,
execution and delivery of this Agreement and the LS Purchase
Documents, to the extent such Person is a party thereto, all such
resolutions to be in form and substance reasonably satisfactory to the
Agents; and
(ii) signature and incumbency certificates of each officer of
each such Credit Party executing instruments, documents or agreements
required to be executed in connection with the transactions
contemplated by this Agreement and the LS Purchase Documents.
(e) LS ACQUISITION DOCUMENTS.
(i) The LS Purchase Documents and any amendments thereto, shall
be in form and substance satisfactory to the Agents; and on the
Closing Date each of the conditions to purchase contained in the LS
Purchase Agreement shall have been satisfied in all material respects
(or waived in writing, such waiver to be reasonably satisfactory to
the Agents) to the reasonable satisfaction of the Agents. Holdings,
Acquisition, Target and the Sellers shall have in all material
respects done and performed such acts and observed such covenants
which each is required to do or
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perform under the LS Purchase Documents on or prior to the Closing
Date (or such acts and covenants shall have been waived in writing,
such waiver to be reasonably satisfactory to the Agents). Full,
complete and accurate copies of each of the LS Purchase Documents
(including all schedules and exhibits thereto) shall have been
provided to the Administrative Agent.
(ii) Holdings and the Borrower shall have provided evidence
satisfactory in form and substance to the Agents that the LS Purchase
has been consummated or will be consummated simultaneously with the
closing of the transactions contemplated by this Agreement.
(f) CAPITAL CONTRIBUTION; CAPITALIZATION. As of the Closing Date,
Holdings (i) shall have received (including in connection with the
Recapitalization and the LS Purchase) cash proceeds in an aggregate amount
of at least $33,500,000 from the issuance of its common stock to KCSN
(which shall be an entity controlled by Kohlberg & Company, LLC), (ii)
shall have a retained investment by the Management Stockholders (after
giving effect to the redemptions contemplated under the Put/Call Option
Agreement) of not less than $12,000,000, (iii) shall have a retained
investment in the form of the Heller Subordinated Note in the amount of not
less than $7,100,000, (iv) shall have issued 404,010 shares of its common
stock to Joseph F. Bradberry, one of the Sellers, as part of the
consideration for the LS Purchase, (v) shall have issued options (as
reflected on Schedule 5.17) in connection with the LS Purchase to certain
former employees of Target who are to be retained by Holdings and/or its
Subsidiaries, and (vi) in connection with the LS Purchase, shall have
contributed a portion of such proceeds to the Borrower (which shall loan
such proceeds to Acquisition) to pay (A) a portion of the consideration in
respect of the LS Purchase and (B) the reasonable fees and expenses of the
Credit Parties and the Agents in connection with the transactions
contemplated by this Agreement and the LS Purchase Documents.
(g) CAPITAL STRUCTURE. On the Closing Date, after giving effect to
the LS Purchase, (i) there shall be no outstanding Capital Stock of
Holdings other than as set forth in Schedule 5.17, (ii) the Borrower shall
be a Wholly Owned Subsidiary of Holdings, (iii) Newco shall be a Wholly
Owned Subsidiary of the Borrower, (iv) all of the partnership interests in
Acquisition shall be owned by the Borrower and Newco, (v) Holdings shall
have no direct Subsidiaries other than the Borrower, and no indirect
Subsidiaries other than the Borrower, Newco and Acquisition (Target having
ceased to exist as a separate entity), and (vi) all of the Capital Stock of
each of the Borrower, Newco and Acquisition shall have been assigned and
pledged to the Administrative Agent, for the benefit of the Banks and
certificates evidencing such Capital Stock shall have been delivered to the
Administrative Agent, together with executed stock powers.
(h) ORGANIZATIONAL DOCUMENTATION, ETC. On or prior to the Closing
Date, the Administrative Agent shall have received a true and complete
certified copy of the
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following documents of each of Holdings, the Borrower, Newco, and
Acquisition, the provisions of which shall be reasonably satisfactory to
the Agents:
(i) Copies of its certificate of incorporation, or certificate
of limited partnership, as the case may be, which (A) shall be
certified by, and accompanied by a good standing certificate from, the
Secretary of State or similar official of the jurisdiction of its
organization and (B) in the case of Holdings, the Borrower, Newco and
Acquisition shall be accompanied by good standing certificates from
each jurisdiction in which it is required to be qualified to do
business as a foreign corporation, each to be dated a recent date
prior to the Closing Date;
(ii) Copies of its by-laws or limited partnership agreement as
the case may be, certified as of a recent date prior to the Closing
Date by its corporate secretary or other person serving in a similar
capacity.
(i) CERTAIN FEES; INTEREST ON OUTSTANDING LOANS. All fees and
reasonable costs and expenses (including, without limitation, reasonable
legal fees and expenses) and other compensation payable to the Agents or
the Banks by Holdings or the Borrower shall have been paid in full, and
there shall have been paid in full all accrued interest and all accrued
commitment fees on the Outstanding Loans and all other fees and expenses
(including, without limitation, reasonable legal fees and expenses) of the
Agents or the Banks, in each case to the extent due and payable and, with
respect to costs and expenses, invoiced or presented on or before the
Closing Date. In addition, on or prior to the Closing Date, there shall
have been delivered to the Agents evidence satisfactory to the Agents that
the fees and expenses payable by Holdings and its Subsidiaries in
connection with the LS Purchase, including, without limitation, fees and
expenses payable to any of its Affiliates related to the issuance and sale
of equity securities, shall not exceed $1,800,000 in the aggregate.
(j) FINANCIAL STATEMENTS, ETC. On or before the Closing Date, the
Agents shall have received: (i) unaudited summary financial data of
Holdings and its Subsidiaries for the twelve-month periods ended on or
about December 31, 1992 through December 31, 1995, inclusive, (which
financial statements shall not have been modified since their receipt by
the Administrative Agent); (ii) audited consolidated financial statements
of Holdings and its Subsidiaries for Holdings' fiscal year ended on or
about June 30, 1996; (iii) a financial and accounting report prepared by
Arthur Andersen relating to Holdings financial reporting and systems; (iv)
unaudited income statements, cash flows and balance sheets for Holdings and
its Subsidiaries for the period July 1, 1996 through October 31, 1996; (v)
unaudited financial statements, cash flows and balance sheets of Target for
the fiscal years ended June 30, 1994 and June 30, 1995; (vi) audited
financial statements of Target for its fiscal year ended June 30, 1996;
(vii) a pro forma balance sheet for Holdings and its Subsidiaries, as of
the Closing Date after giving effect to the LS Purchase and the Initial
Loans; and (vii) a revised annual plan, giving
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effect to the LS Purchase, (by month for the calendar year commencing on or
about January 1, 1997) for each of Holdings' and its Subsidiaries' five
calendar years commencing on or about January 1, 1997, in each case,
accompanied by a statement by Holdings that such projections are based on
estimates and assumptions believed by Holdings in good faith to be
reasonable in light of the conditions which existed at the time of their
preparation as to the future financial performance of Holdings, each in
form, scope and substance satisfactory to the Administrative Agent,
prepared in accordance with Holdings' normal accounting procedures applied
on a consistent basis, including (A) forecasted balance sheets and
statements of operations, stockholders' equity and cash flows of Holdings
and its Subsidiaries for such periods, (B) the amount of forecasted capital
expenditures (including the amount of such costs to be capitalized, if any)
for such periods, and (C) Holdings and its Subsidiaries' forecasted
compliance with Sections 7.01 through 7.05. Each of the items delivered
pursuant to this Section 4.01(j), which are attached as Schedule 4.01(j),
shall be satisfactory to the Agents in their reasonable discretion. Since
the time of the preparation of such financial projections, no fact or facts
have come to the attention of any Credit Party to cause such Person to
believe that any of the estimates and assumptions on which such projections
are based are not reasonable.
(k) INSURANCE. The insurance coverage set forth on Schedule 5.23
shall be in full force and effect with respect to Holdings and its
Subsidiaries and their respective properties.
(l) LITIGATION. Except as set forth on Schedule 4.01(l), there shall
be no litigation pending or threatened by any entity (private or
governmental) involving any Credit Party or any other party to any LS
Purchase Document or any of the properties or assets of any such Person
that could reasonably be expected to restrain, enjoin or result in the
obtaining of a judgment for substantial damages with respect to the LS
Purchase or the con summation of the transactions contemplated by the LS
Purchase Documents, and there shall be no pending or threatened litigation
involving any Credit Party or involving any other party to any LS Purchase
Document or any of the properties or assets of any such Person that could
reasonably be expected to have a material adverse effect on the operations
or properties being acquired in the LS Purchase or the ability of the
Credit Parties to operate the same or that could reasonably be expected to
have a Material Adverse Effect.
(m) INDEBTEDNESS, ETC. (i) Except as set forth on Schedule 4.01(m),
on or before the Closing Date, each Credit Party shall have received all
necessary consents or waivers or shall have amended, supplemented or
otherwise modified, repaid or defeased its outstanding Indebtedness in a
manner and on terms satisfactory to the Agents such that there exists no
default or potential default (as a result of the consummation of the LS
Purchase) with respect to such Indebtedness or under any note, evidence of
indebtedness, capital lease, mortgage, deed of trust, security document or
other agreement relating to such Indebtedness and such indentures, notes,
evidences of indebtedness, capital lease
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mortgages, deeds of trust or other agreements relating to such Indebtedness
shall not contain (i) any restriction on the ability of Holdings or any of
its Subsidiaries to grant any Lien in favor of the Banks (other than in the
case of Capital Leases, or purchase money debt (excluding Real Property
leases), a Lien on the property financed thereby) or any financial
covenants or tests applicable to Holdings or any of its Subsidiaries.
(ii) The terms and conditions of any Indebtedness of Holdings
and its Subsidiaries as of the Closing Date which remains outstanding
after giving effect to the LS Purchase and the making of the Initial
Loans, and the extent to which any Indebtedness of Target remains
outstanding as Indebtedness of Acquisition after giving effect to the
LS Purchase and the making of the Initial Loans shall, in each case,
be reasonably acceptable to the Agents. The Administrative Agent
shall have received evidence satisfactory to it that the Indebtedness
reflected on Schedule 5.20 as being paid as of the Closing Date is
being paid with the proceeds of the Initial Loans.
(n) SECURITY DOCUMENTS. In each case, to the extent the same shall
not have been previously delivered to the Administrative Agent, the
Security Documents shall have been duly executed and delivered by each of
the Credit Parties party thereto and there shall have been delivered to the
Administrative Agent: (i) a certificate or certificates representing all
Capital Stock of Newco and Acquisition, together with executed and undated
stock powers and/or assignments in blank, which Capital Stock shall (taken
together with the Capital Stock of the Borrower which was delivered as of
the Effective Date), represent and constitute all of the Capital Stock of
the Borrower and its Subsidiaries; (ii) executed financing statements for
filing under the provisions of the UCC in each of the offices where such
filing is necessary or appropriate to grant the Administrative Agent a
perfected first priority Lien in the Collateral acquired in the LS Purchase
as to which a security interest may be perfected by the filing of a
financing statement, which Lien shall be superior to and prior to the
rights of all third persons and subject to no other Liens except the Prior
Liens set forth in Schedule 5.10A; (iii) certified copies of Requests for
Information (Form UCC-11 or the equivalent), or equivalent reports or lien
search reports listing all effective financing statements which name
Target, Newco and Acquisition and which are filed in any jurisdiction in
which any of such Collateral is located and the jurisdiction in which such
Person's principal place of business is located (none of which shall cover
the Collateral covered, or purported to be covered, by the Security
Documents other than Prior Liens and Permitted Encumbrances); and (iv)
evidence of the completion of all recordings and filings (or of the making
of arrangements to file contemporaneously with the making of the Initial
Loans) of each such Security Document and delivery of such other security
and other documents as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created, or purported
or intended to be created, by the Security Documents; and (v) payoff
letters executed by the holders of any Indebtedness reflected as being paid
as of the Closing Date on Schedule 5.20 setting forth the amount required
to discharge such Indebtedness, and
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evidence that the proceeds of the Initial Loans will be used to so
discharge such Indebtedness.
(o) LEASES. All Capital Leases and Operating Leases of Holdings and
its Subsidiaries and all Capital Leases and Operating Leases of Target
outstanding immediately prior to the Closing Date shall remain outstanding
after giving effect to the LS Purchase and the making of the Initial Loans
hereunder.
(p) CONSENTS, ETC. All necessary or required governmental and third
party approvals and consents (including, without limitation, all approvals
and consents required in connection with any Environmental Laws), in
connection with the LS Purchase or the transactions contemplated by this
Agreement and the LS Purchase Documents and otherwise referred to herein or
therein to be completed on or before the Closing Date are set forth on
Schedule 4.01(p) and shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains, prevents or imposes, in
the reasonable judgment of the Agents, material adverse conditions upon the
consummation of the LS Purchase. There shall not exist any judgment or
order enjoining or otherwise restraining the making of the Loans hereunder
or the consummation of the LS Purchase.
(q) BORROWING BASE; BORROWING BASE CERTIFICATE. The Administrative
Agent and the Banks shall have received and the Required Banks shall be
satisfied in all reasonable respects with a Borrowing Base Certificate
which shall be substantially in the form of Exhibit 6.01(m) and shall be
prepared as of a date prior to the Closing Date that is reasonably
satisfactory to the Agents. Such Borrowing Base Certificate shall indicate
that the Borrowing Base on the Closing Date (before and after giving effect
to the LS Purchase) exceeds the amount of the Revolving Loans to be
outstanding as of such date by not less than $4 million.
(r) NO MATERIAL ADVERSE CHANGE. Since June 30, 1996 nothing shall
have occurred or become known to any Credit Party which the Agents shall
have determined has or could reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the business or operations
of Holdings and its Susidiaries or on the business or operations of Target
or has resulted or could result in a material adverse change in the
business, assets, prospects, properties or condition (financial or
otherwise) of any Credit Party or of Target or in the ability of the
Borrower or any of its Subsidiaries (after giving effect to the LS
Purchase) as of the Closing Date to conduct its operations in accordance
with the revised projections furnished to the Agents pursuant to Section
4.01(j). As of the Closing Date, there shall not have occurred and be
continuing a material disruption of, or material adverse change in, United
States financial, banking or capital markets, as reasonably determined by
the Agents in their sole discretion.
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(s) EMPLOYMENT AGREEMENTS. The Administrative Agent shall have
received a copy of the employment agreement between Acquisition and Joseph
F. Bradberry, and such agreement shall be in full force and effect and in
form and substance satisfactory to the Agents.
(t) WATER RIGHTS. The Water Rights shall be assigned to Acquisition
in connection with the LS Purchase and, after giving effect to the LS
Purchase, the Water Rights shall be in full force and effect for the
benefit of Acquisition (or, as applicable, permit applications shall be
pending with respect to such Water Rights in the name of Acquisition, or
rights to such pending applications shall have been assigned to
Acquisition), and Acquisition shall have good and valid title to any such
Water Rights.
(u) SPECIFIED COLLATERAL PERFECTION ACTIONS. The "Specified
Collateral Perfection Actions" (as defined in the Original Credit
Agreement) shall have been performed to the satisfaction of the
Administrative Agent.
The acceptance of the proceeds of each Borrowing of Initial Loans shall
constitute a representation and warranty by the Borrower to each of the Banks
that all of the applicable conditions specified above have been satisfied or
waived as of that time. All of the certificates, legal opinions and other
documents and papers referred to in this Section 4.01, unless otherwise
specified, shall be delivered to the Administrative Agent at the Agent's Office
(or such other location as may be specified by the Agents) for the account of
each of the Banks and in sufficient counterparts for each of the Banks and shall
be reasonably satisfactory in form and substance to the Agents.
4.02. CONDITIONS PRECEDENT TO ALL LOANS. The obligations of the Banks to
make all Loans (which term shall not include a conversion or continuation of a
Loan), including the Initial Loans, are subject, at the time of the making of
each such Loan, to the satisfaction of the following conditions:
(a) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the
making of each Loan and also after giving effect thereto (and in the case
of the Initial Loans, after giving effect to the LS Purchase; and in the
case of any Acquisition Term Loans, after giving effect to the transactions
contemplated to be effected with the proceeds of such Loan) (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in each of the other Credit Documents in
effect at such time shall be true and correct with the same effect as
though such representations and warranties had been made on and as of the
date of the making of such Loan, unless such representation and warranty
expressly indicates that it is being made as of any other specific date in
which case it shall be true and correct on and as of such other date.
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(b) NO MATERIAL ADVERSE CHANGE, ETC.
(i) Since June 30, 1996, nothing shall have occurred or become
known to any Credit Party which the Required Banks or the Administrative
Agent shall have determined has or could reasonably be expected to have a
Material Adverse Effect.
(ii) There shall not have been issued or filed any judgment or
order which remains outstanding enjoining or otherwise restraining the
making of any Loans hereunder.
(c) MARGIN RULES. On the date of each Borrowing of Loans, neither
the making of any Loan nor the use of the proceeds thereof will violate the
provisions of Regulation G, U or X of the Board of Governors of the Federal
Reserve System.
(d) BORROWING BASE CERTIFICATE. The Administrative Agent and the
Required Banks shall have received, and the Required Banks shall be
reasonably satisfied (both as to form and substance) with, the Borrowing
Base Certificate last delivered to the Banks.
The acceptance of the proceeds of each Borrowing of Loans, including the
Initial Loans, shall constitute a representation and warranty by each Credit
Party to each of the Banks that all of the applicable conditions specified in
this Section 4.02 have been satisfied or waived (in each case disregarding any
reference therein that such condition be deemed satisfactory by the
Administrative Agent and/or the Required Banks); PROVIDED, HOWEVER, that, solely
for the purpose of determining the rights of the Credit Parties against any
party to the Recapitalization Documents or the LS Purchase Documents, no
representation or warranty hereunder shall be deemed a waiver of any rights or
an admission of the truth thereof by any Credit Party or any other party
indemnified by the Redeeming Shareholders or the Sellers or against any other
party to the Recapitalization Agreement or the LS Purchase Agreement. All of
the certificates, documents and papers referred to in this Section 4.02, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Agent's Office (or such other location as may be specified by the Administrative
Agent) for the account of each of the Banks and in sufficient counterparts for
each of the Banks and shall be reasonably satisfactory in form and substance to
the Administrative Agent.
4.03. ADDITIONAL CONDITIONS PRECEDENT TO ACQUISITION TERM LOANS. The
obligations of the Banks to make Acquisition Term Loans (which shall not include
a conversion or continuation of any such Loan or the refinancing as of the
Closing Date of the Outstanding Acquisition Term Loans) are subject to the
satisfaction of the following additional conditions:
(a) Any such Acquisition Term Loan shall be made solely to effect one
or more Permitted Business Acquisitions;
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(b) No later than ten Business Days prior to the applicable
Acquisition Term Loan Closing Date (except to the extent the Administrative
Agent agrees to a shorter period), the Administrative Agent shall have
received (with sufficient copies for each Bank) each of the following with
respect to the consummation of the Permitted Business Acquisition to be
financed with the proceeds of any such Acquisition Term Loan:
(i) a pro forma balance sheet and pro forma consolidated
statements of income and cash flows of Holdings and its Subsidiaries,
after giving effect to the consummation of the proposed Permitted
Business Acquisition, as at the end of the calendar quarter in which
such Permitted Business Acquisition is to be consummated;
(ii) a revised consolidated plan, substantially in the form of
the consolidated plan provided pursuant to Section 4.01(j)(vi) or
otherwise in a form acceptable to the Administrative Agent, for the
then current calendar year and the next four succeeding calendar
years, in each case, giving effect to such Permitted Business
Acquisition, prepared in accordance with Holdings' normal accounting
procedures (and which will represent management's reasonable estimate
of the projected performance of Holdings and its Subsidiaries during
such periods) applied on a consistent basis, including, without
limitation (i) forecasted consolidated balance sheets, consolidated
statements of operations, of stockholders' equity and of cash flows of
Holdings and its Subsidiaries on a consolidated basis for such
periods, (ii) the amount of forecasted capital expenditures for such
periods, and (iii) forecasted compliance with Sections 7.01 through
7.05; PROVIDED, HOWEVER, that if any such forecast projects a
potential failure to comply with any provision of this Agreement at
some future date, such forecast shall not constitute a Default or
Event of Default or anticipatory or other breach hereof.
(iii) a certificate of the president or chief financial officer
of the Borrower (A) with respect to a proposed Permitted Business
Acquisition which is a Designated Acquisition which is substantially
in the form of Exhibit 4.03(b)(iii)-1, and (B) with respect to a
Permitted Business Acquisition which is an Unspecified Permitted
Acquisition which is substantially in the form of Exhibit
4.03(b)(iii)-2,
(x) certifying to the preparation of the pro forma financial
statements and budgets referenced in subclauses (i) and (ii)
and certifying that, after giving effect to such Permitted
Business Acquisition, no Default or Event of Default shall
exist, and that, on a pro forma basis, Holdings and its
Subsidiaries (including any Subsidiary of the Borrower to be
acquired in the contemplated Permitted Business
Acquisition), will be in compliance with the covenants set
forth in Sections 7.01 through 7.05, inclusive, as of the
end of the calendar quarter in which such
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Acquisition is to be consummated and setting forth the
calculations required to establish such pro forma compliance
and appending a spreadsheet showing any adjustments to the
actual EBITDA of the Permitted Business Acquisition made in
the preparation of such pro forma financial statements and
calculations;
(y) (I) with respect to a Permitted Business Acquisition which
is a Designated Acquisition, certifying either (A) that the
terms and conditions of such Acquisition do not vary in any
material respect from those set forth on or referenced in
Schedule 4.03, or (B) if and to the extent that any such
terms and conditions do so vary in any material respect,
specifying any such variance and certifying that, except as
so specified, the terms and conditions of such Acquisition
do not vary in any material respect from those so set forth
on or referenced in Schedule 4.03, or
(II) with respect to any Permitted Business Acquisition
which is an Unspecified Permitted Acquisition, setting
forth, to the reasonable satisfaction of the Administrative
Agent, the material terms and conditions of such
Acquisition; and
(z) certifying that the conditions set forth in each of Sections
4.02 and 4.03 (other than the completion of filings and
recordings to be performed upon the applicable Acquisition
Term Loan Closing Date) have been satisfied with respect to
such proposed Acquisition Term Loan Borrowing.
(c) With respect to any Permitted Business Acquisition which is a
Designated Acquisition, any terms and conditions of such acquisition which
vary in any material respect from those set forth on or referenced in
Schedule 4.03 shall be reasonably acceptable to the Administrative Agent,
and with respect to any Permitted Business Acquisition which is an
Unspecified Permitted Acquisition, the terms and conditions of such
Acquisition shall be reasonably acceptable to the Administrative Agent;
(d) On or before the applicable Acquisition Term Loan Closing Date,
the Borrower shall have complied, in all material respects, with the
provisions of Sections 6.14 and 6.15 as to any property acquired or to be
acquired in connection with any such Permitted Business Acquisition, except
for any such provisions with which compliance is waived by the
Administrative Agent, including, without limitation, that the Borrower and
its Subsidiaries (including any Subsidiary so acquired) shall execute and
deliver to the Administrative Agent any Additional Security Documents (or
Subsidiary Guarantees) required to provide the Administrative Agent for the
benefit of the Banks with a valid,
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perfected security interest in any Collateral to be acquired in such
Permitted Business Acquisition; and
(e) Without limiting the foregoing clause (d), with respect to any
Real Property (whether fee title or leasehold) in which an interest is
acquired in connection with any such Permitted Business Acquisition
(including any such interest held by any Subsidiary of the Borrower
acquired in such acquisition), the following conditions shall be satisfied
on or before the Acquisition Term Loan Closing Date:
(i) The Administrative Agent, for the benefit of the Banks,
shall be granted a first mortgage or deed of trust (or
leasehold mortgage or deed of trust) on all of the interests
in such Real Property by the Person holding such acquired
interest, subject to no prior Liens except for Permitted
Encumbrances.
(ii) Any leasehold mortgages or deeds of trust granted pursuant
to the foregoing subclause (i) must be consented to by any
owners of such Real Property (if other than the mortgagor or
grantor) pursuant to an estoppel and consent agreement in
form and substance satisfactory to the Administrative Agent.
(iii) There shall be issued a lender's title insurance policy as
to each mortgage or deed of trust granted pursuant to the
foregoing subclause (i), with no exceptions which are not
reasonably acceptable to the Administrative Agent, and,
unless the Administrative Agent shall otherwise elect,
as-built surveys sufficient to remove the survey
exception from all title insurance policies shall be
delivered to the Administrative Agent.
(iv) A Phase I environmental report with respect to each parcel
of such Real Property satisfactory to the Administrative
Agent (and upon which the Banks shall be entitled to
rely) shall be delivered to the Administrative Agent.
(v) Evidence reasonably acceptable to the Administrative Agent
shall be presented that the intended use by the Borrower and
its Subsidiaries of each of such Real Properties complies
with all zoning and land use laws, and that all necessary
permits and approvals for the operation of such properties
in such manner have been obtained and are in full force and
effect.
(f) There shall be delivered to the Administrative Agent (in each
case, with sufficient copies for each Bank) copies of the following
documents related to any
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Permitted Business Acquisition to be consummated with the proceeds of an
Acquisition Term Loan, (i) the term sheet for such Acquisition, upon
execution thereof by the parties thereto, and (ii) upon consummation of
such Acquisition, a complete set of the documents effecting such
Acquisition, together with all schedules and exhibits (including, without
limitation the acquisition agreement and any Seller Notes issued in
connection therewith).
(g) Any fees or expenses of the Agents or the Banks which are then
due and payable, whether due in connection with such Acquisition Term Loan
Borrowing or otherwise, shall have been paid in full prior to, or
simultaneously with, the applicable Acquisition Term Loan Closing.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce
the Agents and the Banks to enter into this Agreement and to make the Loans
provided for herein, Holdings and the Borrower each makes the following
representations and warranties to, and agreements with, the Agents and the
Banks, all of which shall survive the execution and delivery of this Agreement
and the making of the Loans (with the execution and delivery of this Agreement
and the making of each Loan thereafter being deemed to constitute a
representation and warranty that the matters specified in this Section 5 are
true and correct in all material respects both before and after giving effect to
the LS Purchase and the related transactions and as of the date of each such
Loan unless such representation and warranty expressly indicates that it is
being made as of any specific date).
5.01. STATUS. Each Credit Party is a duly organized and validly existing
corporation or limited partnership, as the case may be, in good standing under
the laws of the jurisdiction of its organization. After giving effect to the LS
Purchase, Target shall have merged with and into Acquisition, and all of its
right, title and interest in any assets as of such date shall thereupon be held
directly by Acquisition. Each Credit Party has all corporate power and
authority, and has obtained all requisite governmental licenses, authorizations,
consents and approvals (including, without limitation, those required by
Environmental Laws), to own and operate its property and assets and to transact
the business in which it is engaged and presently proposes to engage, except for
those governmental licenses, authorizations, consents or approvals the failure
of which to be so obtained would not have a Material Adverse Effect; and is duly
qualified and authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect.
5.02. POWER AND AUTHORITY; BUSINESS. Each Credit Party had or has, as
applicable, the requisite corporate power and authority to execute, deliver and
carry out the terms and provisions of the Transaction Documents and LS
Acquisition Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Transaction Documents and LS Purchase Documents to which it is a party. Each
Credit Party has duly executed and delivered each Transaction Document and each
LS Acquisition Documents to which it is a party and each such Document
constitutes the legal, valid and binding obligation of
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such Credit Party and is enforceable against such Credit Party in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to the rights of creditors generally or
by general principles of equity or the discretion of the court before which any
proceeding therefor may be brought.
5.03. NO VIOLATION. Neither the execution, delivery or performance by any
Credit Party of the Documents to which it is a party nor compliance with the
terms and provisions thereof nor the consummation of the transactions
contemplated therein (a) will contravene any applicable provision (or any
provision to be applicable following the LS Purchase) of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or Governmental
Authority; (b) conflicts or will conflict or be inconsistent with, or results or
will result in any breach or violation of any of the terms, covenants,
conditions or provisions of, or constitutes or will constitute a default under,
or (other than pursuant to the Security Documents) results or will result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of any Credit Party pursuant to the terms of, any
indenture, mortgage, deed of trust or other material instrument or agreement to
which any Credit Party is a party or by which it or any of its property or
assets is bound (or will be bound after giving effect to the LS Purchase) or to
which it may be subject or any law, statute, rule, regulation, order, writ,
injunction or decree of any court or Governmental Authority referred to in
clause (a) above; or (c) will violate any provision of the certificate of
incorporation, certificate of formation, certificate of limited partnership,
by-laws, limited liability company agreement of any Credit Party, except in the
case of any of the foregoing clauses (a) through (c) where such contravention,
conflict, inconsistency, breach, default, creation, imposition, obligation or
violation does not have a Material Adverse Effect. Neither the execution,
delivery or performance of any Document, nor the consummation of the
Recapitalization or LS Purchase nor the terms of the financing in connection
therewith conflicted, conflicts or will conflict or be inconsistent with, or
results or will result in any breach or violation of any of the terms,
covenants, conditions or provisions of, or constitutes or will constitute a
default under, or results or will result in the creation or imposition of (or
the obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the property or assets of any Credit Party pursuant to
the terms of, any indenture, mortgage, deed of trust, instrument or agreement
relating to Indebtedness for borrowed money or the equivalent thereof or other
material agreement to which any Credit Party is a party or by which it or any of
its property or assets is bound or to which it may be subject or any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
Governmental Authority referred to in clause (a) above, except, in each case,
where such conflict, inconsistency, breach, default, creation, imposition or
obligation could not reasonably be expected to have a Material Adverse Effect.
5.04. LITIGATION. There are no actions, judgments, suits, investigations
or proceedings by any administrative or other public authority or Governmental
Authority or other Person pending or, to the best knowledge of Holdings and the
Borrower, threatened with respect to any Credit Party or any of its assets (both
before and after giving effect to the LS Acquisition) that (a) challenges the
consummation of the Recapitalization or of the LS Acquisition or the validity of
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any of the Documents or the transactions contemplated thereby, including the
making of any Loans, or (b) taken individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect or a materially adverse
effect on the assets or business operations acquired in the LS Purchase.
5.05. USE OF PROCEEDS.
(a) All proceeds of the Existing Term A Loans and the Existing Term B
Loans were used by the Initial Borrowers to provide a portion of the cash
consideration to be paid by Holdings pursuant to the Recapitalization
Agreement, to repay existing Indebtedness and to pay fees and expenses
related to the consummation of the Recapitalization, the assignment of
assets to the Borrower by Holdings and the financing of the
Recapitalization.
(b) All proceeds of the Term A Loans and the Term B Loans were used
by the Borrower (i) to refinance the Existing Term A Loans and the Existing
Term B Loans and (ii) to loan to Acquisition to be used to provide a
portion of the cash consideration to be paid by Acquisition pursuant to the
LS Purchase Agreement, to repay the existing Indebtedness reflected on
Schedule 5.20 as being paid in connection with the LS Purchase and to pay
fees and expenses related to the consummation of the LS Purchase and the
financing of the LS Purchase.
(c) Not more than $5,000,000 of the proceeds of the Revolving Loans
were used by the Borrower on the Closing Date to provide, directly or
indirectly via loans to Acquisition, a portion of the cash consideration
pursuant to the LS Purchase Agreement, to repay existing Indebtedness of
Target, to consummate the transfer of Holdings' assets to the Borrower and
to pay related fees and expenses and the remaining proceeds of the
Revolving Loans shall be used to finance the ongoing capital requirements
of the Borrower and its Subsidiaries and for general corporate purposes.
(d) All of the proceeds of the Acquisition Term Loans (other than the
proceeds of the Acquisition Term Loans used to refinance the Existing
Acquisition Term Loans on the Closing Date) shall be used by the Borrower
to provide all or a portion of the consideration for Permitted Business
Acquisitions, to pay existing Indebtedness encumbering property acquired in
such transactions (including existing Indebtedness of any Subsidiary of the
Borrower so acquired), and to pay related fees and expenses.
(e) Neither the making of any Loan hereunder nor the use of the
proceeds thereof shall violate or be inconsistent with the provisions of
Regulation G, U or X of the Board of Governors of the Federal Reserve
System.
5.06. GOVERNMENTAL APPROVALS, ETC. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption or other action by or notice
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to, any third party or any foreign or domestic, administrative or public body or
Governmental Authority, or by any subdivision thereof (except for (a) such
orders, consents, approvals, licenses, authorizations or validations which, if
not obtained or made, would not have a Material Adverse Effect or which have
previously been obtained or made and (b) filings to perfect security interests
granted pursuant to the Security Documents) is necessary or required to
authorize or is required in connection with (i) the execution, delivery and
performance of any Document or the transactions contemplated thereby or (ii) the
legality, validity, binding effect or enforceability of any Document. As of the
Effective Date, there did not exist any judgment, order, injunction or other
restraint issued or filed with respect to the transactions contemplated by the
Transaction Documents, including the consummation of the Recapitalization, the
making of Loans or the performance by any Credit Party of its obligations under
any Transaction Document. At the time of the making of the Initial Loans, there
does not exist any judgment, order, injunction or other restraint issued or
filed with respect to the transactions contemplated by the LS Purchase
Documents, including the consummation of the LS Purchase, the making of Loans or
the performance by any Credit Party of its obligations under any LS Purchase
Document.
5.07. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
Holdings nor any of its Subsidiaries was, prior to the Closing Date, is, or will
be after giving effect to the transactions contemplated by the LS Purchase
Documents, (a) an "investment company" or a company "controlled" by an
"investment company," in each case within the meaning of the Investment Company
Act of 1940, as amended; or (b) a "holding company," a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," in each case within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.08. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished in writing by or on behalf of
any Credit Party to any Bank and either (a) contained in any Credit Document or
(b) required to be furnished pursuant to Section 4.01, is, and as of the Closing
Date will be, and all other such factual information (taken as a whole) which
has been or hereafter will be furnished in writing by or on behalf of any Credit
Party to the Administrative Agent or any Bank pursuant to Section 6.01 or 4.03
is or will be, true and accurate in all material respects on the date as of
which such information is dated or certified and is not and will not be
incomplete by omitting to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that it is understood that the
projections and pro forma financial information contained in such materials are
based on good faith estimates and assumptions believed by such Credit Party to
be reasonable at the time made, but that actual results may vary from the
projections.
5.09. FINANCIAL CONDITION; FINANCIAL STATEMENTS; PROJECTIONS.
(a) No Credit Party entered into the arrangements contemplated by the
Original Credit Agreement or by the other Transaction Documents or by this
Agreement or by the
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LS Purchase Documents, or did intend or intends to make any transfer or
incur any obligations hereunder or thereunder, with actual intent to
hinder, delay or defraud either then existing, present or future creditors.
On and as of the Effective Date, the Closing Date (and as of each
Acquisition Term Loan Closing Date), on a pro forma basis after giving
effect to (i) as applicable, the Recapitalization or the LS Purchase (and
the transactions to be consummated with the proceeds of any such
Acquisition Term Loan), (ii) the incurrence of all Indebtedness in
connection therewith, (iii) the creation of all Liens created or to be
created in connection therewith and (iv) the granting of all guarantees
granted by any Credit Party in connection therewith, (A) no Credit Party
expected or expects that final judgments against it in actions for money
damages with respect to pending or threatened litigation will be rendered
at a time when, or in an amount such that, it will be unable to satisfy any
such judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions, the
earliest reasonable time at which such judgments might be ren dered and the
cash available to such Credit Party, after taking into account all other
anticipated uses of the cash of such Credit Party (including the payments
on or in respect of debts (including its Contingent Obligations)); (B) no
Credit Party incurred, will have incurred or intends to, or believes that
it will, incur debts beyond its ability to pay such debts as such debts
mature (taking into account the timing and amounts of cash to be received
by such Credit Party from any source, and of amounts to be payable on or in
respect of debts of such Credit Party and the amounts referred to in the
preceding clause (A)); (C) each Credit Party, after taking into account all
other anticipated uses of the cash of such Person, anticipates being able
to pay all amounts on or in respect of debts of such Person when such
amounts are required to be paid; and (D) each Credit Party will have
sufficient capital with which to conduct its present and proposed business
and the property of such Credit Party will not constitute unreasonably
small capital with which to conduct its present or proposed business. For
purposes of this Section 5.09, "debt" means any liability on a claim, and
"claim" means a (1) right to payment whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or
(2) right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy
is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(b) Holdings has heretofore delivered to the Banks the financial
statements attached hereto as Schedule 4.01(j). All such financial
statements were prepared in accordance with GAAP consistently applied.
Such financial statements (other than the pro forma balance sheets) present
fairly, in all material respects, the financial position of Holdings and
its Subsidiaries on a consolidated basis as of the date and for the periods
covered thereby, and such pro forma balance sheet presents fairly, in all
material respects, the pro forma financial position of Holdings and its
Subsidiaries as of the Closing Date, based on the assumptions stated
therein, and before and after giving effect to the transactions described
therein.
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(c) There have heretofore been delivered to the Banks the pro forma
income projections for Holdings and its Subsidiaries, pro forma balance
sheet projections for Holdings and its Subsidiaries and pro forma cash flow
projections for Holdings and its Subsidiaries for the five calendar years
commencing January 1, 1997, inclusive, referred to in Section 4.01(j)
including the financial statements delivered as of the Closing Date, and,
in connection with any Acquisition Term Loan, the proforma financial
statements referred to in Section 4.03 (the "PROJECTED FINANCIAL
STATEMENTS"), which give effect to the LS Purchase or, as applicable, the
applicable Permitted Business Acquisitions and all Indebtedness and Liens
incurred or created in connection therewith. The Projected Financial
Statements are based on estimates and projections which are believed by
Holdings and its Subsidiaries to be reasonable in light of the conditions
which existed at the time of their preparation as to the future financial
performance of Holdings and its Subsidiaries.
(d) As of the Closing Date, except as fully reflected or reserved
against in the financial statements (including the pro forma balance sheet
as of the Closing Date) described in Section 5.09(b), there were not and
will not be any liabilities or obligations with respect to Holdings and its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due, other than for such as have
been incurred by Holdings and its Subsidiaries in connection with the
Recapitalization or the LS Purchase and other than trade payables incurred
in the ordinary course of business since the respective dates of such
financial statements) which, either individually or in aggregate, were or
will be material to such Persons. No Credit Party knows of any basis for
the assertion against Holdings or any of its Subsidiaries of any liability
or obligation of any nature whatsoever that is not fully reflected in the
financial statements described in Section 5.09(b) or the Recapitalization
Agreement and the LS Purchase Agreement or the schedules thereto (other
than trade payables incurred in the ordinary course of business) since the
respective dates of such financial statements which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.10. SECURITY INTERESTS. Upon the execution, delivery and filing or
recording in all appropriate registries or offices of the Security Documents,
the Security Documents create or will create, in favor of the Administrative
Agent for the benefit of the Banks, as security for the obligations purported
to be secured thereby, a valid and enforceable perfected security interest in
and Lien upon all of the Collateral, which security interest and Lien shall
be superior to and prior to the rights of all third persons and subject to no
Liens except the Prior Liens and Permitted Encumbrances applicable to such
Collateral. Set forth on Schedule 5.10A is a true list of all Liens (other
than Liens included in clause (a) of the definitions of Permitted
Encumbrances) (i) on the property of Holdings and its Subsidiaries after
giving effect to the LS Purchase (collectively, the "PRIOR LIENS"). The
respective pledgor or assignor, as the case may be, has (or, on and after the
time it executes the respective Security Document, will have) good and
marketable title to the Collateral covered by such Security Document, free
and clear of all Liens other than Liens
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permitted under the applicable Security Document. No filings or recordings
are required in order to perfect the security interests created under any
Security Document except for filings or recordings in the registries and
offices set forth in Schedule 5.10B.
5.11. TAX RETURNS AND PAYMENTS. Except for the extension, to March 31,
1997, of the filing deadline for the tax returns due September 15, 1996 for
Holdings' fiscal year ended June 30, 1996, each of Holdings and its Subsidiaries
has filed all tax returns required to be filed by it (which are true and correct
in all material respects) and has paid all taxes and assessments due and
payable, other than (a) those not yet delinquent and (b) those contested in good
faith and for which adequate reserves have been established, except, solely with
respect to tax returns and taxes and assessments required to be filed or paid by
or on behalf of any such Person relating to periods prior to the Closing Date,
for any failure which, individually or in the aggregate, would not have a
Material Adverse Effect. Each of Holdings and its Subsidiaries has paid, or has
provided adequate reserves (in accordance with GAAP) for the payment of, all
federal, state, local and foreign income taxes (including, without limitation,
franchise taxes based upon income) applicable for all prior fiscal years and for
the current fiscal year to the date hereof except, solely with respect to tax
returns and taxes and assessments required to be filed or paid by or on behalf
of any such Person relating to the period prior to the Closing Date, for any
failures which, individually or in the aggregate, would not have a Material
Adverse Effect. Neither Holdings nor any of its Subsidiaries know of any
proposed tax assessment against any such Person that could reasonably be
expected to have a Material Adverse Effect which is not being actively contested
in good faith by such Person to the extent affected thereby in good faith and by
appropriate proceedings; PROVIDED, HOWEVER, that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.12. ERISA. Neither Holdings nor its Subsidiaries nor any ERISA
Affiliate of any such Person (including any ERISA Affiliate of Holdings prior to
the Recapitalization or of Target prior to the LS Purchase) has, for a period
commencing six years prior to the Closing Date, established, maintained,
participated in or been obligated to contribute to any Plan.
5.13. CAPITAL STOCK; SUBSIDIARIES, ETC.
(a) From and after the consummation of the LS Purchase, all of the
outstanding Capital Stock of Holdings and its Subsidiaries shall be validly
issued, fully paid and nonassessable. Except as set forth in the
Stockholders Agreement, there are no preemptive rights on the part of any
holder of any class of securities or equity interests of Holdings and its
Subsidiaries.
(b) The Borrower is a direct, Wholly Owned Subsidiary of Holdings.
Newco is a direct, Wholly Owned Subsidiary of the Borrower. The Borrower
holds 99% of the partnership interests in Acquisition, as the sole limited
partner, and Newco holds the remaining 1% of the partnership interests in
Acquisition, as the sole general partner.
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Holdings owns no Capital Stock of any Person other than the Borrower, and
Holdings has no Subsidiaries other than the Borrower (excluding
Subsidiaries of the Borrower, which Holdings owns indirectly).
(c) Schedule 5.13 (including as supplemented from time to time
pursuant to Section 6.01(n)) lists each Subsidiary of the Borrower and sets
forth the jurisdiction of incorporation (or of formation) of each such
Subsidiary. There are no Subsidiaries of the Borrower which are not
directly or indirectly Wholly Owned Subsidiaries. Each Subsidiary of the
Borrower has guaranteed the Borrower's obligations hereunder and the
Borrower and each such Subsidiary has pledged all of its property to secure
the same, pursuant to a Subsidiary Guarantee and related Security
Documents.
5.14. PROPRIETARY RIGHTS. Holdings and each of its Subsidiaries owns or
possesses adequate patents, patent applications, copyrights, licenses, permits,
trademarks, trademark applications, service marks, service mark applications,
trade names, trade secrets and know how or rights thereto (collectively,
"INTELLECTUAL PROPERTY"), necessary to conduct its business as presently
conducted and as proposed to be conducted. No claim is pending or, to the best
knowledge of Holdings and each such Subsidiary, threatened to the effect that
Holdings or any of its Subsidiaries infringes upon the asserted rights of any
other Person under any Intellectual Property, and to the best knowledge of
Holdings or any of its Subsidiaries, there is no basis for any such claim
(whether or not pending or threatened), in each case where such claim could
reasonably be expected to have a Material Adverse Effect. No claim is pending
or, to the best knowledge of Holdings or any of its Subsidiaries threatened to
the effect that the rights of Holdings or any of its Subsidiaries with respect
to any such Intellectual Property owned by Holdings or any of its Subsidiaries
are invalid or unenforceable by such Person, and, to the best knowledge of
Holdings or any of its Subsidiaries, there is no basis for any such claim
(whether or not pending or threatened), in each case where such claim could
reasonably be expected to have a Material Adverse Effect.
5.15. COMPLIANCE WITH LAWS, ETC. Holdings and its Subsidiaries are each
in compliance in all material respects with all applicable laws and regulations,
including, without limitation, all laws relating to equal employment opportunity
and employee safety (but excluding, for purposes of this Section 5.15,
Environmental Laws), in all jurisdictions in which it is presently doing
business, and Holdings will, and will cause its Subsidiaries to, comply in all
material respects with all such laws and regulations which may be imposed in the
future in jurisdictions in which it or any of its Subsidiaries may then be doing
business, other than such laws and regulations the noncompliance with which
could not reasonably be expected to have a Material Adverse Effect.
5.16. PROPERTIES.
(a) Holdings and its Subsidiaries each has good and marketable title
to, and beneficial ownership of, all the properties owned by it, including,
after the Closing Date, all property reflected in the most recent balance
sheet referred to in Section 5.09(b)
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(except such property assigned to the Borrower by Holdings on or after the
Closing Date or as sold or otherwise disposed of since the date of such
balance sheet in the ordinary course of business or, if prior to the
Effective Date, as permitted by the Recapitalization Agreement or if prior
to the Closing Date, as permitted by the LS Purchase Agreement), free and
clear of all Liens, other than Prior Liens and Permitted Encumbrances.
Schedule 5.16 lists the addresses and locations of all Real Property owned
and leased by Holdings and each such Subsidiary as of the Closing Date,
after giving effect to the LS Purchase. Except as set forth on Schedule
5.16 (including as supplemented from time to time pursuant to Section
6.01(n)) Holdings and its Subsidiaries own or lease no other Real Property.
Each of Holdings and its Subsidiaries holds all material licenses,
certificates of occupancy or operation, water rights and similar
certificates and clearances of municipal and other authorities necessary to
own and operate its Real Property in the manner and for the purposes
currently operated by such party which if not obtained or maintained would
have a material adverse effect upon the value of such Real Property. With
respect to the leases of Real Property reflected on Schedule 5.16, Holdings
or the applicable Subsidiary of Holdings is in compliance with all material
provisions of such lease. With respect to all leases of Real Property by
each of Holdings and its Subsidiaries, no event has occurred which (with
the giving of notice or the passage of time or both), would impair any
right of such Person to exercise and obtain the benefit of any options
contained in any lease; there is no default or basis for acceleration,
repossession or termination under any lease, nor has any event occurred
which (with the giving of notice or the passage of time or both) would
constitute a default or result in or permit the repossession, acceleration
of any obligation under, or termination of, any lease.
(b) As of the Effective Date, Holdings assigned to the Borrower all
of its tangible and intangible assets, pursuant to an assignment agreement
and other documentation (i.e., deeds transferring any owned Real Property
so assigned), in form and substance satisfactory to the Administrative
Agent, and copies of which have been delivered to the Administrative Agent,
including all of its Real Property (whether owned or leased), except for
(i) the Capital Stock of the Borrower and (ii) any such assets, rights,
including rights under leases (whether Operating Leases or Capital Leases)
or contracts, as to which the consent of a third party is required to
effect an assignment of said rights, or as to which the assignment of such
rights without the consent of a third party is grounds for the termination
of the underlying lease or contract by the other party thereto. All of
Holdings' Real Property which has not been assigned to the Borrower is
reflected as continuing to be held by Holdings on Schedule 5.16 (including
as supplemented pursuant to Section 6.01(n)).
(c) Holdings has acquired no assets since the Effective Date (other
than additional Capital Stock of the Borrower, which shall be delivered to
the Administrative Agent), except that it may renew any leases reflected on
Schedule 5.16 which it has not previously assigned to the Borrower. The
extent to which Holdings has so retained assets (including Real Property
reflected on Schedule 5.16), both as of the Closing Date, and as of any
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subsequent date on which Loans are made hereunder, shall be satisfactory to
the Administrative Agent, in its sole discretion; it being expressly
acknowledged and agreed that the intent of the parties is that, after a
reasonable period of time after the Effective Date to permit Holdings to
obtain any necessary consents to the completion of the assignment of its
assets to the Borrower, Holdings shall have no material assets (including
Real Property) other than the Capital Stock of the Borrower.
5.17. SECURITIES.
(a) In connection with the issuance of equity securities of Holdings
or KCSN on the Effective Date or the Closing Date, it is not necessary to
register such equity securities under the Securities Act and the rules and
regulations thereunder and no action has been taken in connection with any
such registration.
(b) Except as set forth in Schedule 5.17 (including as supplemented
from time to time pursuant to Section 6.01(n)), there is not, after giving
effect to the LS Purchase, any existing Capital Stock of Holdings or any
Subsidiary of Holdings that will continue after the Closing Date.
(c) All Capital Stock of the Borrower and its Subsidiaries is pledged
to the Administrative Agent for the benefit of the Banks, and all
certificates evidencing such Capital Stock has been delivered to the
Administrative Agent. All such Capital Stock is and shall be at all times
duly authorized, validly issued, fully paid and nonassessable.
5.18. COLLECTIVE BARGAINING AGREEMENTS; LABOR MATTERS. None of Holdings
nor any of its Subsidiaries is a party to any collective bargaining or similar
agreement. No such Person has experienced any strike, labor dispute, slowdown
or work stoppage due to labor disagreements which could reasonably be expected
to have a Material Adverse Effect, and to the best knowledge of each such
Person, there is no such strike, dispute, slowdown or work stoppage threatened
against any such Person.
5.19. RECAPITALIZATION DOCUMENTS, ETC. As of the Closing Date, the
representations and warranties of each Credit Party and, to the best knowledge
of each Credit Party, each other Person set forth in each of the
Recapitalization Documents and each of the LS Purchase Documents are true and
correct in all material respects as of the date when made, and, for purposes of
making such representation as of the Closing Date, all such representations and
warranties made by each such Person are incorporated herein by reference,
MUTATIS MUTANDIS, as if set forth in their entirety herein; PROVIDED, HOWEVER,
that, solely for the purpose of determining the rights of the Credit Parties
against any party to the Recapitalization Documents or the LS Purchase
Documents, the giving of any such certificate shall not be deemed a waiver of
the rights of, nor an admission of the truth thereof by, any Credit Party or any
other party indemnified by the Redeeming Shareholders or the Sellers or against
any other party to any Recapitalization Document or any LS Purchase Document.
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5.20. INDEBTEDNESS OUTSTANDING. Schedule 5.20 lists and describes all
Indebtedness of Holdings and its Subsidiaries that will be outstanding
immediately after the Closing Date, and all Indebtedness of each such Person
that will be repaid, defeased, transferred or otherwise terminated on the
Closing Date.
5.21. ENVIRONMENTAL PROTECTION. Except as set forth on Schedule 5.21
(including in any of the environmental reports listed on said Schedule), except
to the extent that any items set forth (or in said reports) individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect:
(a) Each of Holdings and its Subsidiaries has obtained all material
permits, licenses and other authorizations which are required with respect
to the operation of its business, and the use, operation and ownership of
its properties (including the Real Property) and assets under any
Environmental Law (collectively, the "ENVIRONMENTAL AUTHORIZATIONS") and
each such Environmental Authorization is in full force and effect.
(b) Each of Holdings and its Subsidiaries, and each of the properties
(including the Real Property) and assets used in its business, is in
compliance in all material respects with all terms and conditions of the
Environmental Authorizations and is also in compliance in all respects
(including, without limitation, compliance in all respects with standards,
schedules and timetables therein) with, and not subject to liability under,
any Environmental Law applicable to it or its business, assets, operations
and Real Property, if any, including without limitation those arising under
the Resource Conservation and Recovery Act of 1976, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA"), the Federal Water Pollution Control Act, as amended, the
Federal Clean Air Act, as amended, and the Toxic Substances Control Act, as
amended, and all corresponding equivalent state laws, and there are no
circumstances of a nature which may prevent or interfere with such material
compliance in the future. None of Holdings nor its Subsidiaries has been
notified by any Governmental Authority or has any basis to believe that any
such Environmental Authorizations will be modified, suspended or revoked or
cannot be renewed or otherwise maintained in the ordinary course of
business. In the last five years, to the best knowledge of each such
Person, none of Holdings nor any of its Subsidiaries has received any
communication, whether from a Governmental Authority, citizen group,
employee or otherwise, that alleges that Holdings or any of its
Subsidiaries or any of the properties or assets used in their respective
businesses (including the Real Properties) is not in compliance in all
material respects with Environmental Laws.
(c) There is no Environmental Notice that (i) is pending or, to the
best knowledge of Holdings and its Subsidiaries, threatened against any
such Person or (ii) is pending or,
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to the best knowledge of each such Person, threatened against any Person
whose liability for such Environmental Notice may have been retained or
assumed by, or could reasonably be imputed or attributed by law or contract
to, any such Person.
(d) To the best knowledge of each of Holdings and its Subsidiaries,
there are no past or present actions, activities, circumstances,
conditions, events or incidents arising out of, based upon, resulting from
or relating to the operation, ownership or use of any properties or assets
(including the Real Properties) currently or formerly owned, operated,
leased or used by any of Holdings and its Subsidiaries (or any predecessor
in interest of any of them), including, without limitation, the emission,
discharge, disposal or other release of any Hazardous Materials in or into
the Environment that could reasonably be expected to form the basis of any
Environmental Notice against or with respect to any such Person, or against
any person or entity whose liability for any Environmental Notice may have
been retained or assumed by, or could be imputed by law or contract to, any
such Person.
(e) None of Holdings nor any of its Subsidiaries (i) has received
written notice that it has been identified as a potentially responsible
party under CERCLA or any comparable state, local or foreign law or (ii)
has received any notification that any Hazardous Materials that it or any
of its predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of, or arranged for transport for disposal
or treatment of, or arranged for disposal or treatment of, has been found
at any site at which any governmental agency or private party is conducting
or plans to conduct a remedial investigation or other action pursuant to
any Environmental Law.
(f) Without in any way limiting the generality of the foregoing, to
the best knowledge of each of Holdings and its Subsidiaries, (i) there are,
and have been, no underground storage tanks or related piping located on,
at or under property (including the Real Properties) owned, operated,
leased or used by any such Person (or any predecessor in interest of any of
them), (ii) there are, and have been, no polychlorinated biphenyls used or
stored by any such Person located on, at or under property (including the
Real Properties) owned, operated, leased or used by any such Person (iii)
there are, and have been, no properties (including the Real Properties)
owned, operated, managed, leased or used by any such Person (or any
predecessor in interest of any of them) at which Hazardous Materials
generated, used, owned, managed, stored or controlled by any such Person
(or any predecessor in interest of any of them) may have been disposed or
otherwise released into the Environment except such disposals or other
releases which were in compliance with Environmental Laws and Environmental
Authorizations and (iv) there is no friable asbestos contained in or
forming part of any building, building component, structure or office space
owned, operated, leased or used by any such Person.
(g) To the best knowledge of each of Holdings and its Subsidiaries,
no Lien has been recorded under any Environmental Law with respect to any
properties, assets or
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facilities (including the Real Property) owned, operated, managed, leased,
used or controlled by any such Person.
(h) Prior to the Closing Date, each of Holdings and its Subsidiaries
shall have made all notifications, registrations and filings in all
material respects in accordance with all applicable State and Local Real
Property Disclosure Requirements, including, without limitation, the use of
forms provided by state or local agencies, where such forms exist, whether
to the Administrative Agent or to, or with, the state or local agency,
provided that where such notification, registration or filing was made to,
or with a state or local agency, a copy of such notification, registration
or filing shall be provided to the Administrative Agent prior to the
Closing Date.
5.22. ENVIRONMENTAL INVESTIGATIONS. All material environmental
investigations, assessments, studies, audits or reviews conducted of which any
of Holdings and its Subsidiaries has knowledge in relation to the current or
prior business of any such Person or any Real Property or facility now or
previously owned, operated, used, controlled or leased by any such Person,
including, without limitation, those relating to compliance with or liability
under any Environmental Law, have been delivered to the Administrative Agent.
5.23. INSURANCE. Schedule 5.23 lists all insurance policies maintained by
each of Holdings and its Subsidiaries. All of such insurance is in full force
and effect as of the Closing Date and, at all times after the Closing Date, such
insurance (and, commencing 90 days after the Effective Date, the insurance
referred to in Section 6.03(d)), or renewal or replacement policies
substantially equivalent in coverage and amount, shall be in full force and
effect.
5.24. GOVERNMENTAL REGULATION. None of Holdings nor any of its
Subsidiaries is subject to any federal or state statute or regulation limiting
its ability to incur indebtedness for money borrowed or guarantee such
indebtedness as contemplated by the Transaction Documents, other than Regulation
X.
5.25. ABSENCE OF EVENTS OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
5.26. PERFORMANCE OF AGREEMENTS. None of Holdings nor any of its
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any contractual
obligation of such Person which, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, and no condition exists which, with
the giving of notice or the lapse of time or both, would constitute such a
default.
5.27. SECURITIES ACTIVITIES. Neither Holdings nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any margin stock.
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5.28. WATER RIGHTS. Except for Water Rights as to which permit
applications are pending, the Water Rights are in full force and effect, being
represented by validly entered permits, based on timely applications, and any
filings required to be made to preserve, restore or continue the validity of the
Water Rights have been made. The Water Rights are sufficient to produce a legal
and physical supply of water which will be adequate for the conduct of
Acquisition's business operations, as conducted as of the Closing Date or
thereafter and as anticipated to be conducted in accordance with the projections
delivered pursuant to Section 4.01(j). Acquisition owns and possesses good and
valid title to the Water Rights (to the extent such exist), and no other party
has asserted any claim of title to them or asserted or obtained any rights to
their use or diversion and there exist no liens, encumbrances, agreements,
easements, leases, or other contractual obligations with respect to or affecting
the Water Rights. There are no actions, suits, claims, investigations or
proceedings pending before any judicial body or governmental body with respect
to the Water Rights.
SECTION 6. AFFIRMATIVE COVENANTS. The Borrower and Holdings each
covenants and agrees that on the Closing Date and thereafter until (a) this
Agreement has ceased to be in effect, (b) the Commitments have terminated and
(c) the Loans, together with interest, fees and all other Obligations incurred
hereunder then due and payable, have been paid in full (except as otherwise
agreed or consented to, or waived, in writing by the Required Banks):
6.01. INFORMATION COVENANTS. The Borrower will furnish or cause to be
furnished to each Bank:
(a) As soon as available, and in any event within 90 days after the
close of each fiscal year of Holdings (commencing with the year ended June
30, 1997), the audited consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such fiscal year and the related audited
consolidated statements of income, of cash flows and of stockholders'
equity for such fiscal year, setting forth comparative consolidated figures
for the preceding fiscal year and a report on such consolidated balance
sheets and financial statements by Arthur Andersen or another "Big Six"
accounting firm that is reasonably satisfactory to the Administrative
Agent, which report shall not be qualified as to the scope of audit or as
to the status of Holdings and its Subsidiaries as a going concern and shall
state that such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP, and
that the examination by such accountants was conducted in accordance with
generally accepted auditing standards.
(b) As soon as practicable, and in any event within 30 days after the
end of each month, commencing with January 1997, (i) the unaudited
consolidated balance sheet of Holdings and its Subsidiaries as at the end
of such month and (ii) the related unaudited consolidated statements of
income and cash flows of Holdings and its Subsidiaries, each in
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the form customarily prepared by management for such month and for the
period from the beginning of the then current calendar year to the end of
such month, setting forth in comparative form the corresponding periods of
the prior calendar year (including a comparison of such monthly financial
results against the budgets required to be submitted pursuant to Section
6.01(d) (such comparisons of actual results to budget to commence with the
financial results of the month of January 1997), together with a brief
narrative discussion and analysis prepared by management describing the
results of operations of Holdings and its Subsidiaries for such month.
(c) Together with each delivery of consolidated financial statements
of Holdings and its Subsidiaries pursuant to Section 6.01(a), a written
statement by the independent public accountants giving the report thereon
(i) stating that their audit examination has included a review of the terms
of Sections 7.01 through 7.05, inclusive, and the definitions related
thereto as they relate to accounting matters but without having conducted
any special auditing procedures in connection therewith; (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes a Default or Event of Default has come to their
attention, and if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; PROVIDED, HOWEVER,
that such accountants shall not be liable by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of their audit examination; and (iii) stating that
based on their audit examination nothing has come to their attention which
causes them to believe that as of the end of such fiscal year of Holdings
there existed a Default or an Event of Default related to the breach of any
covenant set forth in Sections 7.01 through 7.05, inclusive, as they relate
to accounting matters and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof and what
action the applicable Credit Party has taken, is taking and proposes to
take with respect thereto.
(d) Prior to the commencement of each calendar year, annual budgets
of Holdings and its Subsidiaries in reasonable detail for each month of
such calendar year, as customarily prepared by management for its internal
use, setting forth, with appropriate discussion, the principal assumptions
upon which such budgets are based.
(e) At the time of the delivery of the financial statements provided
for in Sections 6.01(a), (b) and (c), a certificate of the chief financial
officer, controller, chief accounting officer or other Authorized Officer
of the Borrower to the effect that no Default or Event of Default exists,
or, if any Default or Event of Default does exist, specifying the nature
and extent thereof, which certificate shall, with respect to the financial
statements provided for in Section 6.01(c), at the time of delivery of such
statements for the fiscal months ended nearest to March 31, June 30,
September 30 and December 31, beginning with the fiscal month ended nearest
to March 31, 1997, be accompanied by a Compliance Certificate, in a form
reasonably acceptable to the Agent, setting forth the calculations required
to establish whether Holdings and its Subsidiaries were in compliance with
the
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covenants in this Agreement (including without limitation the covenants set
forth in Sections 7.01 through 7.05, inclusive) as at the end of such
fiscal period.
(f) Promptly upon receipt thereof, a copy of each annual "management
letter" submitted to Holdings or the Borrower by its independent
accountants in connection with any annual audit made by them of the books
of Holdings or any of its Subsidiaries.
(g) Promptly upon becoming available, copies of all consolidated
financial statements, reports, notices and proxy statements sent or made
available generally by Holdings or any of its Subsidiaries to the security
holders (other than to Holdings or another of its Subsidiaries) of such
Person, of all regular and periodic reports and all registration statements
and prospectuses, if any, filed by Holdings or any of its Subsidiaries with
any securities exchange or with the SEC and of all press releases and other
statements made available generally by Holdings or any of its Subsidiaries
to the public concerning material developments in the business of Holdings
and its Subsidiaries.
(h) Promptly upon any Senior Officer obtaining actual knowledge (i)
of any condition or event which constitutes a Default or Event of Default,
or that any Bank has given any written notice or taken any other action
with respect to a claimed Default or Event of Default under this Agreement,
(ii) that any Person has given any written notice to Holdings or any of its
Subsidiaries or taken any other action with respect to a claimed default or
event or condition of the type referred to in Section 8.04, or (iii) of a
material adverse change in the business, operations, properties, assets,
nature of assets, condition (financial or otherwise) or prospects of
Holdings and its Subsidiaries taken as a whole, an Officers' Certificate
specifying the nature and period of existence of any such condition or
event, or specifying the notice given or action taken by such holder or
Person and the nature of such claimed Default, Event of Default, event or
condition, or material adverse change, and what action the applicable
Credit Party has taken, is taking and proposes to take with respect
thereto.
(i)(i) Promptly upon any Senior Officer obtaining actual knowledge of
the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Holdings or
any of its Subsidiaries or any property of Holdings or any of its
Subsidiaries not previously disclosed to the Banks, which action, suit,
proceeding, governmental investigation or arbitration seeks (or in the case
of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances
which seek) recovery from Holdings or any of its Subsidiaries aggregating
$500,000 or more (exclusive of claims covered by insurance policies of
Holdings or any of its Subsidiaries unless the insurers of such claims have
disclaimed coverage or reserved the right to disclaim coverage on such
claims), the Borrower shall give notice thereof to the Banks and provide
such other information as may be reasonably available to enable the Banks
and their counsel to evaluate such matters; (ii) as soon as practicable and
in any event within 45 days after the end of each
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fiscal quarter, the Borrower shall provide a report to the Banks covering
the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration (not previously reported) against
or affecting Holdings or any of its Subsidiaries or any property of
Holdings or any of its Subsidiaries not previously disclosed to the Banks,
which action, suit, proceedings, governmental investigation or arbitration
seeks (or in the case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same general allegations
or circumstances which seek) recovery from Holdings or any of its
Subsidiaries aggregating $500,000 or more (exclusive of claims covered by
insurance policies of Holdings or any of its Subsidiaries unless the
insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims), and shall provide such other information
at such time as may be reasonably available to enable the Banks and their
counsel to evaluate such matters; (iii) in addition to the requirements set
forth in clauses (i) and (ii) of this Section 6.01(i), the Borrower upon
request shall promptly give notice of the status of any action, suit,
proceeding, governmental investigation or arbitration covered by a report
delivered to the Banks pursuant to clause (i) or (ii) above to the Banks
and provide such other information as may be reasonably available to it to
enable the Banks and their counsel to evaluate such matters; (iv) promptly
upon any officer of Holdings or any Subsidiary obtaining actual knowledge
of any dispute in respect of or the institution of, or written threat of,
any action, suit, proceeding, governmental investigation or arbitration in
respect of any lease of Real Property or other material contract of
Holdings or any of its Subsidiaries (in the case of such other material
contract, to the extent that the dispute, action, suit, proceeding,
investigation or arbitration could, if resolved in a manner unfavorable to
the Credit Party thereto, reasonably be anticipated to have a Material
Adverse Effect), such Person shall give notice thereof to the Banks and
shall provide to the Banks such other information as may be reasonably
available to enable the Banks and their counsel to evaluate such matters;
and (v) promptly upon any Senior Officer obtaining knowledge of, or written
threat of, any action, suit, proceeding, governmental investigation or
arbitration in respect of any lease of Real Property or other material
contract of Holdings or any of its Subsidiaries (in the case of such other
material contract, to the extent that the action, suit, proceeding,
investigation or arbitration could, if resolved in a manner unfavorable to
the Credit Party thereto, reasonably be anticipated to have a Material
Adverse Effect), the Borrower shall give notice thereof to the Banks and
shall provide such other information as may be reasonably available to
enable the Banks and their counsel to evaluate such matters.
(j) Within 90 days of the last day of each calendar year of Holdings,
a summary report outlining all changes to the material insurance coverage
maintained from the date of the previous such report by Holdings or any of
its Subsidiaries.
(k) To the extent reasonably requested by the Administrative Agent,
as soon as practicable and in any event within ten Business Days of the
later of such request and the
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making of any such amendment or waiver, copies of amendments or waivers
with respect to Indebtedness of Holdings or any of its Subsidiaries.
(l) On or prior to the Closing Date and within 90 days after the
commencement of each fiscal year (to the extent there has been a change
since the list provided the prior fiscal year), a complete and accurate
list of the Senior Officers and directors of each Credit Party, which list
shall include any officers authorized to execute any certificates, notices,
reports or other documents provided to the Administrative Agent or the
Banks hereunder or under any other Credit Document, and within 30 days of
any change in personnel affecting the accuracy of such list, a notice
specifying such change in personnel.
(m) Within twenty days after the last Business Day of each fiscal
month, a borrowing base certificate in the form of Exhibit 6.01(m) (each, a
"BORROWING BASE CERTIFICATE") detailing the Borrower's Eligible Accounts
Receivable and Eligible Inventory as of the last day of such fiscal month,
certified as complete and correct on behalf of the Borrower by a Senior
Officer or other Authorized Officer. In addition, each Borrowing Base
Certificate shall have attached to it such additional schedules and/or
other information as the Administrative Agent may reasonably request. If
the Borrower fails to deliver any such Borrowing Base Certificate within
thirty days after the end of any such fiscal month, then the Borrower's
Borrowing Base shall be deemed to be $0 until such time as the Borrower
shall deliver such required Borrowing Base Certificate.
(n) Within 25 days after the last Business Day of each month, or upon
the consummation of any Permitted Business Acquisition, a supplement to
each of Schedules 5.13, 5.16 and 5.17 showing any changes in the
information set forth in such Schedule not previously furnished to the
Banks in writing, and within 25 days after the last Business Day of each
calendar year, an amendment to each such Schedule; PROVIDED that the
Borrower shall only be required to provide a supplement (or amendment) with
respect to any such Schedule where there has been a change in the
information set forth in such Schedule not previously furnished to the
Banks in writing.
(o) With reasonable promptness, such other information and data with
respect to Holdings or any of its Subsidiaries or any other similar entity
in which Holdings or any of its Subsidiaries has an investment, as from
time to time may be reasonably requested by any Bank and may be reasonably
available to the Borrower.
6.02. BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause each
of its Subsidiaries to, keep true books of records and accounts in which full
and correct entries will be made of all its business transactions, and will
reflect in its financial statements adequate accruals and appropriations to
reserves, all in accordance with GAAP. Holdings will, and will cause each of
its Subsidiaries to, permit, upon reasonable prior notice to the chief executive
officer or chief financial officer of the Borrower, officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect any
of the properties or assets (including the conduct, at
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the Borrower's cost, of an annual field audit of the Borrowing Base) of Holdings
or any of its Subsidiaries in whosesoever possession, and to examine the books
of account of Holdings or any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings or any of its Subsidiaries with, and be
advised as to the same by, its and their chief executive officer, chief
financial officer and independent accountants (in the presence of such
officers), all at such reasonable times during normal business hours and
intervals and to such reasonable extent as the Administrative Agent or any Bank
may reasonably request. Notwithstanding anything to the contrary contained in
this Section 6.02, any field audit conducted pursuant to this Section 6.02 may
be conducted by a third party auditor commissioned by the Administrative Agent
or the Banks.
6.03. MAINTENANCE OF PROPERTY; INSURANCE.
(a) Holdings will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and
condition (subject to normal wear and tear) all properties used in its
businesses (including, without limitation, any Real Property, whether owned
or leased) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof and will maintain
and renew as necessary all licenses, permits and other clearances necessary
to use and occupy such properties of Holdings and its Subsidiaries.
Holdings will, and will cause each of its Subsidiaries to, comply with all
material provisions of each lease of Real Property in which any such Person
is the lessee.
(b) Subject to the provisions of Section 6.03(c), Holdings and its
Subsidiaries will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations
to the extent that such types and such amounts of insurance are available
at commercially reasonable rates. Holdings or its Subsidiaries, as
applicable, will furnish to each Bank, upon reasonable request, information
as to the insurance carried, and will not cancel any such insurance without
the consent of the Required Banks, which consent shall not be unreasonably
withheld.
(c) Without limiting Section 6.03(b), Holdings and its Subsidiaries,
as applicable, shall maintain, or cause to be maintained, in full force the
insurance coverages specified in the Security Documents.
(d) The Borrower will use commercially reasonably efforts to obtain,
by no later than 90 days after the Effective Date, key man life insurance
with respect to Michael Vukelich and Jerry Halamuda, which is in form and
substance acceptable to the Administrative Agent, and such insurance shall
be maintained thereafter in full force and
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effect, with no material reduction or alteration in such coverage except as
is reasonably acceptable to the Administrative Agent.
6.04. PAYMENT OF TAXES. Holdings will pay and discharge, and will cause
each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of Holdings or any of its Subsidiaries or cause a failure or
forfeiture of title thereto; PROVIDED, HOWEVER, that neither Holdings nor any of
its Subsidiaries shall be required to pay any such tax, assessment, charge, levy
or claim that is being contested in good faith and by proper proceedings
promptly instituted and diligently conducted if it has maintained adequate
reserves with respect thereto in accordance with GAAP or if the same shall have
been bonded.
6.05. CORPORATE FRANCHISES. Holdings will do or cause to be done, and
will cause each of its Subsidiaries to do or cause to be done, all things
necessary to preserve and keep in full force and effect its corporate existence,
rights and authority, EXCEPT that any Wholly Owned Subsidiary of the Borrower
may merge with and into the Borrower or into another Wholly Owned Subsidiary of
the Borrower.
6.06. COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause each
of its Subsidiaries to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all Governmental
Authorities, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including all applicable laws), except where such
noncompliance would not have a Material Adverse Effect.
6.07. ERISA. The Borrower will furnish to the Administrative Agent, who
will distribute to each of the Banks:
(a) promptly upon any Credit Party's knowing or having reason to know
of the occurrence of any (i) Termination Event, or (ii) "prohibited
transaction," within the meaning of Section 406 of ERISA or Section 4975 of
the Code, in connection with any Pension Plan or any trust created
thereunder, which in the case of all such events described in clause (i) or
(ii) results or could reasonably be expected to result in a liability of
any Credit Party or its ERISA Affiliates in the aggregate in excess of
$250,000, a written notice specifying the nature thereof, what action such
Credit Party or its ERISA Affiliates have taken, are taking or propose to
take with respect thereto, and, when known, any action taken or threatened
by the Internal Revenue Service, Department of Labor, PBGC or Multiemployer
Plan with respect thereto.
(b) with reasonable promptness, copies of (i) all notices received by
any Credit Party or any of its ERISA Affiliates of PBGC's intent to
terminate any Title IV Plan or to have a trustee appointed to administer
any Title IV Plan, the notice of which event is
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required pursuant to Section 6.07(a); (ii) upon the request of the
Administrative Agent, each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by any Credit Party or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan for which Schedule B is required; (iii) upon the request of the
Administrative Agent, the most recent actuarial valuation report for each
Title IV Plan; and (iv) all notices received by any Credit Party or any of
its ERISA Affiliates from a Multiemployer Plan concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA, the
notice of which event is required pursuant to Section 6.07(a).
6.08. PERFORMANCE OF OBLIGATIONS. Holdings will, and will cause each of
its Subsidiaries to, perform in all material respects all of its obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument and material contract by which it is bound or to which it is a party,
except where such nonperformance could not reasonably be expected to have a
Material Adverse Effect.
6.09. FISCAL YEAR; FISCAL QUARTERS. Each of Holdings and its
Subsidiaries as of the Closing Date will, for financial reporting purposes have
(a) its fiscal year end on or about June 30, and (b) its fiscal quarters end on
or about September 30, December 31, March 31 and June 30. Neither Holdings nor
any of its Subsidiaries shall change their respective fiscal years from that set
forth above, with respect to Holdings and such Subsidiaries, and from that
currently maintained by any Subsidiary subsequently acquired by the Borrower
without the prior written consent of the Required Banks, except that any such
subsequently acquired Subsidiary may change its fiscal year to end on or about
June 30, with fiscal quarters to end on or about September 30, December 31,
March 31 and June 30, without such prior written consent.
6.10. USE OF PROCEEDS. All proceeds of the Loans shall be used as
provided in Section 5.05.
6.11. INTEREST RATE PROTECTION.
(a) The Borrower shall, no later than 90 days after the Closing Date
and in respect of no less than 50% of the Term A Loan and the Term B Loan
outstanding from time to time, enter into Interest Rate Agreements
reasonably acceptable to the Administrative Agent for a term of not less
than three years.
(b) The Borrower shall, commencing no later than 30 days after the
first to occur of (x) the date on which the outstanding principal balance
of the Acquisition Term Loans equals $15,000,000 or (y) the Acquisition
Term Loan Commitment Termination Date, enter into Interest Rate Agreements
reasonably acceptable to the Administrative Agent for a term ending no
earlier than three years after the Acquisition Term Loan Commitment
Termination Date, in respect of no less than 50% of the Acquisition Term
Loans outstanding from time to time.
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6.12. NO FURTHER NEGATIVE PLEDGES, ETC. Except with respect to
prohibitions against other encumbrances on specific property encumbered to
secure payment of particular Indebtedness permitted hereunder (which
Indebtedness relates solely to the acquisition or improvement of such specific
property), neither Holdings nor any of its Subsidiaries shall enter into any
agreement prohibiting or restricting, in any manner (directly or indirectly and
including by way of covenant, representation or warranty or event of default),
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired (other than in connection with the Security
Documents). Neither Holdings nor any of its Subsidiaries shall create, or
permit to be created, any restriction in the charter or bylaws of any Subsidiary
of the Borrower restricting the payment of dividends to the Borrower or any
Wholly Owned Subsidiary of the Borrower.
6.13. BANK MEETING. The Borrower will participate in a meeting of the
Banks once during each calendar year (the first such meeting to take place prior
to March 31, 1998) to be held at a location and a time selected by the
Administrative Agent and reasonably acceptable to the Borrower, unless the
Required Banks determine in their sole discretion that such meeting is
unnecessary and so inform the Administrative Agent and the Borrower.
6.14. ADDITIONAL COLLATERAL; FURTHER ASSURANCES.
(a) Promptly, and in any event within 30 days after the Borrower or
any of its Subsidiaries acquires any asset or property, including any Real
Property, which is not covered by the existing Security Documents,
including, without limitation, any Capital Stock of any Subsidiary (the
"ADDITIONAL COLLATERAL"), the Borrower will cause any newly acquired
Subsidiary to execute a Subsidiary Guaranty, and the Borrower will, and
will cause each of its Subsidiaries to, grant to the Administrative Agent,
for the benefit of the Banks, security interests and mortgages in such
asset or property, EXCEPT that, with respect to any asset or property
acquired in a Permitted Business Acquisition, including any Subsidiary so
acquired, such actions shall be required to be performed on or before the
applicable Permitted Business Acquisition Closing Date (except as otherwise
assented to by the Administrative Agent). Such security interests and
mortgages shall be granted pursuant to documentation substantially the same
as the Security Documents (the "ADDITIONAL SECURITY DOCUMENTS") reasonably
satisfactory in form and substance to the Administrative Agent, including,
without limitation, and if deemed desirable by the Administrative Agent,
opinions of local counsel in any jurisdictions in which such asset or
property is located, and shall constitute valid and enforceable perfected
security interests superior to and prior to the rights of all third Persons
and subject to no other Liens except Permitted Encumbrances at the time of
perfection thereof. The Additional Security Documents or other instruments
related thereto shall be duly recorded or filed in such manner and in such
places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Administrative Agent for the benefit of the Banks
required to be granted pursuant to the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall
have been paid in full.
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(b) Holdings will, and will cause each of its Subsidiaries to, at its
own expense, make, execute, endorse, acknowledge, file and/or deliver to
the Administrative Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, real property
surveys, reports and other assurances or instruments and take such further
steps relating to the Collateral covered by any of the Security Documents
or the Additional Security Documents as the Administrative Agent may
reasonably require. Furthermore, Holdings shall cause to be delivered to
the Administrative Agent such opinions of counsel, title insurance and
other related documents as may be requested by the Administrative Agent to
assure themselves that this Section 6.14 has been compiled with. Without
limiting the generality of the foregoing, Holdings will, and will cause
each of its Subsidiaries to, obtain a Landlord Certification and Waiver in
form and substance satisfactory to the Administrative Agent with respect to
any leases of Real Property entered into by any Credit Party after the
Closing Date or held by any Person which becomes a Credit Party after the
Closing Date.
(c) At the request of the Administrative Agent or the Required Banks,
Holdings shall provide to the Administrative Agent appraisals satisfying
applicable requirements of FIRREA in respect of the Real Property of
Holdings and its Subsidiaries, if any, constituting Collateral, from time
to time, in form and substance reasonably satisfactory to the
Administrative Agent.
(d) Holdings and the Borrower agree that each action required by this
Section 6.14 shall be completed as soon as possible, but if such Collateral
has been newly acquired by Holdings or its Subsidiaries or is Collateral
held by any newly acquired Subsidiary of the Borrower, in no event later
than 30 days after the date of the acquisition of such Collateral; PROVIDED
that with respect to any Collateral acquired in a Permitted Business
Acquisition, each action required by this Section 6.14 with respect to such
Collateral (including property of, or Capital Stock of, any newly acquired
Subsidiary) shall be taken no later than the closing of such Permitted
Business Acquisition, unless otherwise consented to by the Administrative
Agent.
6.15. SECURITY INTERESTS. (a) Holdings will, and will cause each of its
Subsidiaries to, perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or modification of any
financing statement and continuation statement) for filing in any appropriate
jurisdiction under the provisions of the UCC, local law or any statute, rule or
regulation of any applicable jurisdiction which are necessary in order to
maintain or confirm in favor of the Administrative Agent for the ratable benefit
of the Banks a valid and perfected Lien on the Collateral and any Additional
Collateral, subject to no Liens except for Prior Liens and Permitted
Encumbrances. The Borrower shall, as promptly as practicable after the filing
of any such financing statements, deliver to the Administrative Agent
acknowledgment copies of, or copies of lien search reports confirming the filing
of, financing statements duly filed under the
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UCC of all jurisdictions as may be necessary or, in the reasonable opinion of
the Administrative Agent, desirable to perfect the Lien created, or purported or
intended to be created, by each Security Document.
(b) Commencing immediately after the Closing Date, Holdings shall use its
best efforts and shall cause each of its Subsidiaries to use their best efforts,
to obtain an executed Landlord Certification and Waiver from each lessor of Real
Property to such Persons; PROVIDED that, with respect to a particular leases of
Real Property, Holdings shall not be required to take actions or incur costs
which are commercially unreasonable with respect to such leases of Real Property
which, in the reasonable judgement of the Administrative Agent, are not material
to the business of Holdings and its Subsidiaries taken as a whole, in order to
obtain such Landlord Certification and Waivers.
6.16. ENVIRONMENTAL EVENTS.
(a) Holdings will, and will cause each of its Subsidiaries to, comply
with any and all Environmental Laws, other than noncompliance which could
not reasonably be expected to result in liability under Environmental Laws
which would have a Material Adverse Effect; PROVIDED that Holdings will,
and will cause each of its Subsidiaries to, comply with any and all
Environmental Laws, to the extent any noncompliance would (x) constitute or
create a default under any lease of Real Property as to which a Credit
Party is a tenant which would entitle the lessor of such Real Property to
terminate said lease or (y) materially diminish the value of any Real
Property owned by any Credit Party.
(b) Holdings will, and will cause each of its Subsidiaries to,
promptly give notice to the Administrative Agent upon becoming aware
thereof (i) of any violation of any Environmental Law, (ii) any
Environmental Notice or (iii) any release or threatened release of any
Hazardous Material at, on, into, under or from any Real Property or any
facility or equipment thereat in excess of reportable or allowable
standards or levels under any Environmental Law, or in a manner and/or
amount which could reasonably be expected to either (x) result in liability
under any Environmental Law, in each case, in excess of $500,000
individually or in the aggregate with any other liability under any
Environmental Laws (other than any such events disclosed in Schedule 5.21
or referred to in the reports listed on said Schedule) or (y) materially
interfere with the continued operation of the Real Property which is the
site or subject of the violation, notice or release.
(c) Holdings will, and will cause each of its Subsidiaries to,
promptly provide the Administrative Agent with copies of any notice,
submittal or documentation provided by Holdings or any of its Subsidiaries
to any Governmental Authority or third party under any Environmental Law if
the matter which is the subject of the notice, submittal or other
documentation could reasonably be expected to have a Material Adverse
Effect. Such notice, submittal or documentation shall be provided to the
Administrative Agent
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promptly and, in any event, within ten Business Days after such material is
provided to the Governmental Authority or third party.
(d) In the event of the presence of Hazardous Materials on any Real
Property which is in violation of, or which could reasonably be expected to
result in liability under, any Environmental Laws, in each case, to the
extent such violation, or liability, could reasonably be expected to (x)
have a Material Adverse Effect, or (y) entitle the lessor of any Real
Property with respect to which a Credit Party is the tenant to terminate
the subject lease, or (z) materially diminish the value of any Real
Property owned by any Credit Party, then, in each case, Holdings or any of
its Subsidiaries, upon discovery thereof, shall take appropriate steps to
initiate and expeditiously complete all response, corrective and other
action required under any Environmental Laws to mitigate and eliminate any
such liability.
(e) The Borrower will furnish or cause to be furnished to each Bank,
within six months of the Effective Date, a report detailing the progress
being made towards addressing outstanding environmental issues pertaining
to the Real Properties as identified by ERM -- Rocky Mountain, Inc. in its
report entitled "Review of Previous Environmental Assessments of Color Spot
Properties and Limited Site Investigation of the Fallbrook Property" dated
December 23, 1996.
6.17. ASSIGNMENT OF HOLDINGS' REMAINING ASSETS TO THE BORROWER. Holdings
shall use its best efforts to complete the contribution, assignment and transfer
of all of its assets (excluding the Capital Stock of the Borrower and, until
January 31, 1998, the Put/Call Funds), including all tangible and intangible
property (including all Real Property), to the Borrower, including, without
limitation, making best efforts to obtain any third party consents which are
required to be obtained prior to the assignment of any leases or contractual
rights to the Borrower which Holdings was unable to secure prior to the
Effective Date. The Borrower shall provide the Administrative Agent with
regular reports as to Holdings' progress completing the contribution, assignment
and transfer of all of its assets to the Borrower, and shall provide the
Administrative Agent with copies of any such third party consents and of any
other documentation. Without limiting the foregoing, commencing immediately
after the Closing Date, Holdings shall diligently pursue the obtaining of
consents from the Federal Aviation Administration to the assignment to the
Borrower of the leases referenced as items 1 and 2 on Schedule 6.18 to the
Original Credit Agreement and, in the event that such consent is not obtained on
or before July 31, 1997, shall obtain an extension from the County of San Diego
of the time period to obtain such FAA consent.
SECTION 7. NEGATIVE COVENANTS. Holdings and the Borrower each hereby
covenants and agrees that as of the Closing Date and thereafter until (a) this
Agreement has ceased to be in effect, (b) the Commitments have terminated and
(c) the Loans (together with interest, fees and all other Obligations incurred
hereunder) then due and payable have been paid in full (except as otherwise
agreed or consented to, or waived, in writing by the Required Banks):
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7.01. CAPITAL EXPENDITURES. Holdings will not, and will not permit any of
its Subsidiaries to, make Consolidated Capital Expenditures for any purpose, in
excess of the amount specified in the table below for each of the calendar years
specified in such table:
Year Ending Amount
----------- ------
December 31, 1997 . . . . . . $4.5 million
December 31, 1998 . . . . . . $4.5 million
December 31, 1999 . . . . . . $4.5 million
December 31, 2000 . . . . . . $4.5 million
December 31, 2001 . . . . . . $4.5 million
December 31, 2002 . . . . . . $4.5 million
December 31, 2003 . . . . . . $4.5 million
; PROVIDED, HOWEVER, that for purposes of this Section 7.01, the aggregate
amount of Capitalized Lease Obligations incurred by Holdings and its
Subsidiaries, on a consolidated basis, shall be included in the calculation of
Consolidated Capital Expenditures in the year in which such Capitalized Lease
Obligations were incurred; PROVIDED, FURTHER, that if Holdings and its
Subsidiaries make Consolidated Capital Expenditures in any calendar year in an
amount less than the amount set forth above for such period (such unused portion
the "CARRYOVER AMOUNT"), Holdings and its Subsidiaries may make Consolidated
Capital Expenditures in the immediately succeeding calendar year in an amount
not to exceed the sum of (i) the amount set forth above for such calendar year
and (ii) the Carryover Amount; PROVIDED, FURTHER, that (i) the Carryover Amount
calculated for any calendar year may only be used during the immediately
succeeding calendar year and will not be added to the amount of Consolidated
Capital Expenditure availability for such succeeding calendar year for purposes
of calculating the Carryover Amount for such calendar year, and (ii) the Capital
Expenditures for a given calendar year shall be counted, first, against the
amount set forth above for such calendar year and, second, against the Carryover
Amount.
7.02. TOTAL INTEREST COVERAGE RATIO. The Borrower will not permit the
ratio of (a) Consolidated EBITDA of Holdings for any Test Period ended on or
about a date specified in the table below to (b) Consolidated Interest Expense
of Holdings for such Test Period, to be less than the ratio set forth opposite
such date in such table:
Test Period Ending Ratio
-------------------------
June 30, 1997. . . . . . . . . . . 2.00 to 1.00
September 30, 1997 . . . . . . . . 2.00 to 1.00
December 31, 1997. . . . . . . . . 2.15 to 1.00
March 31, 1998 . . . . . . . . . . 2.15 to 1.00
June 30, 1998. . . . . . . . . . . 2.25 to 1.00
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September 30, 1998 . . . . . . . . 2.25 to 1.00
December 31, 1998. . . . . . . . . 2.25 to 1.00
March 31, 1999 . . . . . . . . . . 2.25 to 1.00
June 30, 1999. . . . . . . . . . . 2.50 to 1.00
September 30, 1999 . . . . . . . . 2.75 to 1.00
December 31, 1999. . . . . . . . . 2.75 to 1.00
March 31, 2000 . . . . . . . . . . 2.75 to 1.00
June 30, 2000. . . . . . . . . . . 3.00 to 1.00
September 30, 2000 . . . . . . . . 3.00 to 1.00
December 31, 2000. . . . . . . . . 3.00 to 1.00
March 31, 2001 . . . . . . . . . . 3.00 to 1.00
June 30, 2001. . . . . . . . . . . 3.25 to 1.00
September 30, 2001 . . . . . . . . 3.25 to 1.00
December 31, 2001. . . . . . . . . 3.25 to 1.00
March 31, 2002 . . . . . . . . . . 3.25 to 1.00
June 30, 2002. . . . . . . . . . . 3.50 to 1.00
September 30, 2002 . . . . . . . . 3.50 to 1.00
December 31, 2002. . . . . . . . . 3.50 to 1.00
March 31, 2003 . . . . . . . . . . 3.50 to 1.00
June 30, 2003. . . . . . . . . . . 3.50 to 1.00
September 30, 2003 . . . . . . . . 3.50 to 1.00
December 31, 2003. . . . . . . . . 3.50 to 1.00
; PROVIDED that, for purposes of this Section 7.02, Consolidated EBITDA for a
given Test Period (x) shall mean Consolidated EBITDA for the twelve month period
ended on the last day of such Test Period and (y) shall also include the EBITDA
(with appropriate adjustments) derived from any business which was acquired by
Holdings and its Subsidiaries during such twelve-month period and which is
consolidated with Holdings and its Subsidiaries as of the last day of such Test
Period, for the portion of such twelve month period before the business was so
acquired; and PROVIDED further that, for purposes of clause (b) of this Section
7.02, (i) Consolidated Interest Expense for (x) the Test Period ending March 31,
1997 shall equal the product of Consolidated Interest Expense for the period
January 1, 1997 through ended March 31, 1997 TIMES 4; (y) the Test Period ending
June 30, 1997 shall equal the product of Consolidated Interest Expense for the
period January 1, 1997 through June 30, 1997 TIMES 2; and (z) the Test Period
ending September 30, 1997 shall equal the product of Consolidated Interest
Expense for the period January 1, 1997 through September 30, 1997 TIMES 1 1/3
and (ii) Consolidated Interest Expense shall include only cash interest expense
paid during the applicable period.
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7.03. FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the ratio
of (a) Consolidated EBITDAC for any Test Period ending on or about the date
specified in the table below MINUS taxes paid in cash during such Test Period to
(b) the sum of (i) Consolidated Interest Expense (which for purposes of this
clause (b) shall mean only cash interest expense paid during such period) of
Holdings for such period PLUS (ii) the amount of cash payments on account of
principal of Indebtedness PLUS (iii) payments on account of noncompetition or
consulting arrangements made by Holdings and its Subsidiaries, on a consolidated
basis, during such period to be less than the ratio specified opposite such
date:
Test Period Ending Ratio
------------------ -----
June 30, 1997. . . . . . . . . . . 1.00 to 1.00
September 30, 1997 . . . . . . . . 1.00 to 1.00
December 31, 1997. . . . . . . . . 1.00 to 1.00
March 31, 1998 . . . . . . . . . . 1.00 to 1.00
June 30, 1998. . . . . . . . . . . 1.00 to 1.00
September 30, 1998 . . . . . . . . 1.00 to 1.00
December 31, 1998. . . . . . . . . 1.00 to 1.00
March 31, 1999 . . . . . . . . . . 1.00 to 1.00
June 30, 1999. . . . . . . . . . . 1.05 to 1.00
September 30, 1999 . . . . . . . . 1.05 to 1.00
December 31, 1999. . . . . . . . . 1.05 to 1.00
March 31, 2000 . . . . . . . . . . 1.05 to 1.00
June 30, 2000. . . . . . . . . . . 1.10 to 1.00
September 30, 2000 . . . . . . . . 1.10 to 1.00
December 31, 2000. . . . . . . . . 1.10 to 1.00
March 31, 2001 . . . . . . . . . . 1.10 to 1.00
June 30, 2001. . . . . . . . . . . 1.10 to 1.00
September 30, 2001 . . . . . . . . 1.10 to 1.00
December 31, 2001. . . . . . . . . 1.10 to 1.00
March 31, 2002 . . . . . . . . . . 1.10 to 1.00
June 30, 2002. . . . . . . . . . . 1.10 to 1.00
September 30, 2002 . . . . . . . . 1.10 to 1.00
December 31, 2002. . . . . . . . . 1.10 to 1.00
March 31, 2003 . . . . . . . . . . 1.10 to 1.00
June 30, 2003. . . . . . . . . . . 1.10 to 1.00
September 30, 2003 . . . . . . . . 1.10 to 1.00
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December 31, 2003. . . . . . . . . 1.10 to 1.00
7.04. LEVERAGE RATIO. The Borrower will not permit the ratio of (a) the
Consolidated Indebtedness (including the outstanding balance under any
noncompete or consulting arrangements) of Holdings as of the last day of each
calendar quarter ending on or about the date specified in the table below to (b)
the Consolidated EBITDA of Holdings for the Test Period ending on or about such
date, to be greater than the ratio specified opposite such date in such table:
Test Period Ending Ratio
------------------ -----
June 30, 1997. . . . . . . . . . . 5.50 to 1.00
September 30, 1997 . . . . . . . . 5.25 to 1.00
December 31, 1997. . . . . . . . . 5.00 to 1.00
March 31, 1998 . . . . . . . . . . 5.00 to 1.00
June 30, 1998. . . . . . . . . . . 4.50 to 1.00
September 30, 1998 . . . . . . . . 4.50 to 1.00
December 31, 1998. . . . . . . . . 4.50 to 1.00
March 31, 1999 . . . . . . . . . . 4.50 to 1.00
June 30, 1999. . . . . . . . . . . 3.75 to 1.00
September 30, 1999 . . . . . . . . 3.75 to 1.00
December 31, 1999. . . . . . . . . 3.75 to 1.00
March 31, 2000 . . . . . . . . . . 3.75 to 1.00
June 30, 2000. . . . . . . . . . . 3.25 to 1.00
September 30, 2000 . . . . . . . . 3.25 to 1.00
December 31, 2000. . . . . . . . . 3.25 to 1.00
March 31, 2001 . . . . . . . . . . 3.25 to 1.00
June 30, 2001. . . . . . . . . . . 2.75 to 1.00
September 30, 2001 . . . . . . . . 2.75 to 1.00
December 31, 2001. . . . . . . . . 2.75 to 1.00
March 31, 2002 . . . . . . . . . . 2.75 to 1.00
June 30, 2002. . . . . . . . . . . 2.75 to 1.00
September 30, 2002 . . . . . . . . 2.75 to 1.00
December 31, 2002. . . . . . . . . 2.75 to 1.00
March 31, 2003 . . . . . . . . . . 2.75 to 1.00
June 30, 2003. . . . . . . . . . . 2.75 to 1.00
September 30, 2003 . . . . . . . . 2.75 to 1.00
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December 31, 2003. . . . . . . . . 2.75 to 1.00
; PROVIDED that, for purposes of this Section 7.04, for a given date set forth
above, (x) Consolidated Indebtedness shall not include any such Indebtedness as
to which the interest on such Indebtedness is not cash-pay (but is, rather,
pay-in-kind or capitalized), EXCEPT that, if cash interest is paid on any such
non cash-pay Indebtedness during the fiscal quarter ended on such date,
Consolidated Indebtedness shall include the non cash-pay Indebtedness on which
such cash interest was paid, and (y) the component of Consolidated Indebtedness
consisting of Revolving Loans shall equal (i) the sum of the balance of the
Revolving Loans as of the last day of each fiscal month during the twelve fiscal
month period ending on such date DIVIDED by (ii) twelve; and PROVIDED further
that for purposes of clause (y) of this Section 7.04, for any fiscal month ended
on a date prior to the Closing Date, the "Revolving Loans" shall mean the
working capital facility maintained by Holdings and its Subsidiaries with Coast
Business Credit (successor by merger to Coastfed Business Credit Corporation);
and PROVIDED further that, for purposes of this Section 7.04, Consolidated
EBITDA for a given Test Period (x) shall mean Consolidated EBITDA for the twelve
month period ended on the last day of such Test Period and (y) shall also
include the EBITDA (with appropriate adjustments) derived from any business
which was acquired by Holdings and its Subsidiaries during such twelve-month
period and which is consolidated with Holdings and its Subsidiaries as of the
last day of such Test Period, for the portion of such twelve month period before
the business was so acquired.
7.05. MINIMUM CONSOLIDATED EBITDA. The Borrower will not permit
Consolidated EBITDA for any Test Period ending on or about the date specified in
the table below to be less than the amount specified in such table opposite such
date:
Test Period Ending Amount
------------------ ------
June 30, 1997. . . . . . . . . . . $13.5 million
September 30, 1997 . . . . . . . . $13.5 million
December 31, 1997. . . . . . . . . $13.5 million
March 31, 1998 . . . . . . . . . . $13.5 million
June 30, 1998. . . . . . . . . . . $15.5 million
September 30, 1998 . . . . . . . . $15.5 million
December 31, 1998. . . . . . . . . $15.5 million
March 31, 1999 . . . . . . . . . . $15.5 million
June 30, 1999. . . . . . . . . . . $18.0 million
September 30, 1999 . . . . . . . . $18.0 million
December 31, 1999. . . . . . . . . $18.0 million
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March 31, 2000 . . . . . . . . . . $18.0 million
June 30, 2000. . . . . . . . . . . $20.0 million
September 30, 2000 . . . . . . . . $20.0 million
December 31, 2000. . . . . . . . . $20.0 million
March 31, 2001 . . . . . . . . . . $20.0 million
June 30, 2001. . . . . . . . . . . $20.0 million
September 30, 2001 . . . . . . . . $20.0 million
December 31, 2001. . . . . . . . . $20.0 million
March 31, 2002 . . . . . . . . . . $20.0 million
June 30, 2002. . . . . . . . . . . $20.0 million
September 30, 2002 . . . . . . . . $20.0 million
December 31, 2002. . . . . . . . . $20.0 million
March 31, 2003 . . . . . . . . . . $20.0 million
June 30, 2003. . . . . . . . . . . $20.0 million
September 30, 2003 . . . . . . . . $20.0 million
December 31, 2003. . . . . . . . . $20.0 million
7.06. LIENS. Holdings will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether now owned or hereafter acquired, except for the Lien of the
Security Document relating thereto, Prior Liens applicable thereto and Permitted
Encumbrances. Holdings will not, and will not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon or with respect to any
property or assets of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets or assign any right to receive income, or file or permit the filing of
any financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute, except the following, which are herein
collectively referred to as "PERMITTED ENCUMBRANCES":
(a) Liens for taxes, assessments or governmental charges or claims
not yet delinquent or Liens for taxes, assessments or governmental charges
or claims being con tested in good faith and by appropriate proceedings for
which adequate reserves, as may be required by GAAP, have been established
or as to which bonds have been posted with the applicable authority in the
amounts required by applicable law;
(b) Liens in respect of property or assets of Holdings or any of its
Subsidiaries imposed by law (i) which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens and
other similar Liens arising in the ordinary course of business, and (A)
which do not in the aggregate materially detract from the value of the
property or assets of Holdings and its Subsidiaries, taken as a whole, or
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materially impair the use thereof in the operation of the business of
Holdings or any of its Subsidiaries or (B) which are being contested in
good faith by appropriate proceedings promptly instituted, which
proceedings have the effect of preventing the forfeiture or sale of the
property or asset subject to such Lien or (ii) which do not relate to
material liabilities of Holdings and its Subsidiaries and do not in the
aggregate materially detract from the value of the property and assets of
Holdings and its Subsidiaries taken as a whole and do not create a default
under any lease of Real Property;
(c) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) not in excess of $500,000 in the aggregate
(exclusive of any amount ade quately covered by insurance as to which the
insurance company has acknowledged coverage) unless the attachment or
judgment it secures shall, within 60 days after the entry thereof, not have
been discharged or execution thereof not stayed pending appeal, or shall
not have been discharged within 30 days after the expiration of any such
stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemploy ment insurance and other types of social security,
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money or the equivalent);
(e) Easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with the
business of Holdings or any of its Subsidiaries, in each case incurred in
the ordinary course of business and which do not materially impair for its
intended purposes the Real Property to which it relates;
(f) Zoning and building bylaws and ordinances, municipal bylaws and
regulations, and restrictive covenants, which do not materially interfere
with the use of the subject property by Holdings or any of its Subsidiaries
as such property is used as of the Closing Date (or, with respect to
property acquired after the Closing Date, as such property is used as of
the acquisition date of such property);
(g) Liens securing Indebtedness of any Subsidiary of the Borrower
owing to the Borrower or any Wholly Owned Subsidiary of the Borrower;
(h) Liens upon real or tangible personal property acquired or
constructed by Holdings or its Subsidiaries after the date hereof or on
such property or equity securities of a Person at the time such Person
becomes a Subsidiary of the Borrower or any of its Subsidiaries; PROVIDED,
HOWEVER, that (A) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, the cost of the
item of property subject thereto or such Liens existed on the date such
property or securities were
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acquired and were not incurred as a result of or in anticipation of such
acquisition, (B) the principal amount of the Indebtedness secured by such
Lien does not exceed when incurred 100% of the fair value (as determined in
good faith by the board of directors of Holdings or the Borrower) of the
property at the time it was so acquired or constructed, (C) the
Indebtedness secured by the Lien is not created more than 180 days after
the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property
subject to the Lien, (D) such Lien does not extend to or cover any other
property other than such item of property, (E) the incurrence of such
Indebtedness secured by such Lien is permitted by Section 7.07 and (F) such
Lien is not in violation of any lease of any Real Property of any Credit
Party; and
(i) Liens on any property existing as of the date hereof securing
Existing Debt and any refinancing, extension, renewal or rearrangement
thereof provided that such Lien does not extend to or cover any other
property other than items of property encumbered as of the date hereof.
7.07. INDEBTEDNESS. Holdings will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume, guarantee, acquire or become
liable for (contingently or otherwise) or suffer to exist any Indebtedness,
except:
(a) Indebtedness incurred pursuant to the Credit Documents;
(b) Indebtedness incurred pursuant to the Heller Subordinated Note;
(c) Indebtedness not in excess of $3,000,000 in aggregate principal
amount at any one time outstanding, incurred pursuant to any note issued to
sellers as part of the consideration for a Permitted Business Acquisition
(any such note, a "SELLER NOTE"), provided that any such Seller Note shall
satisfy the following conditions: (i) it shall be unsecured, (ii) it shall
not pay interest prior to maturity, other than interest which is paid-
in-kind (except that up to $300,000 of cash interest may be paid on Seller
Notes annually, subject to there being, at the time of any such payment of
cash interest, no payment Default hereunder, and subject to restrictions
imposed on such payment pursuant to clause (iii) hereof), and (iii) it
shall contain subordination and related provisions which are acceptable in
form and substance to the Administrative Agent, including, without
limitation, that there shall be no payments made with respect to such
Seller Notes (other than the payment of interest, in-kind) while there is
any payment Default or, subject to such conditions as are acceptable to the
Administrative Agent, upon such other Defaults as are acceptable to the
Administrative Agent, and there shall be no right of acceleration on such
Seller Notes on account of such nonpayment.
(d) Indebtedness arising under noncompetition or consulting
arrangements entered into in connection with Permitted Business
Acquisitions, not to exceed $2,000,000 in the aggregate at any one time
outstanding.
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(e) Existing Debt and any refinancing, extension, rearrangement,
renewal or replacement thereof; PROVIDED, HOWEVER, that any such
refinancing, extension, renewal, rearrangement or replacement of Existing
Debt shall be on terms which, both taken as a whole and specifically as
such terms relate to the identity of the obligors, repayments of principal,
covenants, events of default and security in property of the debtor, are in
each event no less favorable to Holdings or the Borrower than the
correlative terms of the Existing Debt;
(f) Interest Rate Agreements entered into pursuant to Section 6.11 or
for other bona fide hedging purposes;
(g) Indebtedness (other than Indebtedness permitted by Section
7.07(j)) not exceeding $2,000,000 in aggregate principal amount outstanding
at any time to finance the cost of the acquisition of personal tangible
property (including Capital Leases, but excluding Indebtedness incurred to
finance Permitted Business Acquisitions), and any refinancing, extension,
renewal, rearrangement or replacement; PROVIDED, HOWEVER, that such
Indebtedness (or the refinancing thereof) shall not exceed when incurred
100% of the fair value of such property when so acquired; and PROVIDED,
FURTHER, that such Indebtedness (or the refinancing thereof) is not secured
by any Lien other than a Lien referred to in Section 7.06(h);
(h) other unsecured Indebtedness not exceeding $1,000,000 in the
aggregate at any time outstanding;
(i) Indebtedness of the Borrower to any of its Wholly Owned
Subsidiaries or of any Subsidiary of the Borrower to the Borrower or
another Wholly Owned Subsidiary of the Borrower (but only so long as such
Indebtedness is held by the Borrower or a Wholly Owned Subsidiary of the
Borrower) to the extent such Indebtedness is permitted as an Investment by
the Person owed such Indebtedness by the provisions of Section 7.08; and
(j) Indebtedness of any entity, or secured by any personal tangible
property, acquired in a Permitted Business Acquisition, so long as such
Indebtedness is (i) not incurred in contemplation of such Permitted
Business Acquisition, (ii) not in excess of $500,000 in the aggregate at
any one time outstanding and (iii) not secured by any Lien other than a
Lien referred to in Section 7.06(h).
7.08. INVESTMENTS. Holdings will not, and will not permit any of its
Subsidiaries to, have outstanding or make any Investments except:
(a) Investments consisting of Cash and Cash Equivalents;
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(b) Investments consisting of receivables owing to them and advances
to cus tomers and suppliers, in each case if created, acquired or made in
the ordinary course of business and payable or dischargeable in accordance
with customary trade terms;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers or in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(d) Investments made in Wholly Owned Subsidiaries of the Borrower or
any Person which, as a result of such Investment, becomes a Wholly Owned
Subsidiary of the Borrower (including any such Investment which constitutes
a Permitted Business Acquisition); PROVIDED, HOWEVER, that such Wholly
Owned Subsidiary is engaged in a business related to that of Holdings and
its Subsidiaries in compliance with Section 7.17;
(e) Investments consisting of loans or advances made by the Borrower
to its officers, directors and employees in the ordinary course of business
not to exceed $100,000 in the aggregate outstanding at any time (excluding
any such loans or advances made as of the Closing Date pursuant to the
Put/Call Option Agreement);
(f) Investments made as a result of the receipt of non-cash proceeds
from any Asset Sale made pursuant to and in compliance with Section 7.11;
(g) Investments in Interest Rate Agreements permitted under Section
7.07(f); and
(h) Investments in addition to those permitted above not exceeding
$500,000 in the aggregate at any time outstanding.
7.09. PREPAYMENTS OF INDEBTEDNESS. Holdings will not, and will not permit
any of its Subsidiaries to, make (or give any notice in respect of) any
voluntary or optional payment or prepayment or redemption or acquisition for
value of Indebtedness (including, without limitation, by way of depositing with
any trustee with respect thereto money or securities before such Indebtedness is
due for the purpose of paying such Indebtedness when due) or exchange of any
such Indebtedness, other than the Loans.
7.10. DIVIDENDS, ETC. Holdings will not, and will not permit any of its
Subsidiaries to, declare or pay any dividends or return any capital to its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for any consideration, any shares of any class
of its capital stock now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of such shares), or make
any loans or advances to Affiliates, or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of
Holdings or any of its Subsidiaries, as the case may be, now or hereafter
outstanding (or any
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options or warrants or stock appreciation rights issued by such Person with
respect to its capital stock) (all of the foregoing, "DIVIDENDS"), PROVIDED,
HOWEVER, that (a) any direct or indirect Wholly Owned Subsidiary of the Borrower
may pay Dividends to its parent corporation if such parent corporation is the
Borrower or a Wholly Owned Subsidiary of the Borrower; (b) Holdings or any of
its Subsidiaries may make payments to Affiliates pursuant to and in compliance
with Section 7.19; (c) Holdings may make payments from the Put/Call Funds to
Management Stockholders to redeem their "Option Shares" (as defined in the
Put/Call Option Agreement), in accordance with the Put/Call Option Agreement,
provided that any such redemption is effected prior to January 31, 1998; (d)
upon the death, disability or termination of employment of Management
Stockholders, Holdings may repurchase from such Management Stockholders their
Capital Stock of Holdings in an amount not exceeding $250,000 per year or
$1,500,000 in the aggregate; provided that no Default or Event of Default which
has not been cured or waived is in existence, or would result from such payment;
and (e) Holdings may repurchase from the Senior Managers their Capital Stock of
Holdings upon the occurrence of a "TRIGGERING EVENT" (as defined in the Stock
Repurchase Agreement) through the issuance of unsecured pay-in-kind subordinated
notes of Holdings which are not payable (whether in respect of cash interest or
principal) prior to December 31, 2004 and which contain subordination provisions
satisfactory in all respects to the Administrative Agent.
7.11. DISPOSITION OF ASSETS. Holdings will not, and will not permit any
of its Subsidiaries to, dispose of all or any part of its interest in any asset
except that Holdings and its Subsidiaries may sell or otherwise dispose of
assets to any Person other than an Affiliate so long as such sales or other
dispositions are (a) approved by the Required Banks; (b) for at least the fair
market value of such assets and the aggregate amount of such asset sales is less
than $1,000,000 in any 12-month period and, in any such case, Holdings or such
Subsidiary complies with the mandatory prepayment provisions and Commitment
reduction provisions herein and, in the case of Collateral, so long as the
conditions to the release of Collateral described herein and in the applicable
Security Documents are met; (c) of inventory in the ordinary course of business;
(d) (i) of equipment that has become worn out, obsolete or damaged or otherwise
unsuitable or no longer needed for use in connection with the business of
Holdings or any of its Subsidiaries or should be replaced, as the case may be,
in each case as determined in good faith by the board of directors of Holdings
or its Subsidiary, as the case may be; (ii) for at least the fair value of such
equipment, as determined in good faith by the board of directors of Holdings or
its Subsidiaries; and (iii) the proceeds of the sales of such equipment are used
within 120 days of such sales (or such longer period as may be consented to by
the Administrative Agent) to (A) purchase equipment used in substantially
similar lines of business or (B) repay Loans pursuant to Section 3.03 and until
so applied are held in the Reserve Account; or (e) of assets as to which the
likely amount of net sales proceeds that would be realized upon a sale of such
assets is such that a sale of such assets is not, in the reasonable judgment of
the Borrower, economically practicable but such other disposition is otherwise
of commercial value to the Borrower; PROVIDED, HOWEVER, that in no case shall
sales or other dispositions pursuant to this clause (e) be of assets of a fair
market value at the time of such sale which is in excess of an aggregate of
$500,000 in any calendar year, and in the case of Collateral, so long as the
conditions to the release of Collateral described herein and in the
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applicable Security Documents are met; PROVIDED, HOWEVER, that notwithstanding
the foregoing, Holdings will not, and will not permit any of its Subsidiaries
to, sell, with or without recourse, or discount (other than in connection with
trade discounts in the ordinary course of business consistent with past
practice) or otherwise sell for less than the face value thereof, notes or
accounts receivable owed to it by its third-party customers or suppliers.
The consideration received by Holdings and its Subsidiaries from each sale
of assets permitted by this Section 7.11, other than with respect to such sales
involving consideration of not more than $250,000 in the aggregate in any
calendar year, shall be received in whole within 15 days of such sale and at
least 70% of the consideration from each sale shall consist of Cash or Cash
Equivalents. Any non-Cash proceeds received from the sale of assets
constituting Collateral shall be pledged pursuant to and in accordance with the
applicable Security Documents and shall constitute Collateral.
7.12. CONTINGENT OBLIGATIONS. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create or become or be
liable with respect to any Contingent Obligation except:
(a) guarantees resulting from endorsement of instruments for deposit
or collection in the ordinary course of business;
(b) Interest Rate Agreements permitted under Section 7.07(f);
(c) obligations arising as a direct consequence of the
Recapitalization;
(d) obligations with respect to the Indebtedness permitted to be
incurred under Section 7.07;
(e) other Contingent Obligations not to exceed $500,000 outstanding
at any one time; and
(f) Contingent Obligations in respect of the repurchase or redemption
of Capital Stock of Holdings held by Management Stockholders, upon the
termination of such shareholders' employment, which meet the specifications
of Section 7.10.
7.13. MERGER AND CONSOLIDATIONS. Holdings will not, and will not permit
any of its Subsidiaries to, merge or consolidate with or into any other entity;
PROVIDED, HOWEVER, that any Subsidiary of the Borrower or any Person acquired in
a Permitted Business Acquisition may be merged or consolidated with or into (a)
the Borrower, if the Borrower is the continuing or surviving corporation or (b)
any Subsidiary of the Borrower, if (i) the continuing or surviving corporation
is a Wholly Owned Subsidiary of the Borrower and (ii) the continuing or
surviving corporation is, or immediately thereafter becomes, party to a
Subsidiary Guarantee and a Security
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Agreement and all related documentation necessary for the perfection of the
liens and security interests created thereunder.
7.14. AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Without the prior written
consent of the Administrative Agent, Holdings will not, and will not permit any
of its Subsidiaries to, amend, modify or change any of the terms or provisions
of its certificate of incorporation (including, without limitation, by the
filing of any certificate of designation), by-laws or agreement of limited
partnership, in each case to the extent such amendment, modification or change
is adverse to the Banks as Banks hereunder.
7.15. ERISA. At no time shall the actuarial present value of unfunded
liabilities for post- employment health care benefits of Holdings, any
Subsidiary of Holdings or any ERISA Affiliate of any of them, whether or not
provided under a Plan, calculated in a manner consistent with Statement No. 106
of the Financial Accounting Standards Board, exceed $250,000 in aggregate.
7.16. NO NON-WHOLLY OWNED SUBSIDIARIES. Holdings shall not have any
direct Subsidiaries other than the Borrower, which shall, at all times be a
Wholly Owned Subsidiary of Holdings. Neither the Borrower nor any of its
Subsidiaries shall have, create or suffer to exist any Subsidiary of any of them
which is not a Wholly Owned Subsidiary, including, without limitation, any such
Subsidiary acquired in a Permitted Business Acquisition.
7.17. CHANGES IN BUSINESS. Other than asset dispositions permitted under
Section 7.11, Holdings will not, and will not permit any of its Subsidiaries to,
materially alter its business from that conducted by it at the Closing Date,
after giving effect to the Recapitalization.
7.18. AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS. After the Closing Date,
Holdings will not, and will not permit any of its Subsidiaries to, amend,
terminate or otherwise change the terms of any of the Recapitalization
Documents, or of the LS Purchase Documents or of the leases of Real Property
referred to on Schedule 5.16 without, with respect to any amendment, termination
or change which is adverse to the Banks as Banks hereunder, the prior written
consent of the Administrative Agent. Holdings will not, and will not permit any
of its Subsidiaries to, amend or otherwise change the terms of any Existing Debt
(excluding such Indebtedness arising under Capital Leases), except as otherwise
permitted under this Section 7.
7.19. TRANSACTIONS WITH AFFILIATES. Holdings will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any holder
of 5% or more of any class of equity interests of Holdings or with any Affiliate
of Holdings other than on terms and conditions substantially as favorable to
Holdings or such Subsidiary as would be obtainable by Holdings or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than a holder of 5% or more of any class of equity interests of Holdings
or an Affiliate of Holdings; PROVIDED, HOWEVER, that the foregoing restrictions
shall not apply to (a) transactions between the Borrower and any of its Wholly
Owned Subsidiaries and between Wholly Owned Subsidiaries of the Borrower
permitted
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by the other provisions of this Agreement, (b) loans or advances made by the
Borrower to its officers, directors and employees permitted under Section
7.08(e), (c) the payment of fees to Indosuez and its respective Affiliates for
financial services, such fees not to exceed the usual and customary fees for
similar services, (d) the issuance of Capital Stock of Holdings pursuant to any
pension, stock option, profit sharing or other employee benefit plan or
agreement of Holdings or its Subsidiaries in the ordinary course of business,
(e) payments to KCSN or its Affiliates for services rendered in connection with
the Recapitalization not to exceed the amount disclosed to the Agents prior to
the Effective Date, and for management services pursuant to the Management
Agreement, not to exceed, in any fiscal year, the greater of (i) 3% of
Consolidated EBITDA for that fiscal year or (ii) $250,000, PROVIDED that no
Default or Event of Default shall have occurred and be continuing or would
result from such payment, (f) the continuation and renewal of the leases
referred to on Schedule 5.16, (g) the consummation of the Signature Designated
Acquisition on the terms described on Schedule 4.03, (h) distributions with
respect to the Heller Subordinated Note permitted under Section 7.23 and the
Heller Subordination Agreement, (i) the redemption of Capital Stock of Holdings
held by Management Stockholders or the Senior Managers subject to the conditions
described in Section 7.10, and (j) (i) the payment to the Senior Managers, in
accordance with Section 1(b) of the Stock Repurchase Agreement, of up to
$150,000 per year to each Senior Manager and (ii) the exchange by any Senior
Manager of his Subject Securities for redeemable preferred stock of Holdings, in
the case of each of subclause (i) and (ii) of this clause (j) in the event that,
following the occurrence of a "Triggering Event" (as defined in the Stock
Repurchase Agreement), Holdings is precluded from repurchasing such Senior
Manager's Subject Securities, pursuant to clause (y) of section 1(b) of the
Stock Repurchase Agreement.
7.20. CAPITAL STRUCTURE. The Borrower shall not and shall not permit any
of its Subsidiaries to issue, sell, assign, pledge or otherwise encumber or
dispose of any of its Capital Stock (including partnership interests or other
securities or warrants, rights or options to acquire capital stock, partnership
interests or other securities), without first providing prior written notice
thereof to the Administrative Agent and making arrangements satisfactory to the
Administrative Agent to ensure that any such Capital Stock will be deposited
with the Administrative Agent, and that the Administrative Agent will have a
valid first priority perfected security interest in such Capital Stock.
7.21. SALE AND LEASE-BACKS. Holdings will not, and will not permit any of
its Subsidiaries to, directly or indirectly, become or thereafter remain liable
as lessee or as guarantor or other surety with respect to the lessee's
obligations under any lease, whether an Operating Lease or a Capital Lease, of
any property (whether real or personal or mixed) whether now owned or hereafter
acquired, (a) which Holdings or any of its Subsidiaries has sold or transferred
or is to sell or transfer to any other Person (other than in connection with the
Recapitalization) or (b) which Holdings or any such Subsidiary intends to use
for substantially the same purpose as any other property which has been or is to
be sold or transferred by Holdings or any such Subsidiary to any Person in
connection with such lease, if in the case of clause (a) or (b) above, such sale
and
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such lease are part of the same transaction or a series of related transactions
or such sale and such lease occur within one year of each other or are with the
same other Person.
7.22. CLEAN-DOWN PERIOD. During the Clean-down Period for each fiscal
year of the Borrower, the aggregate unpaid principal amount of outstanding
Revolving Loans plus outstanding Letters of Credit Usage shall not exceed the
Clean-down Amount.
7.23. CERTAIN PAYMENTS. Holdings and its Subsidiaries shall make no
payments or distributions with respect to the Heller Subordinated Notes, except
as permitted under the Heller Subordination Agreement. Without limiting the
foregoing, on or after December 31, 1998, the Borrower shall be permitted to pay
interest in cash on the Heller Subordinated Notes to the holders thereof (the
"SUBORDINATED LENDERS") in an amount equal to any scheduled semi-annual interest
payment on the Subordinated Notes if (A) at the time of making such payment
there is not in existence, nor will there occur after giving effect to such
payment, a Default or Event of Default; (B) after giving pro forma effect to
such cash payment as if such payment was made during the relevant Test Period
(i) the ratio of (w) total Consolidated Indebtedness of Holdings and its
Subsidiaries (including the outstanding balance under any noncompete or
consulting arrangements) immediately prior to such payment to (x) Consolidated
EBITDA of Holdings and its Subsidiaries is not more than 3.25:1.0 (PROVIDED,
that, for purpose of the foregoing clause (i), the calculations shall be
performed in accordance with the provisos to Section 7.04) and Consolidated
Indebtedness shall include the outstanding balance (including capitalized
interest) of the Heller Subordinated Notes; and (ii) the ratio of (y)
Consolidated EBITDA of Holdings and its Subsidiaries to (z) Consolidated
Interest Expense (which, for the purposes of this Section 7.23, shall include
only cash interest expense) of Holdings and its Subsidiaries is not less than
3.0:1.0; (C) during the period two weeks before the scheduled interest payment
date on the Heller Subordinated Notes for which the Borrower has proposed a cash
interest payment there shall be $2.5 million of availability for additional
Borrowings of a Revolving Loan pursuant to Section 1.01; and (D) the Borrower
shall have delivered to the Administrative Agent an Officers' Certificate (i)
setting forth the calculation of the financial ratios required by clause (B)
above and (ii) stating that, based on the annual budgets or forecasts currently
in effect and provided pursuant to Section 4.01(j) or 4.03 hereof and after
giving effect to the amount of any interest payment permitted by this Section
7.23, such persons do not expect that a Default or an Event of Default shall
occur in the then current fiscal quarter or the next succeeding fiscal quarter,
in each case, of Holdings and its Subsidiaries.
SECTION 8. EVENTS OF DEFAULT. Each of the events specified in Sections
8.01 through 8.09, inclusive, is referred to as an "EVENT OF DEFAULT":
8.01. PAYMENTS. The Borrower shall (a) default in the payment when due of
any principal of the Loans, (b) default in the payment when due of any interest
on the Loans, and such default shall continue for two or more Business Days or
(c) fail to pay any other amounts owing hereunder or under any other Credit
Document, and such failure shall continue for five Business Days after the
Borrower's receipt of written notice thereof.
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8.02. REPRESENTATIONS, ETC. Any representation, warranty or statement
made or deemed made by operation of Sections 4.01, 4.02 or 4.03 by any Credit
Party herein or in any other Credit Document or in any written statement or
certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made by operation of Sections 4.01, 4.02 or 4.03.
8.03. COVENANTS.
(a) Any Credit Party shall default in the due performance or
observance by it of any term, covenant or agreement contained in Sections
6.11, 6.12 or Section 7; or
(b) any Credit Party shall default in the due performance or
observance by it of any other term, covenant or agreement contained in this
Agreement, any other Credit Document or any Security Document (except as
otherwise provided in this Section 8) and such default shall continue
unremedied after (i) the expiry of any specified grace period relative to
such default or, (ii) where no grace period is specified, 30 days (or, in
the case of Section 6.16(d), ten Business Days) after the date of such
default.
8.04. DEFAULT UNDER OTHER AGREEMENTS.
(a) Any Credit Party shall (i) default in any payment with respect to
any Indebtedness (other than Obligations) having a principal amount of
$500,000 or more individually or $1,000,000 or more in the aggregate, for
all such Persons, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created, or (ii)
default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or, except for any such default or other event or
condition as to such Indebtedness arising under Capital Leases, to permit
(with or without notice, lapse of time or both) the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due (whether by
acceleration, redemption, etc.) prior to its stated maturity;
(b) any such Indebtedness of any Credit Party shall be declared to be
due and payable, or required to be prepaid or redeemed other than by a
regularly scheduled or required prepayment, prior to the stated maturity
thereof; or
(c) Any Credit Party shall default in the performance or observance
of any obligation under any lease reflected on Schedule 5.16 (excluding
those leases which the Borrower has designated on Schedule 5.16 as not
material, and the Administrative Agent
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has agreed with such designation), and such default results in the
termination of such lease.
8.05. BANKRUPTCY, ETC. Any Credit Party shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"BANKRUPTCY CODE"); or an involuntary case is commenced against any Credit Party
and the petition is not controverted within 20 days, or is not dismissed within
60 days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of any Credit Party; or any Credit Party commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Credit Party; or
there is commenced against any Credit Party any such proceeding which remains
undismissed for a period of 60 consecutive days; or any Credit Party is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any Credit Party suffers
any appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
any Credit Party makes a general assignment for the benefit of creditors; or any
corporate action is taken by any Credit Party for the purpose of effecting any
of the foregoing.
8.06. SECURITY DOCUMENTS; GUARANTEES.
(a) Any Security Document shall cease to be in full force and effect,
or shall cease to give the Administrative Agent the Liens, rights, powers,
and privileges purported to be created thereby, in favor of the
Administrative Agent, superior to and prior to the rights of all third
Persons and subject, in each case, to no Liens other than Permitted
Encumbrances, Prior Liens and Liens expressly permitted by the applicable
Security Document, or any judgment creditor having a Lien against any
material item of Collateral shall commence legal action to foreclose such
Lien or otherwise exercise its remedies against any material item of
Collateral, or the Administrative Agent shall cease to hold, for the
benefit of the Banks, 100% of the Borrower's Capital Stock.
(b) The Holdings Guarantee provided in Section 9 hereof, or any
Subsidiary Guarantee, or any provisions thereof shall cease to be in full
force and effect in all material respects, 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 guarantee or shall default in the
due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to such guarantee.
8.07. SUBORDINATION. (a) The terms of the Heller Subordination
Agreement, or of the subordination as to any Seller Note shall cease, for any
reason, to be in full force and effect for the benefit of the Banks, or any
Credit Party or the holder of the Heller Subordinated Notes or any
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Seller Note shall so assert or shall otherwise assert that the Obligations are
not senior to the Heller Subordinated Notes or any Seller Note, as the case may
be.
(b) An event described in section 2.2(a) of the Heller Subordinated Notes,
as requiring mandatory redemption of the Heller Subordinated Notes,
shall occur.
8.08. JUDGMENTS. One or more judgments or decrees shall be entered against
any Credit Party involving a liability of $500,000 or more in the case of any
one such judgment or decree and $1,000,000 in the aggregate for all such
judgments or decrees for Holdings and its Subsidiaries (in either case in excess
of the amount covered by insurance as to which the insurance company has
acknowledged coverage) and any such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal for a period of 60
consecutive days from the entry thereof.
8.09. OWNERSHIP.
(a) KCSN, together with any other Person controlled by or under
common control with Kohlberg & Company, LLC, shall, collectively,
cease to have and to exercise the right, whether such right is
through ownership and control of sufficient shares of Holdings'
capital stock or otherwise, to elect or designate directors
entitled to cast a majority of the votes of Holdings' board of
directors; or
(b) Any Person, taken together with any Person controlled by or under
common control with such Person, (other than KCSN, taken together
with any other Person controlled by or under common control with
Kohlberg & Company, LLC) shall own and/or control (x) more than
30% of the issued and outstanding capital stock of Holdings
entitled (without regard to the occurrence of any contingency) to
vote for the election of directors, or (y) more of the issued and
outstanding capital stock of Holdings (taking into consideration
both voting and nonvoting capital stock) than KCSN, taken
together with any other Person controlled by or under common
control with Kohlberg & Company, LLC; or
(c) KCSN shall cease to be controlled by Kohlberg & Company, LLC; or
(d) the Borrower shall cease to be a Wholly Owned Subsidiary of
Holdings.
8.10. CERTAIN ACTIONS FOLLOWING AN EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, the Administrative Agent
may, and, upon the written request of the Required Banks shall, by written
notice to the Borrower (which shall be deemed notice to each other Credit Party,
including Holdings), take any or all of the following actions, without prejudice
to the rights of the Administrative Agent or any Bank to enforce its claims
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against the Borrower or any other Credit Party, except as otherwise specifically
provided for in this Agreement (PROVIDED, HOWEVER, that upon an Event of Default
specified in Section 8.05 the actions provided for in clauses (a) and (b) below
shall occur automatically without the giving of any notice):
(a) declare the Total Revolving Loan Commitments terminated (and, if
prior to the Acquisition Term Loan Commitment Termination Date, declare the
Acquisition Term Loan Commitments terminated), whereupon the Revolving Loan
Commitment (and, if applicable, the Acquisition Term Loan Commitment) of
each Bank shall forthwith terminate immediately and any accrued and unpaid
Commitment Fee shall forthwith become due and payable without any other
notice of any kind;
(b) declare the principal of and accrued interest in respect of all
Loans and all Obligations owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived
by each Credit Party; and/or
(c) enforce, as Administrative Agent (or direct the Administrative
Agent to enforce), any or all of the remedies created pursuant to the
Security Documents. If an Event of Default is cured or waived in
accordance with the terms of this Agreement, it ceases (and, if waived,
pursuant to the terms, and to the extent, of such waiver).
SECTION 9. HOLDINGS GUARANTEE.
9.01. GUARANTEE OF OBLIGATIONS. Holdings unconditionally guarantees that
the Obligations will be performed and will be paid in full in Cash when due and
payable, whether at the stated or accelerated maturity thereof or otherwise,
this guarantee being a guarantee of payment and not of collectibility and being
absolute and in no way conditional or contingent. In the event any part of the
Obligations shall not have been so paid in full when due and payable, Holdings
will, immediately upon notice by the Administrative Agent or, without notice,
immediately upon the occurrence of an Event of Default of the kind described in
Section 8.05 with respect to the Borrower, pay or cause to be paid to the
Administrative Agent for the account of each Bank in accordance with the Bank's
respective Commitments the amount of such Obligations which are then due and
payable and unpaid. Holdings' obligations hereunder shall not be affected by
the invalidity, unenforceability or irrecoverability of any of the Obligations
as against the Borrower, any other guarantor thereof or any other Person. For
purposes hereof, the Obligations shall be due and payable when and as the same
shall be due and payable under the terms of this Agreement or any other Credit
Document notwithstanding the fact that the collection or enforcement thereof may
be stayed or enjoined under the Bankruptcy Code or other applicable law.
9.02. CONTINUING OBLIGATION. Holdings acknowledges that the Banks and the
Agents have entered into this Agreement (and, to the extent that the Banks or
the Administrative Agent may enter into any future Credit Document, will have
entered into such agreement) in reliance on this
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Section 9 being a continuing irrevocable agreement, and Holdings agrees that its
guarantee may not be revoked in whole or in part. The obligations of Holdings
hereunder shall terminate when the commitment of the Banks to extend credit
under this Agreement shall have terminated and all of the Obligations have been
paid in full in Cash and discharged; PROVIDED, HOWEVER, that:
(a) if a claim is made upon the Banks at any time for repayment or
recovery of any amounts or any property received by the Banks from any
source on account of any of the Obligations and the Banks repay or return
any amounts or property so received (including interest thereon to the
extent required to be paid by the Banks) or
(b) if the Banks become liable for any part of such claim by reason
of (i) any judgment or order of any court or administrative authority
having competent jurisdiction, or (ii) any settlement or compromise of any
such claim.
then Holdings shall remain liable under this Agreement for the amounts so repaid
or property so returned or the amounts for which the Banks become liable (such
amounts being deemed part of the Obligations) to the same extent as if such
amounts or property had never been received by the Banks, notwithstanding any
termination hereof or the cancellation of any instrument or agreement evidencing
any of the Obligations. Not later than five days after receipt of notice from
the Administrative Agent, Holdings shall pay to the Administrative Agent an
amount equal to the amount of such repayment or return for which the Banks have
so become liable. Payments hereunder by Holdings may be required by the
Administrative Agent on any number of occasions.
9.03. WAIVERS WITH RESPECT TO OBLIGATIONS. Except to the extent expressly
required by this Agreement or any other Credit Document, Holdings waives, to the
fullest extent permitted by the provisions of applicable law, all of the
following (including all defenses, counterclaims and other rights of any nature
based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Obligations, and notice of protest, dishonor or nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on this guarantee of the Obligations;
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Borrower or any other Person with respect to any
Credit Document, or notice of any acceleration of maturity of any
Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of, the Obligations, this Agreement or any other Credit
Document or any pursuit or exhaustion of rights or remedies with respect to
any Collateral or against the Borrower or any other Person in respect of
the Obligations or any requirement of diligence or
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promptness on the part of the Administrative Agent or the Banks in
connection with any of the foregoing;
(e) any act or omission on the part of the Administrative Agent or
the Banks which may impair or prejudice the rights of Holdings, including
rights to obtain subrogation, exoneration, contribution, indemnification or
any other reimbursement from the Borrower or any other Person, or otherwise
operate as a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
security interest in any Collateral or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any Collateral;
(g) any statute of limitations or any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Banks from bringing any action, including any claim
for a deficiency, against Holdings before or after the Administrative
Agent's or the Banks' commencement or completion of any foreclosure action,
whether judicially, by exercise of power of sale or otherwise, or any other
law which would otherwise require any election of remedies by the
Administrative Agent or the Banks;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Borrower may now or hereafter have to the payment of the
Obligations, together with all suretyship defenses, which could otherwise
be asserted by Holdings.
Holdings represents that it has obtained the advice of counsel as to the extent
to which suretyship and other defenses may be available to it with respect to
its obligations hereunder in the absence of the waivers contained in this
Section 9.03.
No delay or omission on the part of the Administrative Agent or the Banks
in exercising any right under this Agreement or any other Credit Document or
under any guarantee of the Obligations or with respect to the Collateral shall
operate as a waiver or relinquishment of such right. No action which the
Administrative Agent or the Banks or the Borrower may take or refrain from
taking with respect to the Obligations, including any amendments thereto or
modifications thereof or waivers with respect thereto, shall affect the
provisions of this Agreement or Holdings' obligations hereunder. None of the
Banks' or the Administrative Agent's rights shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Credit
Party, or by any noncompliance by the Borrower with the terms, provisions and
covenants
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of this Agreement, regardless of any knowledge thereof which the Administrative
Agent or the Banks may have or otherwise be charged with.
9.04. BANKS' POWER TO WAIVE, ETC. Holdings grants to the Banks full power
in their discretion, without notice to Holdings or its consent, such notice and
consent being expressly waived to the fullest extent permitted by applicable
law, and without in any way affecting Holdings' liability under its guarantee
hereunder;
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, this Agreement, any
other Credit Document, the Collateral, the Obligations or any guarantee
thereof (each as from time to time in effect);
(b) To grant any extension of the Obligations (for any duration), and
any other indulgence with respect thereto, and to effect any total or
partial release (by operation of law or otherwise), discharge, compromise
or settlement with respect to the obligations of any Credit Party or any
other Person in respect of the Obligations, whether or not rights against
Holdings under this Agreement are reserved in connection therewith;
(c) To take security in any form for the Obligations, and to consent
to the addition to or the substitution, exchange, release or other
disposition of, or to deal in any manner with, any part of any property
contained in the Collateral whether or not the property, if any received
upon the exercise of such power shall be of a character or value the same
as or different from the character or value of any property disposed of,
and to obtain, modify or release any present or future guarantees of the
Obligations and to proceed against any of the Collateral or such guarantees
in any order.
(d) To collect or liquidate or realize upon any of the Obligations or
the Collateral in any manner or to refrain from collecting or liquidating
or realizing upon any of the Obligations or the Collateral; and
(e) To extend credit under this Agreement, any other Credit Document
or otherwise in such amount as the Banks may determine, including
increasing the amount of credit and the interest rate and fees with respect
thereto, even though the condition of the Credit Parties (financial or
otherwise on an individual or consolidated basis) may have deteriorated
since the date hereof.
9.05. INFORMATION REGARDING THE BORROWER, ETC. Holdings has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
Holdings waives any obligation which may now or hereafter exist on the part of
the Administrative Agent or the Banks to inform it of the risks being undertaken
by entering into this Agreement or of any changes in such risks and, from and
after the date hereof, Holdings undertakes to keep itself informed of such risks
and any changes therein.
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Holdings expressly waives any duty which may now or hereafter exist on the part
of the Administrative Agent or the Banks to disclose to it any matter related to
the business, operations, character, collateral, credit, condition (financial or
otherwise), income or prospects of the Borrower or its Subsidiaries or their
properties or management, whether now or hereafter known by the Administrative
Agent or the Banks. Holdings represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Borrower all information concerning
this Agreement and all other Credit Documents and all other information as to
the Borrower and its Subsidiaries or their properties or management as it deems
necessary or desirable.
9.06. CERTAIN GUARANTOR REPRESENTATIONS. Holdings represents that (a) it
is in its best interest and in pursuit of the purposes for which it was
organized as an integral part of the business conducted and proposed to be
conducted by the Borrower and its Subsidiaries, and reasonably necessary and
convenient in connection with the conduct of the business conducted and proposed
to be conducted by them, to induce the Banks to enter into this Agreement and to
extend credit to the Borrower by making the guarantee contemplated by this
Section 9, (b) the credit available hereunder will directly or indirectly inure
to its benefit, and (c) by virtue of the foregoing it is receiving at least
reasonably equivalent value from the Banks for its guarantee. Holdings
acknowledges that it has been advised by the Administrative Agent that the Banks
are unwilling to enter into this Agreement unless the guarantee contemplated by
this Section 9 are given by it. Holdings represents that (i) it will not be
rendered insolvent as a result of entering into this Agreement, (ii) after
giving effect to the transactions contemplated by this Agreement, it will have
assets having a fair saleable value in excess of the amount required to pay its
probable liability on its existing debts as they become absolute and matured,
(iii) it has, and will have, access to adequate capital for the conduct of its
business and (iv) it has the ability to pay its debts from time to time incurred
in connection therewith as such debts mature.
9.07. SUBROGATION. Holdings agrees that it will not exercise any right of
reimbursement, subrogation, contribution, offset or other claims against the
other Credit Parties arising by contract or operation of law in connection with
any payment made or required to be made by it under this Agreement.
9.08. SUBORDINATION. Holdings covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by the Borrower or any other Credit Party to Holdings
whether arising hereunder or otherwise are subordinated to the prior payment in
full of the Obligations and are so subordinated as a claim against such Person
or any of its assets, whether such claim be in the ordinary course of business
or in the event of voluntary or involuntary liquidation, dissolution, insolvency
or bankruptcy, so that no payment with respect to any such Indebtedness, claim
or liability will be made or received while any Event of Default exists.
9.09. FURTHER ASSURANCES. Holdings will, promptly upon the request of the
Administrative Agent from time to time, execute, acknowledge and deliver, and
file and record, all such
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instruments, and take all such action, as the Administrative Agent deems
necessary or advisable to carry out the intent and purposes of this Section 9.
SECTION 10. DEFINITIONS. Certain capitalized terms are used in this
Agreement with the specific meanings set forth or referred to below in this
Section 10. Capitalized terms defined in this Agreement in the singular or
plural form include the plural and singular form, respectively.
"ACCOUNT" means all of the "accounts" of Holdings and its Subsidiaries (as
that term is defined in Section 9-106 of the Uniform Commercial Code as in
effect in the State of New York) whether or not such Account has been earned by
performance, whether now existing or existing in the future, including, without
limitation, all (a) accounts receivable, including, without limitation, all
accounts created by or arising from the sale of goods or rendition of services
by Holdings and its Subsidiaries; (b) unpaid seller's rights (including
rescission, replevin, reclamation and stopping in transit) relating to the
foregoing or arising therefrom; (c) rights to any goods represented by any of
the foregoing, including returned or repossessed goods; (d) reserves and credit
balances held by Holdings and its Subsidiaries with respect to any such accounts
receivable or any account debtor; (e) guarantees or collateral for any of the
foregoing; and (f) insurance policies or rights relating to any of the
foregoing.
"ACQUISITION PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total Acquisition Term Loan Commitment.
"ACQUISITION TERM LOAN" is defined in Section 1.01(d).
"ACQUISITION TERM LOAN CLOSING DATE" is defined in Section 1.01(d).
"ACQUISITION TERM LOAN COMMITMENT" means, with respect to each Bank, the
amount set forth below such Bank's name on Exhibit A hereto directly below the
column entitled "Acquisition Term Loan", as same may be reduced from time to
time pursuant to Sections 2.01, 3.03 and/or 8.
"ACQUISITION TERM LOAN COMMITMENT TERMINATION DATE" means the last Business
Day of December, 1997.
"ACQUISITION TERM LOAN MATURITY DATE" means the last Business Day of
December, 2003.
"ACQUISITION TERM NOTE" is defined in Section 1.05(a)(iv).
"ADDITIONAL SECURITY DOCUMENTS" is defined in Section 6.14(a).
"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; PROVIDED, HOWEVER,
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that neither Indosuez, IBJS, nor any Affiliate of Indosuez or IBJS, shall be
deemed to be an Affiliate of any Credit Party. A Person shall be deemed to
control a corporation for the purposes of this definition if such Person
possesses, directly or indirectly, the power (a) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (b) to direct or cause the direction of the management and
policies of such cor poration, whether through the ownership of voting
securities, by contract or otherwise.
"ADMINISTRATIVE AGENT" is defined in the preamble to this Agreement and
shall include any successor Administrative Agent appointed in accordance
herewith in its capacity as Administrative Agent for the Banks.
"AGENTS" is defined in the preamble to this Agreement.
"AGENT'S OFFICE" shall mean the office of the Administrative Agent located
at 1211 Avenue of the Americas, 7th Floor, New York, New York 10036, or such
other office as the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.
"AGREEMENT" shall mean the Original Credit Agreement, as amended and
restated hereby, including as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"ACQUISITION" is defined in the recitals to this Agreement.
"ACQUISITION GUARANTEE" means the Subsidiary Guarantee executed by
Acquisition and delivered to the Administrative Agent as of the Closing Date,
pursuant to which Acquisition guarantees the Borrower's Obligations.
"ASSET RESTORATION AMOUNT" is defined in Section 3.03(f)(i).
"ASSET SALE" means the sale, transfer or other disposition, to the extent
consummated after the Closing Date, by Holdings or any of its Subsidiaries to
any Person other than the Borrower or any of its Wholly Owned Subsidiaries of
any asset of Holdings or such Subsidiary, except for (a) transactions included
in the definition of Net Financing Proceeds or (b) the issuance of equity
securities under any stock option or other benefit plan available to the
employees or directors of Holdings or any of its Subsidiaries.
"ASSETS" means all of the assets of Holdings and its Subsidiaries from time
to time after consummation of the LS Purchase.
"ASSIGNMENT AGREEMENT" is defined in Section 12.04(c).
"AUTHORIZED OFFICER" shall mean any senior officer of Holdings or the
Borrower, as applicable, designated as such in writing to the Administrative
Agent by the Borrower.
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"BANK" is defined in the preamble to this Agreement and in Section 12.04.
"BANKRUPTCY CODE" is defined in Section 8.05.
"BASE RATE" means the higher of (a) 1/2% per annum in excess of the Federal
Funds Rate and (b) the rate which the Administrative Agent announces from time
to time as its prime commercial lending rate, as in effect from time to time;
PROVIDED, HOWEVER, that (i) the rate the Administrative Agent announces as its
prime commercial lending rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer and (ii) the
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the rate it announces as its prime lending rate.
"BASE RATE LOAN" means each Loan bearing interest at the rate provided in
Section 1.08(a).
"BASE RATE MARGIN" means:
(a) with respect to any Term A Loan, 1.25% per annum;
(b) with respect to any Term B Loan, 1.75% per annum;
(c) with respect to any Revolving Loan, 1.25% per annum; and
(d) with respect to any Acquisition Term Loan, 1.75% per annum.
"BORROWER" is defined in the preamble to this Agreement.
"BORROWING" means the incurrence pursuant to a Notice of Borrowing and
under the Loan Facility of one Type of Loan by the Borrower (or the Initial
Borrowers, as applicable) from all of the Banks on a pro rata basis on a given
date (or resulting from conversions on a given date), having, in the case of
Reserve Adjusted Eurodollar Loans, the same Interest Period.
"BORROWING BASE" means, at any date of determination, an amount equal to
the sum of (x) 85% of Eligible Accounts Receivable PLUS (y) the lesser of (a)
$15,000,000 and (b)(i) for the period May 1 through October 31, 40% of Eligible
Inventory or (ii) for the period November 1 through April 30, 60% of Eligible
Inventory, in each case as shown on the most recent Borrowing Base Certificate
delivered prior to such date of determination; PROVIDED that during any
Clean-down Period, the Borrowing Base shall be the lesser of (x) the amount
derived from the foregoing calculation and (y) the Clean-down Amount.
"BORROWING BASE CERTIFICATE" is defined in Section 6.01(m).
"BREAKAGE COSTS" is defined in Section 1.10(f).
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"BUSINESS DAY" means (a) for all purposes other than as covered by clause
(b) below, any day excluding Saturday, Sunday and any day which shall be in the
City of New York or the State of California a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close and (b) with respect to all notices and determinations in connection with,
and payments of principal and interest on, Reserve Adjusted Eurodollar Loans,
any day which is a Business Day described in clause (a) and which is also a day
for trading by and between banks in U.S. dollar deposits in the interbank
Eurodollar market.
"CAPITAL LEASE" of any Person means any lease of any property (whether
real, personal or mixed) by that Person as lessee which, in conformity with
GAAP, is, or is required to be, accounted for as a capital lease on the balance
sheet of that Person, together with any renewals of such leases (or entry into
new leases) on substantially similar terms.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase, or securities convertible into,
any of the foregoing.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means all obligations under
Capital Leases of such Person or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"CARRYOVER AMOUNT" is defined in Section 7.01.
"CASH" means Dollars in money, currency or a credit balance in a Deposit
Account.
"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 three years from the date of acquisition; (b) marketable direct obligations
issued by any State of the United States of America or any local government or
other political subdivision thereof rated (at the time of acquisition of such
security) at least AA by S&P or the equivalent thereof by Moody's having
maturities of not more than one year from the date of acquisition; (c) U.S.
dollar denominated time deposits, certificates of deposit and bankers'
acceptances of (i) any Bank, (ii) any domestic commercial bank of recognized
standing having capital and surplus in excess of $10,000,000,000 or (iii) any
bank whose short-term commercial paper rating (at the time of acquisition of
such security) by S&P is at least A-1 or the equivalent thereof or by Moody's
is at least P-1 or the equivalent thereof (any such bank, an "APPROVED BANK"),
in each case with maturities of not more than six months from the date of
acquisition; (d) commercial paper and variable or fixed rate notes issued by any
Bank or Approved Bank or by the parent company of any Bank or Approved Bank and
commercial paper and variable rate notes issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating (at
the time of acquisition of such security) of at least A-1 or the equivalent
thereof by S&P or at
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least P-1 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long-term unsecured debt rating (at the time of acquisition of
such security) of at least AA or the equivalent thereof by S&P or the equivalent
thereof by Moody's and in each case maturing within one year after the date of
acquisition; (e) repurchase agreements with any Bank or any primary dealer
maturing within one year from the date of acquisition that are fully
collateralized by investment instruments that would otherwise be Cash
Equivalents; PROVIDED that the terms of such repurchase agreements comply with
the guidelines set forth in the Federal Financial Institutions Examination
Council Supervisory Policy -- Repurchase Agreements of Depository Institutions
With Securities Dealers and Others, as adopted by the Comptroller of the
Currency on October 31, 1985; and (f) investments in money market mutual funds,
all of the assets of which are invested in securities and instruments of the
types set forth in clauses (a) through (d) above.
"CERCLA" is defined in Section 5.21(b).
"CLEAN-DOWN AMOUNT" means $5,000,000.
"CLEAN-DOWN PERIOD" means, for each fiscal year of the Borrower, the 30
consecutive calendar day period designated by the Borrower for such fiscal year,
falling within the 90 day period commencing on July 1 of that year and ending on
September 30 of that year.
"CLOSING DATE" means the date on which the Initial Loans are made and the
LS Purchase is consummated.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means all assets of Holdings and/or its Subsidiaries from time
to time (excluding the Put/Call Funds) and any other assets which are required
to be subjected to Liens and security interests in favor of the Administrative
Agent, for the benefit of the Banks, as collateral security for the payment or
performance of any of the Obligations, including the assets described as
collateral security in the Security Documents, the Newco Guarantee, the
Acquisition Guarantee and any Subsidiary Guarantee.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the account of the Borrower for the benefit of the
Borrower or any of its Subsidiaries, for the purpose of providing the primary
payment mechanism in connection with the purchase of any materials, goods or
services by the Borrower or any of its Subsidiaries in the ordinary course of
business of the Borrower or such Subsidiaries.
"COMMITMENTS" means, with respect to each Bank, the Term A Loan Commitment,
the Term B Loan Commitment, the Revolving Loan Commitment and the Acquisition
Term Loan Commitment of such Bank.
"COMMITMENT FEE" is defined in Section 2.03.
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"COMPLIANCE CERTIFICATE" means a certificate issued pursuant to Section
6.01(e) signed by a chief financial officer, controller, chief accounting
officer or other Authorized Officer of the Borrower.
"CONSOLIDATED AMORTIZATION EXPENSE" for any Person means, for any period,
the consolidated amortization expense of such Person for such period (including
amortization of any step-up in value of inventory or other assets as may be
required by purchase accounting), determined on a consolidated basis for such
Person and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" of any Person means, for any period,
the aggregate gross increase during that period, in the property, plant or
equipment reflected in the consolidated balance sheet of such Person and its
consolidated Subsidiaries, in conformity with GAAP, but excluding expenditures
made in connection with the replacement, substitution or restoration of assets
(a) to the extent financed from insurance proceeds paid on account of the loss
of or damage to the assets being replaced or restored or from indemnity
payments, received under the Recapitalization Documents or from any Replacement
Asset Amount or Asset Restoration Amount, (b) with awards of compensation
arising from the taking by eminent domain or condemnation of the assets being
replaced or (c) with regard to equipment that is purchased substantially
simultaneously with the trade-in of existing equipment, fixed assets or
improvements, the credit granted by the seller of such equipment for the
trade-in of such equipment, fixed assets or improvements; PROVIDED, HOWEVER,
that Consolidated Capital Expenditures shall exclude the purchase price paid in
connection with the acquisition of any other Person in a Permitted Business
Acquisition financed, in whole or in part, with the proceeds of an Acquisition
Term Loan (including through the purchase of all of the capital stock or other
ownership interests of such Person or through merger or consolidation) to the
extent allocable to property, plant and equipment.
"CONSOLIDATED CURRENT ASSETS" means, with respect to any Person as at any
date of determination, the total assets of such Person and its consolidated
Subsidiaries which may properly be classified as current assets on a
consolidated balance sheet of such Person and its Subsidiaries in accordance
with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, with respect to any Person as at
any date of determination, the total liabilities of such Person and its
consolidated Subsidiaries which may properly be classified as current
liabilities (other than the current portion of any Loans or any Existing Debt)
on a consolidated balance sheet of such Person and its consolidated Subsidiaries
in accordance with GAAP.
"CONSOLIDATED DEPRECIATION EXPENSE" for any Person means, for any period,
the consolidated depreciation expense of such Person for such period, determined
on a consolidated basis for such Person and its consolidated Subsidiaries in
conformity with GAAP.
"CONSOLIDATED EBITDA" for any Person means, without duplication, for any
period,
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the sum of the amounts for such period of
(i) Consolidated Net Income,
(ii) Consolidated Tax Expense,
(iii) Consolidated Interest Expense,
(iv) Consolidated Depreciation Expense,
(v) Consolidated Amortization Expense, and
(vi) other non-cash expenses incurred during such period.
"CONSOLIDATED EBITDAC" for any Person means, for any period, Consolidated
EBITDA minus Consolidated Capital Expenditures.
"CONSOLIDATED INDEBTEDNESS" for any Person means, at any time for the
determination thereof, the principal amount of all Indebtedness of such Person
and its consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" for any Person means, for any period, the
sum of (a) total interest expense (including that attributable to Capital
Leases in accordance with GAAP) and (b) total dividends paid on any preferred
stock, in each case of such Person and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness and preferred stock of
such Person and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges of a similar nature owed
with respect to letters of credit and bankers' acceptance financing, but
excluding, however, any amortization of deferred financing costs, all as
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in accordance with GAAP. For purposes of clause (b) above,
dividend requirements shall be increased to an amount representing the pretax
earnings that would be required to cover such dividend requirements;
accordingly, the increased amount shall be equal to such dividend
requirements multiplied by a fraction, the numerator of which is such
dividend requirement and the denominator of which is one MINUS the applicable
actual combined federal, state, local and foreign income tax rate of such
Person and its subsidiaries (expressed as a decimal), on a consolidated
basis, for the calendar year immediately preceding the date of the
transaction giving rise to the need to calculate Consolidated Interest
Expense.
"CONSOLIDATED NET INCOME" for any Person means, for any period, the net
income (or loss) of such Person and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined on a consolidated
basis for such Person and its consolidated Subsidiaries in conformity with GAAP;
PROVIDED, HOWEVER, that there shall be excluded (a) the income (or loss) of any
other Person (other than consolidated Subsidiaries of such Person) in
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which any third Person (other than such Person or any of its consolidated
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually received by such Person or any of its
consolidated Subsidiaries from such other Person during such period, and (b) the
income of any consolidated Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by that
consolidated Subsidiary of that income is not at the time permitted by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that consolidated
Subsidiary.
"CONSOLIDATED TAX EXPENSE" for any Person means, for any period, the
consolidated tax expense of such Person for such period, determined on a
consolidated basis for such Person and its consolidated Subsidiaries in
conformity with GAAP.
"CONTINGENT OBLIGATIONS" means, as to any Person, without duplication, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the maximum amount that such Person may be obligated to expend
pursuant to the terms of such Contingent Obligation or, if such Contingent
Obligation is not so limited, the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"CREDIT DOCUMENTS" means (a) the Original Credit Agreement, as amended and
restated by this Agreement, (b) each Note, (c) each Security Document, (d) the
Newco Guarantee, (e) the Acquisition Guarantee, (f) any other Subsidiary
Guarantee, and (g) any other agreement, document or instrument between the
Administrative Agent and the Borrower or any other Credit Party or between or
among the Agent, the Banks and the Borrower or any other Credit Party, which
amends, supplements or modifies this Agreement, the Notes, any Security Document
or any Subsidiary Guarantee or which is stated to be a Credit Document.
"CREDIT PARTIES' COUNSEL" is defined in Section 6.18.
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"CREDIT PARTY" means each of Holdings, the Borrower, Newco, Acquisition and
each other Subsidiary of the Borrower.
"DEFAULT" means any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"DESIGNATED ACQUISITION" means each transaction listed on Schedule 4.03.
"DIVIDENDS" is defined in Section 7.10.
"DOLLARS" means United States dollars.
"EFFECTIVE DATE" means December 31, 1996, such being the date of the
Original Credit Agreement and the making of the initial Loans thereunder.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, as at any applicable date of
determination, the aggregate face amount of Borrower's and its Subsidiaries'
Accounts included in clause (a) of the definition of Account hereunder, without
duplication, MINUS (i) (without duplication) the aggregate amount of all
reserves, limits and deductions with respect to such Accounts required by
paragraphs (a) through (q) below and (ii) the aggregate amount of all returns,
discounts, claims, credits, charges (including warehouseman's charges) and
allowances of any nature with respect to such Accounts (whether issued, owing,
granted or outstanding). Unless otherwise approved in writing by the
Administrative Agent in its sole discretion, no individual Account shall be
deemed to be an Eligible Account Receivable if:
(a) the Borrower or its Subsidiary does not have legal and valid
title to the Account or the account has been written off as uncollectible;
or
(b) the Account is not the valid, binding and legally enforceable
obligation of the account debtor subject, as to enforceability, only to
(i) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws at the time in effect affecting the enforceability of
creditors' rights generally and (ii) judicial discretion in connection with
the remedy of specific performance and other equitable remedies; or
(c) the Account arises out of a sale made by the Borrower or a
Subsidiary to an Affiliate of the Borrower (other than a Person that is an
Affiliate solely by virtue of being under common control with the
Borrower); or
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(d) the Account or any portion thereof is unpaid more than 90 days
after the original invoice date; or
(e) other than Accounts of Home Depot, the Account, when aggregated
with all other Accounts of the same account debtor (or any Affiliate
thereof), exceeds 30% in face value of all Accounts of the Borrower then
outstanding, to the extent of such excess; or
(f) (i) the Account is subject to any claim on the part of the
account debtor disputing liability under such Account in whole or in part,
to the extent of the amount of such dispute or (ii) the Account otherwise
is or is reasonably likely to become subject to any right of setoff or any
counterclaim, claim or defense by the account debtor, to the extent of the
amount of such setoff or counterclaim, claim or defense or (iii) the
account debtor for such Account is also a creditor of the Borrower, to the
extent of the amount owed by the Borrower to the account debtor; or
(g) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors or if a decree or order for
relief has been entered by a court having jurisdiction in the premises in
respect of the account debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or if any other
petition or other application for relief under the federal bankruptcy laws
has been filed by or against the account debtor, or if the account debtor
has failed, suspended business, ceased to be solvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs; or
(h) the Administrative Agent does not have a valid and perfected
first priority security interest in such Account; or
(i) the sale to the account debtor for such Account is on a
consignment, bill-and-hold, sale on approval, guaranteed sale or
sale-and-return basis or pursuant to any written agreement providing for
repurchase or return other than return arrangements in the ordinary course
of business consistent with the past business practices of Borrower; or
(j) it is from an account debtor (or any Affiliate thereof) and 25%
or more, in face amount, of other Accounts from either such account debtor
or any Affiliate thereof are due or unpaid for more than 90 days after the
original invoice date; or
(k) 25% or more, in face amount, of other Accounts from the same
account debtor are not deemed Eligible Accounts Receivable hereunder; or
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(l) the amount debtor is a foreign Governmental Authority;
(m) the Account is an Account a security interest in which would be
subject to the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. Section 3727 et seq.), unless (i) such Account, together with all
other Eligible Accounts a security interest in which would be subject to
such Act, does not exceed 2% in face value of all Eligible Accounts of
Holdings and its Subsidiaries then outstanding, or (ii) Borrower has
assigned the Account to the Administrative Agent in compliance with the
provisions of such Act; or
(n) the sale is to an account debtor outside the United States or
Canada or incorporated in or primarily doing business in any jurisdiction
located outside the United States or Canada, unless (i) the obligations
with respect to such Account are secured by the issuance of a letter of
credit by a bank reasonably acceptable to the Agent, guarantee or
acceptance terms, (PROVIDED, HOWEVER, that obligations so secured shall not
exceed 5% in face value of all Eligible Accounts of Borrower and its
Subsidiaries then outstanding) or (ii) such Account is otherwise approved
by and acceptable to the Administrative Agent; or
(o) the Administrative Agent determines in good faith, and in
accordance with its internal credit policies and reasonable commercial
banking practices that (i) collection of the Account is insecure or (ii)
the Account may not be paid by reason of the account debtor's financial
inability to pay; PROVIDED, HOWEVER, that any Account referred to in this
clause (o) shall not become ineligible until the Administrative Agent shall
have given the Borrower five Business Days' advance notice of such
determination; or
(p) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the account debtor or the services giving rise
to such Account have not been performed by the Borrower and accepted by the
account debtor or the Account otherwise does not represent a final sale; or
(q) the Account does not comply in all material respects with all
applicable legal requirements, including, where applicable, the Federal
Consumer Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board of Governors of the Federal Reserve System, in
each case as amended.
In addition to the foregoing, Eligible Accounts Receivable shall include
such Accounts as the Borrower shall request and that the Administrative Agent
approves in advance, in writing and in its sole discretion (or if the aggregate
face amount to be approved exceeds $1,000,000 at any one time, the approval of
the Required Banks has been obtained in writing).
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"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws of
the United States, or any State thereof, and having total assets in excess of
$1,000,000,000; (b) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $1,000,000,000; (c) a finance company, insurance company,
investment company or other financial institution organized under the laws of
the United States, or any State thereof, that is engaged in purchasing or
otherwise investing in commercial loans in the ordinary course of business,
having total assets in excess of $100,000,000; or (d) an entity managed by a
Bank or Affiliate of a Bank; PROVIDED, HOWEVER, that the Commitment held by such
entity is less than $20,000,000.
"ELIGIBLE INVENTORY" means the total of:
(a) the gross amount of Inventory of the Borrower and its
Subsidiaries, valued at the lower of cost (on a FIFO basis) or market,
which (i) is owned solely by the Borrower or any of its Subsidiaries and
with respect to which the Borrower or such Subsidiary has good, valid and
marketable title; (ii) is stored on property that is owned or leased by
(A) the Borrower or any of its Subsidiaries or (B) a warehouseman that has
contracted with the Borrower or any of its Subsidiaries to store Inventory
on such warehouseman's property (PROVIDED, HOWEVER, that, with respect to
Inventory stored on property owned or leased by a warehouseman, the
Borrower or such Subsidiary shall have delivered to the Administrative
Agent acknowledgment agreements executed by such warehouseman); (iii) is
subject to a valid, enforceable and first priority Lien in favor of the
Administrative Agent (subject, with respect to Eligible Inventory stored at
sites described in clause (ii)(B) above, to Liens for normal and customary
warehouseman charges); (iv) is located in the United States; and (v) is
not, in the reasonable judgment of the Agent, obsolete or slow moving in
relation to customary industry practice, and which otherwise conforms to
the requirements for eligibility contained in clauses (i) through (iv)
above; MINUS (without duplication);
(b) the amount of any goods returned or rejected by the customers of
the Borrower or any of its Subsidiaries and goods in transit to third
parties (other than to agents or warehousemen of the Borrower or any of its
Subsidiaries that comply with clause (a)(ii)(B) above); MINUS (without
duplication); and
(c) the amount of any reserves for spoilage, special order goods and
market value declines in accordance with GAAP.
In addition to the foregoing, Eligible Inventory shall include such items of the
Inventory of the Borrower and its Subsidiaries as the Borrower shall request and
the Administrative Agent (or if the aggregate amount to be approved exceeds
$1,000,000 at any one time, the Required Banks) shall approve in advance, in
writing and in its (their) sole discretion.
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"ENVIRONMENT" means any surface water, ground water, drinking water supply,
land surface or subsurface strata or ambient air and includes, without
limitation, any indoor location.
"ENVIRONMENTAL AUTHORIZATIONS" is defined in Section 5.21.
"ENVIRONMENTAL LAWS" means the common law and all federal, state, local and
foreign laws or regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder, now or hereafter in effect,
relating to pollution or protection of public or employee health or safety or
the Environment, including, without limitation, laws relating to (a) emissions,
discharges, releases or threatened releases of Hazardous Materials into the
Environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), (b) the manufacture, processing,
distribution, use, generation, treat ment, storage, disposal, transport or
handling of Hazardous Materials, and (c) underground and aboveground storage
tanks, and related piping, and emissions, discharges, releases or threatened
releases therefrom.
"ENVIRONMENTAL NOTICE" means any written notice or claim by any
Governmental Authority or other third party alleging liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental costs, compliance costs or harm, injuries or damages to any person,
property or natural resources, or any fines or penalties) arising out of, based
upon, resulting from or relating to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" of a Person means any entity, whether or not
incorporated, which is under common control or would be considered a single
employer with such Person within the meaning of Section 414(b) or (c) of the
Code and regulations promulgated under those sections or within the meaning of
section 4001(b) of ERISA and regulations promulgated under that section.
"EURODOLLAR RATE" means with respect to each Interest Period for a Reserve
Adjusted Eurodollar Loan, (a) the arithmetic average (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the interbank
Eurodollar market by each of the Reference Banks for dollar deposits of amounts
in same day funds comparable to the outstanding principal amount of the Reserve
Adjusted Eurodollar Loan for which an interest rate is then being determined
with maturities comparable to the Interest Period to be applicable to such
Eurodollar Loan, determined as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period divided
(and rounded upward to the next whole multiple of 1/16 of 1%) DIVIDED BY (b) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal,
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emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D); PROVIDED, HOWEVER, that if any Reference Bank fails to provide
the Administrative Agent with its aforesaid rate, then the Eurodollar Rate shall
be determined based on the rate or rates provided to the Administrative Agent by
the remaining Reference Banks.
"EURODOLLAR RATE MARGIN" means:
(a) with respect to any Term A Loan, 2.75% per annum;
(b) with respect to any Term B Loan, 3.25% per annum;
(c) with respect to any Revolving Loan, 2.75% per annum;
(d) with respect to any Acquisition Term Loan, 3.25% per annum.
"EVENT OF DEFAULT" is defined in Section 8.
"EXCESS" is defined in Section 3.03(b).
"EXCESS CASH FLOW" means, without duplication, for any Person for any
period for which such amount is being determined, (a) Consolidated Net Income,
MINUS (b) any amount which is both (i) included in Consolidated Net Income and
(ii) required to be applied to the prepayment of the Loans pursuant to Section
3.03, PLUS (minus) (c) the amount of depreciation, depletion, amortization of
intangibles, deferred taxes and other non-cash expenses (revenues) which,
pursuant to GAAP, were deducted (added) in determining such Consolidated Net
Income of such Person, MINUS (d) additions to working capital for such period
(I.E., the increase or decrease in Consolidated Current Assets of such Person
from the beginning to (excluding Cash or Cash Equivalents which are either Net
Cash Proceeds or Net Financing Proceeds required to be applied to the prepayment
of the Loans pursuant to Section 3.03(d) during such period) of such Person
minus the increase or plus the decrease in Consolidated Current Liabilities),
MINUS (e) cash expenditures in respect of Consolidated Capital Expenditures that
are made during such period, MINUS (f) Scheduled Term A Loan Principal Payments,
Scheduled Term B Loan Principal Payments, Scheduled Acquisition Term Loan
Principal Payments and voluntary prepayments of Loans not subject to reborrowing
made during such period, MINUS (g) cash payments to Management Stockholders to
repurchase capital stock pursuant to Section 7.10, MINUS (h) principal payments
on Indebtedness permitted under Section 7.07. For purposes of the foregoing and
without duplication, Consolidated Net Income will exclude (A) all net losses on
the sale of capital assets or out of the ordinary course of business and (B) all
write-downs of capital assets.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"EXISTING DEBT" means Indebtedness of Borrower and its Subsidiaries set
forth on Schedule 5.20.
"EXISTING LEASES" means the Leases of Holdings and its Subsidiaries set
forth on Schedule 5.16.
"EXISTING ACQUISITION TERM LOANS" is defined in the recitals to this
Agreement.
"EXISTING LOANS" means the Existing Term A Loans, the Existing Term B
Loans, the Existing Acquisition Term Loans and the Existing Revolving Loans, all
of which are to be refinanced and replaced with the proceeds of the Initial
Loans hereunder.
"EXISTING REVOLVING LOANS" is defined in the recitals to this Agreement.
"EXISTING TERM A LOANS" is defined in the recitals to this Agreement.
"EXISTING TERM B LOANS" is defined in the recitals to this Agreement.
"FEDERAL FUNDS RATE" means on any one day the weighted average of the rate
on overnight Federal funds transactions with members of the Federal Reserve
System only arranged by Federal funds brokers as published as of such day by the
Federal Reserve Bank of New York, or if not so published, the rate then used by
first-class banks in extending overnight loans to other first-class banks.
"FINANCING PROCEEDS" means the Cash or Cash Equivalents (other than Net
Cash Proceeds or proceeds of any sale, transfer or other disposition of assets
excluded from the definition of "Asset Sale" by the exceptions contained
therein) received by Holdings or any of its Subsidiaries, directly or
indirectly, from any financing transaction of whatever kind or nature, including
without limitation from any incurrence of Indebtedness from any mortgage or
pledge of an asset or interest therein (including any transaction which is the
substantial equivalent of a mortgage or pledge), from any lease to a third party
and a pledge of the lease payments due thereunder to secure Indebtedness, from
any joint venture arrangement, from any exchange of assets and a sale of the
assets received in such exchange, or any other similar arrangement or technique
whereby a Credit Party obtains Cash in respect of an asset, net of direct costs
associated therewith. Financing Proceeds shall not include any amounts with
respect to (a) any Borrowings of Revolving Loans or Acquisition Term Loans, (b)
the incurrence or refinancing of Indebtedness permitted by Sections 7.07(e), (f)
and (g) effected in accordance with the applicable provisions of such Sections
and (c) transactions between any of the Borrower and its Wholly Owned
Subsidiaries.
"FIRREA" means the Financial Institutions Reform, Recovery & Enforcement
Act of 1989, as amended from time to time, and any successor statute.
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"FOREIGN BANK" is defined in Section 3.07(c).
"GAAP" means generally accepted accounting principles in the United States
of America observed in the preparation of the audited financial statements of
Holdings for its fiscal year ended June 30, 1996 and delivered pursuant to
Section 4.01(j), consistently applied.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, foreign or other
governmental or administrative (including self-regulatory) body,
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body including, without limitation, those governing the regulation and
protection of the Environment, whether now or hereafter in existence, or any
officer or official thereof.
"HAZARDOUS MATERIALS" means all pollutants, contaminants or chemical,
industrial, hazardous or toxic materials, substances, constituents or wastes,
including, without limitation, asbestos, or asbestos-containing materials,
polychlorinated biphenyls and petroleum, oil, or petroleum or oil products,
derivatives or constituents, including, without limitation, crude oil or any
fraction thereof, or any other material, waste, chemical, substance or
constituent subject to regulation under any Environmental Law.
"HELLER" is defined in the preamble to this Agreement.
"HELLER SUBORDINATED NOTES" means the 8% unsecured subordinated convertible
notes in the aggregate principal amount of $7,100,000 issued by Holdings and the
Borrower to Heller in connection with the Recapitalization.
"HELLER SUBORDINATION AGREEMENT" means the Subordination Agreement dated as
of December 31, 1996 among the Borrower, Holdings, Heller and the Administrative
Agent, providing for the subordination of the Heller Subordinated Note.
"HOLDINGS" is defined in the preamble to this Agreement.
"IBJS" is defined in the preamble to this Agreement.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (c) the undrawn amount of
all letters of credit issued for the account of such Person and, without
duplication, all unreimbursed drafts drawn thereunder, (d) all Indebtedness of a
second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person, (e) all
Capitalized Lease Obligations of such Person, (f) all obligations of such Person
to pay a specified purchase price for goods or services whether or not delivered
or accepted, i.e., take-or-pay and similar obligations, (g) all Obligations
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of such Person under Interest Rate Agreements and (h) all Contingent Obligations
of such Person; PROVIDED, HOWEVER, that Indebtedness shall not include trade
payables, accrued expenses, accrued dividends and accrued income taxes, in each
case arising in the ordinary course of business.
"INDOSUEZ" is defined in the preamble to this Agreement.
"INFORMATION" is defined in Section 12.04(e).
"INITIAL BANK" means a Bank that is an original signatory to this
Agreement.
"INITIAL BORROWERS" is defined in the preamble to this Agreement.
"INITIAL DATE" means, in the case of each Bank party hereto on the Closing
Date, the Closing Date, and in the case of each other Bank, the effective date
of the Assignment Agreement pursuant to which it became a Bank hereunder.
"INITIAL LOANS" means the Loans made on the Closing Date.
"INITIAL REVOLVING LOANS" means the initial Revolving Loans made on the
Closing Date in an aggregate amount not to exceed $3,000,000 used to make
payments as set forth in Section 1.01(c).
"INTELLECTUAL PROPERTY" is defined in Section 5.14.
"INTEREST PERIOD" means, with respect to any Reserve Adjusted Eurodollar
Loan, the interest period applicable thereto, as determined pursuant to Section
1.09.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, interest rate futures
contract, interest rate option contract or other similar agreement or
arrangement to which any Credit Party is a party, designed to protect Holdings
or any of its Subsidiaries against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to a Reserve
Adjusted Eurodollar Loan, the date for calculating the Eurodollar Rate for
purposes of determining the interest rate in respect of an Interest Period, and
for each such Borrowing the date which is two Business Days prior to the
commencement of the Interest Period for such Borrowing.
"INVENTORY" means all of the inventory of the Borrower and its Subsidiaries
(on a consolidated basis), including, without limitation, (a) all finished
goods, raw materials, work in process and packaging materials produced, used or
consumed in the business of the Borrower and its Subsidiaries, whether finished
or unfinished, held for sale or furnished or to be furnished
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under contracts of service, and (b) all finished goods returned or repossessed
by the Borrower or any of its Subsidiaries.
"INVESTMENT" means with respect to any Person (a) any share of Capital
Stock, partnership interest, evidence of Indebtedness or other security issued
by any other Person, (b) any loan, advance, extension of credit to, or
contribution to the capital of, any other Person, (c) the acquisition of the
stock or assets of a business or (d) any other investment; PROVIDED, HOWEVER,
that the term "Investment" shall not include (i) fixed assets or inventory
acquired in the ordinary course of business and payable in accordance with
customary trade terms, (ii) advances to employees for travel expenses, drawing
accounts and similar expenditures, (iii) stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or claims due or
owing to any Person or as security for any such Indebtedness or claim, (iv) any
investment or purchase made through the issuance of common stock of Holdings or
(v) demand deposits in banks or trust companies. The amount of an Investment
outstanding at any time shall be determined in accordance with GAAP; PROVIDED,
HOWEVER, that no Investment shall be increased as a result of an increase in the
undistributed retained earnings of the Person in whom an Investment was made or
decreased as a result of equity in the losses of any such Person.
"IPO" is defined in Section 8.09.
"KCSN" is defined in the preamble to this Agreement.
"LANDLORD CERTIFICATION AND WAIVER" means, with respect to any Real
Property leased by Holdings or any of its Subsidiaries, a statement executed by
the landlord of such Real Property, in form and substance satisfactory to the
Administrative Agent, providing the Administrative Agent with, among other
things, (i) the right to take and perfect a mortgage or other assignment of the
applicable Credit Party's interest in the lease as collateral security for the
Obligations, (ii) the right to cure defaults and perform under the lease in the
event of a failure to perform by such Credit Party, (iii) the right to foreclose
or otherwise realize upon said security interest in the lease and to assign the
Credit Party's rights in the lease to a third party in connection with such
foreclosure or other realization and (iv) the right to take upon such
foreclosure or other realization any property of the Credit Party located on the
leased Real Property (which right shall be superior to that of the lessor).
"LEASE" means any lease, sublease, franchise agreement, license, occupancy
or concession agreement.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means, (i) Standby Letter or
Letters of Credit and (ii) Commercial Letter or Letters of Credit, in each case,
issued or to be issued by Issuing Banks for the account of Borrower pursuant to
Section 1.13.
"LETTER OF CREDIT CASH COLLATERAL" shall have the meaning provided in
Section 1.13(a)(iv).
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"LETTER OF CREDIT CASH COLLATERAL ACCOUNT" shall have the meaning provided
in Section 1.13(a)(iv).
"LETTER OF CREDIT PARTICIPATION" shall have the meaning provided in Section
1.13(a)(ii).
"LETTERS OF CREDIT USAGE" means, as at any date of determination, the sum
of (i) the maximum aggregate amount that is or at any time thereafter may become
available to be drawn under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by all Issuing
Banks and not theretofore reimbursed by Borrower.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien,
claim, hypothecation, assignment for security or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"LOAN" means each Term A Loan, Term B Loan, Revolving Loan and Acquisition
Term Loan.
"LOAN FACILITY" means the credit facility evidenced by the Total Term A
Loan Commitment, the Total Term B Loan Commitment, the Total Revolving Loan
Commitment and the Total Acquisition Term Loan Commitment.
"LOSS PROCEEDS" is defined in Section 3.03(f).
"LS PURCHASE" is defined in the recitals to this Agreement.
"LS PURCHASE AGREEMENT" is defined in the recitals to this Agreement.
"LS PURCHASE DOCUMENTS" means the LS Purchase Agreement and the other
documents evidencing or implementing the transactions contemplated thereby.
"MATERIAL ADVERSE EFFECT" means, (a) with respect to Holdings and its
Subsidiaries, any material adverse effect (whether occurring before or after
giving effect to the Recapitalization and the financing thereof and the other
transactions contemplated hereby and by the other Transaction Documents) with
respect to the operations, business, properties, assets, liabilities (contingent
or otherwise), financial condition or prospects of Holdings and its
Subsidiaries, taken as a whole, or (b) any fact or circumstance (whether or not
the result thereof would be covered by insurance) as to which singly or in the
aggregate there is a reasonable likelihood of (i) a material adverse change
described in clause (a) with respect to Holdings and its Subsidiaries, taken as
a whole, or (ii) the inability of any Credit Party to perform in any material
respect its Obligations hereunder or under any of the other Transaction
Documents or the inability of the Banks to enforce in any material respect their
rights purported to be granted hereunder or under
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any of the other Transaction Documents or the Obligations (including realizing
on the Collateral).
"MANAGEMENT AGREEMENT" means the Fee Agreement dated as of the date hereof
between the Borrower and Kohlberg & Company, LLC.
"MANAGEMENT STOCKHOLDERS" means, collectively, Michael F. Vukelich, Jerry
L. Halamuda, Gary E. Mariani, Gene Malcolm, Steven J. Bookspan, Michael T.
Neenan, Robert F. Strange, Jim Tsurudome, Richard George, Gary Crook, Dave
Grimshaw, John Negrete, Dennis Bahen, and other individuals from time to time
party to the Stockholders Agreement.
"MINIMUM BORROWING AMOUNT" means $100,000.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA with respect to which the Borrower or any of its
ERISA Affiliates is or has been required to contribute.
"NET CASH PROCEEDS" means with respect to any Asset Sale, the aggregate
payments of Cash or Cash Equivalents received by Holdings and/or any of its
Subsidiaries, as the case may be, from such Asset Sale, net of direct expenses
of sale, net of taxes (including income taxes and transfer taxes) and net of
repayment of Indebtedness or Capitalized Leases in each case secured by a Lien
on the asset subject to such Asset Sale; PROVIDED, HOWEVER, that with respect to
taxes, expenses shall only include taxes to the extent that taxes are payable in
cash with respect to the current year; and PROVIDED, FURTHER, that Net Cash
Proceeds shall not include any amounts or items included in the definition of
Financing Proceeds or Net Financing Proceeds.
"NET FINANCING PROCEEDS" means Financing Proceeds, net of direct expenses
of the transaction and net of taxes (including income taxes) currently paid or
payable in cash with respect to the current year as a result of the transaction
generating such Financing Proceeds.
"NEWCO" is defined in the recitals to this Agreement.
"NEWCO GUARANTEE" means the Subsidiary Guarantee executed by Newco and
delivered to the Administrative Agent as of the Closing Date, pursuant to which
Newco guarantees the Borrower's Obligations.
"NOTE" means each Term A Note, Term B Note, Revolving Note and Acquisition
Term Note.
"NOTICE OF ACQUISITION LOAN BORROWING" is defined in Section 1.03.
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"NOTICE OF BORROWING" is defined in Section 1.03.
"NOTICE OF REVOLVING LOAN BORROWING" is defined in Section 1.03.
"NOTICE OF CONVERSION/CONTINUATION" is defined in Section 1.06.
"OBLIGATIONS" means all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Administrative Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document or secured by any of the Security Documents, including,
without limitation, interest accruing subsequent to the filing of a petition
initiating any proceeding in bankruptcy, insolvency or like proceeding of any
Credit Party, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under the Bankruptcy Code.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its Chairman of the Board (if an
officer) or its President or one of its Vice Presidents, its Chief Financial
Officer or its Treasurer (in such Person's capacity as an officer and not
individually); PROVIDED, HOWEVER, that every Officers' Certificate with respect
to compliance with a condition precedent to the making of any Loan hereunder
shall include (a) a statement that the officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (b) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(c) a statement as to whether, in the opinion of the signers, such condition has
been complied with.
"OLD NOTE" means each Old Term A Note, Old Term B Note, Old Revolving Note
and Old Acquisition Term Note.
"OLD ACQUISITION TERM NOTES" means the Acquisition Term Notes issued
pursuant to the Original Credit Agreement and dated the Effective Date, to be
cancelled upon issuance of the Acquisition Term Notes to be issued hereunder as
of the Closing Date.
"OLD REVOLVING NOTES" means the Revolving Notes issued pursuant to the
Original Credit Agreement and dated the Effective Date, to be cancelled upon
issuance of the Revolving Notes to be issued hereunder as of the Closing Date.
"OLD TERM A NOTES" means the Term A Notes issued pursuant to the Original
Credit Agreement and dated the Effective Date, to be cancelled upon issuance of
the Term A Notes to be issued hereunder as of the Closing Date.
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"OLD TERM B NOTES" means the Term B Notes issued pursuant to the Original
Credit Agreement and dated the Effective Date, to be cancelled upon issuance of
the Term B Notes to be issued hereunder as of the Closing Date.
"OPERATING LEASE" of any Person shall mean any lease (including, without
limitation, leases which may be terminated by the lessee at any time) of any
property (whether real, per sonal or mixed) by such Person as lessee which is
not a Capital Lease.
"ORIGINAL CREDIT AGREEMENT" is defined in the preamble to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PENSION PLAN" means any pension plan as defined in Section 3(2) of ERISA
(other than a Multiemployer Plan) which is or has been maintained by or to which
contributions are or have been made by the Borrower or any of its ERISA
Affiliates.
"PERMITTED BUSINESS ACQUISITION" means either (i) a Designated Acquisition
or (ii) an Unspecified Permitted Acquisition.
"PERMITTED ENCUMBRANCES" is defined in Section 7.06.
"PERSON" means any individual, partnership, joint venture, limited
liability company, firm, corporation, association, trust or other enterprise or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means, at any time, any pension benefit plan subject to Title IV of
ERISA.
"PORTION" means the Term A Portion, the Term B Portion, the Revolving
Portion or the Acquisition Term Portion.
"PREPAYMENT COLLATERAL ACCOUNT" is defined in Section 3.08(b).
"PRIOR LIENS" is defined in Section 5.10.
"PROJECTED FINANCIAL STATEMENTS" is defined in Section 5.09(c).
"PUT/CALL FUNDS" means the aggregate $5,690,898 set aside by Holdings from
the proceeds of the Initial Loans to redeem "Option Shares" (as defined in the
Put/Call Option Agreement) pursuant to the Put/Call Option Agreement.
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"PUT/CALL OPTION AGREEMENT" means the Put/Call Option Agreement dated as of
December 31, 1996 among Holdings, KCSN and the Management Stockholders.
"REAL PROPERTY" means all right, title and interest of Holdings or any of
its Subsidiaries (including, without limitation, any leasehold estate) in and to
a parcel of real property owned or leased (or, with respect to representations,
warranties and covenants relating to compliance with Environmental Laws,
operated) by Holdings or any of its Subsidiaries together with, in each case,
all improvements and appurtenant fixtures, equipment, personal property,
easements and other property and rights incidental to the ownership or lease (or
operation, as applicable) thereof, in each case, from time to time after the
Closing Date.
"RECAPITALIZATION" means the recapitalization of Holdings whereby a
controlling interest in Holdings is acquired by KCSN pursuant to the
Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" is defined in the recitals to this Agreement.
"REDEEMING SHAREHOLDER" has the meaning provided in the Recapitalization
Agreement.
"REFERENCE BANKS" means Indosuez, Citibank, N.A. and The Chase Manhattan
Bank, N.A.
"REGISTER" is defined in Section 12.04(c).
"REGULATIONS D, G, T, U AND X" means Regulations D, G, T, U and X (or any
one or more of them specified) 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 establishing margin requirements.
"REPLACEMENT ASSET AMOUNT" is defined in Section 3.03(c)(i).
"REQUIRED BANKS" means at any time Banks holding at least 51% of the sum of
the (x) Total Commitments and (y) outstanding Loans; PROVIDED, HOWEVER that in
the event there is only one Bank, "Required Banks" shall mean such Bank; and
PROVIDED, FURTHER that for the purposes of Section 4, the requirement that any
document, agreement, certificate or other writing is to be satisfactory to the
Required Banks shall be satisfied if (a) such document, agreement, certificate
or other writing was delivered in its final form to the Banks prior to the
Closing Date (or if amended or modified thereafter, the Administrative Agent
shall have reasonably determined such amendment or modification not to be
material), (b) such document, agreement, certificate or other writing is
satisfactory to the Administrative Agent and (c) Banks holding more than 51% of
the Total Commitments held by Banks have not objected in writing to such
document, agreement, certificate or other writing to the Administrative Agent
prior to the Closing Date.
"RESERVE ACCOUNT" is defined in Section 3.08(a).
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"RESERVE ADJUSTED EURODOLLAR LOAN" means any Loan bearing interest at a
rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Section 1.08(b).
"REVOLVING LOAN COMMITMENT" means, with respect to each Bank, the amount
set forth below such Bank's name on Schedule A hereto directly below the column
entitled "Revolving Loan", as same may be reduced from time to time pursuant to
Sections 2.01, 3.03 and/or 8.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the Business Day
immediately preceding the Revolving Loan Maturity Date.
"REVOLVING LOAN MATURITY DATE" means the last Business Day of June, 2002.
"REVOLVING LOAN" is defined in Section 1.01(c).
"REVOLVING NOTE" is defined in Section 1.05(a)(iii).
"REVOLVING PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total Revolving Loan Commitment.
"S&P" means Standard & Poor's Corporation.
"SCHEDULED ACQUISITION TERM LOAN PRINCIPAL PAYMENTS" means, with respect to
the principal payments on the Acquisition Term Loan to be made on the last
Business Day of each calendar quarter specified in the table below, in each
case, for each such date, in the Dollar amount which is the product of (x) the
total outstanding principal amount of all of the Acquisition Term Loans as of
the close of business on the Acquisition Term Loan Commitment Termination Date
(after giving effect to any Borrowings under the Acquisition Term Loans on such
date) and (y) the percentage specified opposite such date in such table:
Percentage to Obtain
Acquisition Term Loan
Period Principal Payment
------ ---------------------
January 1, 1998 through 0.250%
December 31, 2001
January 1, 2002 through 8.083%
December 31, 2002
January 1, 2003 through 15.920%
September 30, 2003
December 31, 2003 15.908%
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"SCHEDULED TERM A LOAN PRINCIPAL PAYMENTS" means, with respect to the
principal payments on the Term A Loan to be made on the last Business Day of
each calendar quarter specified in the table below, the Dollar amount specified
opposite such date in such table:
Scheduled Term A Loan
Date Principal Payment
---- ---------------------
March 31, 1997 $450,000
June 30, 1997 $625,000
September 30, 1997 $625,000
December 31, 1997 $625,000
March 31, 1998 $975,000
June 30, 1998 $975,000
September 30, 1998 $975,000
December 31, 1998 $975,000
March 31, 1999 $1,125,000
June 30, 1999 $1,125,000
September 30, 1999 $1,125,000
December 31, 1999 $1,125,000
March 31, 2000 $1,200,000
June 30, 2000 $1,200,000
September 30, 2000 $1,200,000
December 31, 2000 $1,200,000
March 31, 2001 $1,400,000
June 30, 2001 $1,400,000
September 30, 2001 $1,400,000
December 31, 2001 $1,400,000
March 31, 2002 $1,937,500
June 30, 2002 $1,937,500
"SCHEDULED TERM B LOAN PRINCIPAL PAYMENTS" means, with respect to the Term
B Loan, principal payments to be made on the last Business Day of each calendar
quarter specified in the table below, in each case, in the Dollar amount
specified opposite such period in such table:
Scheduled Term B Loan
Period Principal Payment
------ ---------------------
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January 1, 1997 through
June 30, 2002 $87,620
July 1, 2002 through
December 31, 2003 $5,512,060
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SECURITIES" means any stock, shares, partnership interests, membership
interests, voting trust certificates, bonds, debentures, options, warrants,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participation in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENTS" means, collectively, the Security Agreements executed
by Holdings, the Borrower, Newco, Acquisition and any other Subsidiary of the
Borrower pursuant to Sections 6.14 or 6.15, each substantially in the form of
Exhibit 10A, except for such changes therein as shall have been approved by the
Administrative Agent as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"SECURITY DOCUMENTS" means each of the Security Agreements, the Landlord
Certification and Waivers, any mortgages, deeds of trust or leasehold mortgages
granting a security interest in favor of the Administrative Agent (or other
agent for the Banks) in any Real Property of any Credit Party, the Trademark
Security Agreement and any other documents (including UCC financing statements)
utilized to pledge or perfect a security interest in any other property or
assets of whatever kind or nature as Collateral for the Obligations.
"SELLER NOTE" is defined in Section 7.07(c).
"SELLERS" is defined in the preamble to this Agreement.
"SENIOR MANAGERS" means, collectively, Michael F. Vukelich and Jerry L.
Halamuda.
"SENIOR OFFICER" means any of the chief executive officer, president, chief
financial officer, controller, chief accounting officer, chief operating
officer, treasurer or any vice president of the Borrower.
"SIGNATURE DESIGNATED ACQUISITION" means the acquisition described in the
letter of intent dated November 27, 1996 between CSN, Inc. and Signature Trees,
a copy of which is included in Schedule 4.03.
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"SPECIFIED COLLATERAL PERFECTION ACTIONS" is defined in Section 6.18 of the
Original Credit Agreement.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) workers' compensation
liabilities of the Borrower or any of its Subsidiaries, (ii) the obligations of
third-party insurers of the Borrower or any of its Subsidiaries arising by
virtue of the laws of any jurisdiction requiring third-party insurers to obtain
such letters of credit, or (iii) performance, payment, deposit or surety
obligations of the Borrower or any of its Subsidiaries, including with respect
to the obligations of Borrower to third party vendors, if required by law or
governmental rule or regulation or in accordance with custom and practice in the
industry.
"STATE AND LOCAL REAL PROPERTY DISCLOSURE REQUIREMENTS" means any state or
local laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as of
December 31, 1996 among Holdings, KCSN, Heller and the Management Stockholders,
as amended as of the Closing Date.
"STOCK REPURCHASE AGREEMENT" means the Stock Repurchase Agreement dated as
of the date hereof between Holdings and the Senior Managers.
"SUBJECT SECURITIES" has the meaning provided in the Stock Repurchase
Agreement.
"SUBORDINATED LENDERS" is defined in Section 7.23.
"SUBSIDIARY" of any Person means and includes (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 stock of 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 the time.
"SUBSIDIARY GUARANTEE" means the guarantee of the Borrower's Obligations
hereunder to be executed by each Subsidiary of the Borrower, in the form
attached hereto as Exhibit 10B, including, without limitation, the Acquisition
Guarantee and the Newco Guarantee.
"TARGET" is defined in the preamble to this Agreement.
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"TAXES" means all taxes, levies, imposts, duties or other charges of
whatsoever nature imposed by any Governmental Authority, together with interest,
penalties and expenses payable or incurred in connection therewith, except that
such term shall not refer to any of the following:
(a) any taxes imposed by the United States or any political
subdivision thereof on the effectively connected net income of any Bank or
any franchise taxes imposed by any such jurisdiction;
(b) taxes imposed on the net income of, or franchise taxes imposed
upon, any Bank by the jurisdiction under the laws of which such Bank is
organized or by any political subdivision thereof;
(c) taxes imposed on the net income of such Bank's lending office,
and franchise taxes imposed on it, by the jurisdiction of such Bank's
lending office, or any political subdivision thereof;
(d) any taxes imposed on any Bank by Section 884(a) of the Code (and
any successor statute to Section 884(a)); and
(e) any United States withholding tax payable with respect to any
payments to such Bank under the laws (including, without limitation, any
treaty, ruling, judicial or administrative determination or regulation) in
effect on the Initial Date or as a result of the Bank's having voluntarily
changed the jurisdiction of its lending office from a jurisdiction in which
payments made to such Bank are exempt from United States withholding tax to
a jurisdiction in which such payments are not so exempt; PROVIDED, HOWEVER,
that the term "Taxes" shall include any United States withholding tax
payable or increased as a result of any change in any law, treaty, ruling,
judicial or administrative determination or regulation occurring after the
Initial Date.
"TERM A LOAN COMMITMENT" means, with respect to each Bank, the amount set
forth below such Bank's name on Schedule A hereto directly below the column
entitled "Term A Loan", as the same may be reduced from time to time pursuant to
Sections 2.01, 2.02, 3.03 and/or 8.
"TERM A LOAN" is defined in Section 1.01(a).
"TERM A LOAN MATURITY DATE" means the last Business Day of June, 2002.
"TERM A NOTE" is defined in Section 1.05(a)(i).
"TERM A PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total Term A Loan Commitment.
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"TERM B LOAN COMMITMENT" means, with respect to each Bank, the amount set
forth below such Bank's name on Schedule A hereto directly below the column
entitled "Term B Loan", as the same may be reduced from time to time pursuant to
Sections 2.01, 2.02, 3.03 and/or 8.
"TERM B LOAN" is defined in Section 1.01(b).
"TERM B LOAN MATURITY DATE" means the last Business Day of December, 2003.
"TERM B NOTE" is defined in Section 1.05(a)(ii).
"TERM B PORTION" means, at any time, the portion of the Loan Facility
evidenced by the Total Term B Loan Commitment.
"TERMINATION EVENT" means (a) a "reportable event" described in Section
4043 of ERISA or in the regulations thereunder (excluding events for which the
requirement for notice of such reportable event has been waived by the PBGC)
with respect to a Title IV Plan, or (b) the withdrawal of Holdings or any of its
ERISA Affiliates from a Title IV Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the
filing of a notice of intent to terminate a Title IV Plan or the treatment of a
Title IV Plan amendment as a termination under Section 4041 of ERISA, or (d) the
institution of proceedings by the PBGC to terminate a Title IV Plan or to
appoint a trustee to administer a Title IV Plan, or (e) any other event or
condition which might constitute reasonable and probable grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan, or (f) the complete or partial withdrawal (within
the meaning of Sections 4203 and 4205, respectively, of ERISA) of Holdings or
any of its ERISA Affiliates from a Multiemployer Plan, or (g) the insolvency or
reorganization (within the meaning of Sections 4245 and 4241, respectively, of
ERISA) or termination of any Multiemployer Plan.
"TEST PERIOD" means, for any specified date, the shorter of (x) the four
consecutive complete calendar quarters last ended or (y) the period of all
complete calendar quarters since the Effective Date.
"TITLE IV PLAN" means any plan (other than a Multiemployer Plan) described
in Section 4021(a) of ERISA, and not excluded under Section 4021(b) of ERISA,
which is or has been maintained by, or to which contributions are or have been
made by, Borrower or any of its ERISA Affiliates.
"TOTAL ACQUISITION TERM LOAN COMMITMENT" means the sum of the Acquisition
Term Loan Commitments of each of the Banks.
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"TOTAL COMMITMENTS" means the sum of (a) the Total Term A Loan Commitments
(b) the Total Term B Loan Commitments, (c) the Total Revolving Loan Commitments
and (d) Total Acquisition Term Loan Commitments.
"TOTAL REVOLVING LOAN COMMITMENT" means the sum of the Revolving Loan
Commitments of each of the Banks.
"TOTAL TERM A LOAN COMMITMENT" means the sum of the Term A Loan Commitments
of each of the Banks.
"TOTAL TERM B LOAN COMMITMENT" means the sum of the Term B Loan Commitments
of each of the Banks.
"TOTAL UTILIZATION" means, at any date of determination, the sum of the
aggregate principal amount of all Revolving Loans and all Acquisition Term Loans
then outstanding.
"TRADEMARK SECURITY AGREEMENT" means the trademark security agreement
substantially in the form of Exhibit 10C.
"TRANSACTION DOCUMENTS" means each Credit Document and each
Recapitalization Document.
"TYPE" of Loan means a Base Rate Loan or Reserve Adjusted Eurodollar Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
"UCP" is defined in Section 1.13(k).
"UNSPECIFIED PERMITTED ACQUISITION" means an acquisition by the Borrower or
its Subsidiaries of assets or property used or useful in the Borrower's business
which is proposed to be financed with the proceeds of an Acquisition Term Loan
Borrowing and either (x) the amount of the Acquisition Term Loan required to
finance any such acquisition is less than $2,000,000 individually, and not more
than $5,000,000 in the aggregate for all such acquisitions under this clause
(x), or (y) the acquisition, and the related Acquisition Term Loan Borrowing is
approved by the Required Banks.
"UNUTILIZED COMMITMENT" for any Bank at any time means, on and after the
Closing Date, the amount by which the sum of the Revolving Loan Commitment and
the Acquisition Term Loan Commitment of such Bank exceeds its portion of the
Total Utilization.
"WATER RIGHTS" means the water rights set forth on Schedule 3.21 of the LS
Purchase Agreement.
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"WHOLLY OWNED SUBSIDIARY" of any Person shall mean any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' or nominees' qualifying shares, is owned
directly or indirectly by such Person.
"WRITTEN" or "IN WRITING" means any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
SECTION 11. THE AGENT.
11.01. APPOINTMENT. Each Bank hereby irrevocably designates and appoints
Indosuez as Administrative Agent, and IBJS as Co-Agent, of such Bank to act as
specified herein and in the other Credit Documents and each such Bank hereby
irrevocably authorizes the Agents to take such action on its behalf under the
provisions of this Agreement and the other Credit Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agents by the
terms of this Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. The Agents agrees to act as such
upon the express conditions contained in this Section 11. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agents shall not have
any duties or responsibilities, except those expressly set forth herein or in
the other Credit Documents, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against either
Agent. The provisions of this Section 11 are solely for the benefit of the
Agents and the Banks, and no Credit Party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an Agent of the
Banks 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.
11.02. DELEGATION OF DUTIES. The Agents may each execute any of its
duties under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither Agent shall not be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care except to the extent otherwise required by Section 11.03.
11.03. EXCULPATORY PROVISIONS. Neither 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 with this Agreement (except for its or such Person's own
gross negligence or willful misconduct) or (b) responsible in any manner to any
of the Banks for any recitals, statements, representations or warranties by any
of the Credit Parties or their respective officers contained in this Agreement,
any other Transaction Document or any LS Purchase Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by each Agent under or in connection with, this Agreement or any
other Transaction Document or any LS Purchase Document or for any failure of any
of the Credit Parties or their respective officers to perform its obligations
hereun-
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der or thereunder. The Administrative Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of any Credit Party. Neither Agent
shall be responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Credit
Document or for any representations, warranties, recitals or statements made
herein or therein or made 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 such Agent to the Banks
or by or on behalf of any Credit Party to such Agent or any Bank 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 of the Loans or of the existence or possible
existence of any Default or Event of Default.
11.04. RELIANCE BY THE AGENT. Each 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 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 the Credit Parties),
independent accountants and other experts selected by the Administrative
Agent. Each Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Credit Document unless it shall
first receive such advice or concurrence of the Required Banks as it deems
appropriate or it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Each Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Credit Documents in accordance with a request of
the Required Banks (or to the extent specifically provided in Section 12.11,
all the Banks), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks.
11.05. NOTICE OF DEFAULT. Neither Agent shall be deemed to have knowledge
of the occurrence of any Default or Event of Default, other than a default in
the payment of principal or interest on the Loans hereunder unless it has
received notice from a Bank or any Credit Party referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks;
PROVIDED, HOWEVER, that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
11.06. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither Agent nor any officers, directors,
employees, agents, attorneys-in-fact
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or affiliates of such Agent have made any representations or warranties to it
and that no act by such Agent hereinafter taken, including any review of the
affairs of any Credit Party, shall be deemed to constitute any representation or
warranty by such Agent to any Bank. Each Bank represents to each Agent that it
has, independently and without reliance upon such Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the 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 Agreement and the other agreements contemplated hereby. Each Bank
also represents that it will, independently and without reliance upon either
Agent or any other Bank, 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 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 Banks by
the Administrative Agent hereunder, neither Agent shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
conditions, prospects or creditworthiness of any Credit Party which may come
into the possession of either such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
11.07. INDEMNIFICATION. The Banks agree to indemnify each Agent in its
capacity as such or in any other representative capacity under any other Credit
Document ratably according to the sum of their aggregate Commitments and Loans,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against either Agent in its capacity as such, in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by either or both
of the Agents under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by any Credit Party; PROVIDED,
HOWEVER, that no Bank shall be liable to either Agent for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from any
such Agent's gross negligence or willful misconduct. If any indemnity furnished
to either Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, either 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 11.07 shall
survive the payment of all Obligations.
11.08. THE AGENTS IN THEIR INDIVIDUAL CAPACITIES. The Agents and their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Credit Party and any Affiliate of any
Credit Party as though such Agent were not an
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Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, such Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not an Agent, and the terms
"Bank" and "Banks" shall include each Agent in its individual capacity.
11.09. SUCCESSOR AGENT. Upon the acceptance of any appointment as an
Administrative Agent hereunder by a successor Administrative Agent, the term
"Administrative Agent" shall include such successor Administrative Agent
effective upon its appointment, and the resigning Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement. After the retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Section 11
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.
11.10. RESIGNATION, TRANSFER BY AGENT.
(a) The Administrative Agent may resign from the performance of all
its functions and duties hereunder at any time by giving 30 Business Days'
prior written notice to the Borrower and the Banks. Such resignation shall
take effect upon the acceptance by a successor Administrative Agent of
appointment pursuant to Sections 11.10(b) and (c) or as otherwise provided
below.
(b) Upon any such notice of resignation of the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent
acceptable to the Borrower and which shall be an incorporated bank or trust
company or other qualified financial institution with operations in the
United States and total assets of at least $5 billion.
(c) If a successor Administrative Agent shall not have been so
appointed within said 30 Business Day period, the resigning Administrative
Agent with the consent of the Borrower shall then appoint a successor
Administrative Agent (which shall be an incorporated bank or trust company
or other qualified financial institution with operations in the United
States and total assets of at least $5 billion) who shall serve as a
successor Administrative Agent until such time, if any, as the Required
Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to Section 11.10(b) or (c) by the 30th Business Day after the date such
notice of resignation was given by the resigning Administrative Agent, such
Administrative Agent's resignation shall become effective and the Required
Banks shall thereafter perform all the duties of Administrative Agent
hereunder until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
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(e) Notwithstanding anything to the contrary contained in this
Section 11, Indosuez, as Administrative Agent, may transfer its rights and
obligations to perform all of its functions and duties hereunder to its
parent company or to any Affiliate of it or its parent company.
11.11. CO-AGENT. The Co-Agent, in such capacity, shall have no
obligations, duties or responsibilities, and shall incur no liabilities, under
this Agreement or any other Credit Document.
SECTION 12. MISCELLANEOUS.
12.01. PAYMENT OF EXPENSES, ETC. Holdings and the Borrower each agrees
to: (a) whether or not the transactions herein contemplated are consummated, pay
all reasonable out-of-pocket costs and expenses of the Agents in connection with
the negotiation, preparation, execution, syndication and delivery of the Credit
Documents and the documents and instruments referred to therein (in accordance
with the terms of the letter agreement between KGRO Acquisition Company, LLC and
Indosuez dated November 18, 1996 and the letter agreement between the Borrower
and Indosuez dated February 10, 1997), other than any expenses of Indosuez
incurred after the Closing Date solely in its capacity as one of the Banks
hereunder, and any amendment, waiver or consent relating thereto (including,
without limitation, the reasonable fees and disbursements of Ropes & Gray and
local counsel to Indosuez, and of Cadwalader, Wickersham & Taft, counsel to
IBJS) and of each of the Banks after the occurrence and during the continuation
of an Event of Default in connection with the enforcement of the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, the reasonable fees and disbursements of counsel for each of
the Banks) with prior notice to the Borrower of the engagement of any counsel,
and hold each of the Banks harmless from and against any and all reasonable fees
and expenses of any appraisers or any consultants or other advisors reasonably
engaged by the Administrative Agent; (b) pay and hold each of the Banks harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Banks harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; and (c) indemnify each Agent and each Bank, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
arising under Environmental Laws except with regard to any losses, costs,
damages or expenses under Environmental Laws, excluding such losses, costs,
damages or expenses arising from or relating to acts or omissions occurring
after the Administrative Agent or any Bank takes possession of, uses, operates,
manages, controls or sells any Real Property provided, however, that such
exception shall apply only to the extent such losses, costs, damages or expenses
arise solely from the gross negligence, bad faith or willful misconduct of the
applicable Administrative Agent or any Bank or of the agents of such
Administrative Agent or any Bank) 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
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proceeding (whether or not any Bank is a party thereto) related to the entering
into and/or performance of any Credit Document or the use of the proceeds of any
Loans hereunder or the Recapitalization 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, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
12.02. RIGHT OF SETOFF. 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 occur rence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice 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 Bank (including,
without limitation, by branches and agencies of such Bank wherever located) to
or for the credit or the account of any Credit Party against and on account of
the Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured. Notwithstanding the foregoing, the Banks
shall have no right of setoff as to the Put/Call Funds and shall not seek to
enjoin payments from the Put/Call Funds made pursuant to the Put/Call Option
Agreement or otherwise prevent Holdings from honoring its obligations
thereunder; PROVIDED that nothing in the foregoing shall be construed to prevent
the Administrative Agent from exercising remedies against Holdings and the
Borrower generally available under this Agreement or applicable law, including,
without limitation the commencement of a case under the Bankruptcy Code relative
to any Credit Party.
12.03. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and hand
delivered, telegraphed, telexed, telecopied, cabled or delivered:
(a) If to Holdings or the Borrower, to it at:
3478 Buskirk Avenue, Suite 260
Pleasant Hill CA 94523
Attention: President
with a copy to each of the following:
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Brownstein Hyatt Farber & Strickland, PC
410 Seventeenth Street
22nd Floor
Denver, CO 80202-4437
Attention: Steven Siegel, Esq.
Fax: (303) 623-1956
and
Kohlberg & Company
111 Radio Circle
Mt. Kisco, NY 10549
Attention: Samuel Frieder
Fax: (914) 241-7476
(b) if to any Bank, to it at its address specified on Schedule 12.03;
(c) or, at such other address as shall be designated by any party in
a written notice to the other parties hereto.
All such notices and communications shall, when hand delivered,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective the following Business Day when delivered to the telegraph company,
cable company or overnight courier, as the case may be, or when transmission is
confirmed, if by telex or telecopier, except that notices and communications to
the Administrative Agent shall not be effective until received by the
Administrative Agent.
12.04. BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto, all future holders of the Notes,
and their respective successors and assigns; PROVIDED, HOWEVER, that
Holdings or the Borrower shall not assign or transfer any of its interests
hereunder without the prior written consent of the Banks; and PROVIDED,
FURTHER, that the rights of each Bank to transfer, assign or grant
participation in its rights and/or obligations hereunder shall be limited
as set forth below in this Section 12.04; and PROVIDED, FURTHER, that
nothing in this Section 12.04 shall prevent or prohibit any Bank from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank and (ii)
granting participation in or assignments of such Bank's Loans, Notes and/or
Commitments hereunder to its parent company and/or to any Affiliate of such
Bank that is at least 50% owned by such Bank or its parent company.
(b) Each Bank shall have the right to transfer, assign or grant
participation in all or any part of its remaining Loans, Notes and/or
Revolving Loan Commitments here under on
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the basis set forth below in this Section 12.04. Subject to Section
12.04(e), each Bank may furnish any information concerning Holdings or any
Subsidiary in the possession of such Bank from time to time to assignees
and participants (including prospective assignees and participants).
(c) Each Bank, with the written consent of the Administrative Agent,
which consent shall not be unreasonably withheld may assign pursuant to an
Assignment Agreement substantially in the form of Exhibit 12.04(c) hereto
(the "ASSIGNMENT AGREEMENT") all or a portion of its Loans, Notes,
Revolving Loan Commitments and/or Acquisition Term Loan Commitments
hereunder pursuant to this Section 12.04(c) to one or more Eligible
Assignees; PROVIDED, HOWEVER, that any assignment pursuant to this Section
12.04(c)(i) shall be in a minimum aggregate amount, for all Loans and
Commitments assigned, of $5,000,000, and (ii) shall not result in the
Borrower incurring any obligation to pay additional amounts as of the time
of such assignment pursuant to Section 1.10(e), 1.11 or 3.05. Any
assignment pursuant to this Section 12.04(c) will become effective five
Business Days after the Administrative Agent's receipt of (i) a written
notice in the form of Exhibit 12.04(c) executed by the assigning Bank and
the Eligible Assignee, and (ii) a processing and recordation fee of $2,500
from the assigning Bank in connection with the Administrative Agent's
recording of such sale, assignment, transfer or negotiation; PROVIDED,
HOWEVER, that such fee shall only be payable if the assignment is between a
Bank and an Eligible Assignee that is not a Bank prior to the assignment.
Such assignment shall be recorded by the Administrative Agent in the
Register. The Borrower shall issue new Notes to the assignee Bank or
Eligible Assignee, as the case may be, in conformity with Section 1.05 and
the assignor shall return the old Notes to the Borrower. Upon the
effectiveness of any assignment in accordance with this Section 12.04(c),
the assignee, if not a Bank, will become a "Bank" for all purposes of this
Agreement and the other Credit Documents and, to the extent of such
assignment, the assigning Bank shall be relieved of its obligations
hereunder with respect to the Commitments being assigned. The
Administrative Agent shall maintain at its address specified in Exhibit
12.03 a copy of each Assignment Agreement delivered to and accepted by it
and a register in which it shall record the names and addresses of the
Banks and the Commitments of, and principal amount of the Loans owing to,
each Bank from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent demonstrable
error, and the Borrower, the Administrative Agent and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Administrative Agent or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(d) Each Bank may transfer, grant or assign participation in all or
any part of such Bank's Loans, Notes and/or Commitments hereunder pursuant
to this Section 12.04(d) to any Person; PROVIDED, HOWEVER, that (i) such
Bank shall remain a "Bank" for all purposes of this Agreement and the
transferee of such participation shall not constitute a Bank
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hereunder and (ii) no participant under any such participation shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (A)
change the scheduled final maturity date of any of the Loans, Notes,
Revolving Loan Commitments or Acquisition Term Loan Commitments in which
such participant is participating or (B) reduce the principal amount,
interest rate or fees applicable to any of the Loans, Notes or Revolving
Loan Commitments in which such participant is participating or postpone the
payment of any interest or fees or (C) release all or substantially all of
the Collateral and PROVIDED, FURTHER, that any participation pursuant to
this Section 12.04(d) shall not result in the Borrower paying additional
amounts as of the time of such participation pursuant to Section 1.10(e),
1.11 or 3.05. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against the granting Bank in respect of
such participation to be those set forth in the agreement with such Bank
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such
participation; PROVIDED, HOWEVER, that such participant shall be considered
to be a "Bank" for purposes of Sections 12.02 and 12.06(b).
(e) The Agents and the Banks agree to keep confidential (and to cause
their respective officers, directors, employees, agents, representatives
and counsel to keep confidential) all information, materials and documents
furnished by any Credit Party to the Agents or any Bank (the
"INFORMATION"). Notwithstanding the foregoing the Agents and each Bank
shall be permitted to disclose Information (i) to such of its officers,
directors, employees, agents, representatives and counsel as need to know
such Information in connection with its participation in any of the
transactions contemplated hereby or the administration of this Agreement;
(ii) to the extent required by applicable laws and regulations or by any
subpoena or similar legal process, or requested by any governmental agency
or authority; (iii) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this Agreement or any other
confidentiality agreement with respect thereto, (B) becomes available to
such Agent or such Bank on a non-confidential basis from a source other
than the Borrower or its Subsidiaries, officers, directors, employees,
agents or representatives or (C) was available to such Agent or such Bank
on a non-confidential basis prior to its disclosure to the Agent or such
Bank by the Borrower or any of its Subsidiaries; (iv) to the extent the
Borrower or any of its Subsidiaries shall have consented to such disclosure
in writing; (v) in connection with the sale of any Collateral pursuant to
the provisions of any of the Security Documents; (vi) in connection with
any litigation or claim concerning enforcement of the Obligations or
arising under this Agreement or any Credit Document or any related
agreement; or (vii) pursuant to Section 12.04(b); PROVIDED, HOWEVER, that
prior to any such disclosure under Section 12.04(b), each prospective
Eligible Assignee or participant shall enter into a written agreement with
the assigning or selling Bank to preserve the confidentiality of any
Information to the extent set forth in this Section 12.04(e).
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(f) If the Borrower shall: (i) as a result of the requirements of
Section 1.01(b) or 1.11 of this Agreement, be required to pay to any Bank
the additional amounts referred to in such Sections at any time when all of
the Banks have not requested payment of such amounts; (ii) as a result of
the requirements of Section 3.07, be required to pay any Bank the Taxes
referred to in Section 3.07, or (iii) as a result of the failure of any
Bank to make available to the Administrative Agent such Bank's ratable
portion of any Borrowing, be required to repay to the Administrative Agent
such corresponding amount pursuant to Section 1.04(b), then, in each such
case, (A) the Borrower shall be entitled to designate an Eligible Assignee
to replace such Bank, (B) such Bank shall execute and deliver to such
Eligible Assignee an Assignment Agreement with respect to such Bank's
entire interest under this Agreement and the Notes, and (C) upon the
execution by such Eligible Assignee of such Assignment Agreement and
compliance with the requirements of Section 12.04(c), such Eligible
Assignee shall succeed to all of such Bank's rights and duties under this
Agreement; PROVIDED, HOWEVER, that notwithstanding anything to the contrary
in this Agreement, the Borrower shall be responsible to pay any and all
out-of- pocket expenses of any Bank replaced by the Borrower pursuant to
this Section 12.04(f) or of the Administrative Agent incurred by such Bank
or by the Administrative Agent, in either case incurred in connection with
the Borrower's replacement of any Bank pursuant to this Section 12.04(f).
12.05. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Administrative Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Administrative Agent or any Bank 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 herein expressly provided are
cumulative and not exclusive of any rights or remedies which any Administrative
Agent or any Bank 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 circum stances or constitute a waiver of the
rights of any Administrative Agent or the Banks to any other or further action
in any circumstances without notice or demand.
12.06. PAYMENTS PRO RATA.
(a) The Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of any Credit Party in respect of any
Obligations of such Credit Party, it shall distribute such payment to the
Banks pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received and in
accordance with the provisions hereof as to the application of prepayments.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of
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setoff or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or otherwise) which is
applicable to the payment of the principal of, or interest on, the Loans,
of a sum which with respect to the related sum or sums received by other
Banks is in a greater proportion than the total of such Obligations then
owed and due to such Bank bears to the total of such Obligations then owed
and due to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations of the
respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; PROVIDED,
HOWEVER, that if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
12.07. CALCULATIONS; COMPUTATIONS. Unless otherwise indicated, all
computations of interest and fees hereunder shall be made on the actual number
of days elapsed over a year of 365 days; PROVIDED, HOWEVER, that all
computations of Reserve Adjusted Eurodollar Loans and Commitment Fees shall be
made on the actual number of days elapsed over a year of 360 days.
12.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; SERVICE OF
PROCESS.
(a) This Agreement and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with and be
governed by the laws of the State of New York applicable to contracts made
and to be performed wholly therein, without giving effect to principles of
conflicts of law. Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the
State of New York or the United States for the Southern District of New
York, and, by execution and delivery of this Agreement, each Credit Party
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the non- exclusive jurisdiction of the
aforesaid courts. Each Credit Party designates and appoints CT Corporation
System, with an address at 1633 Broadway, New York, New York 10019 and such
other persons as may hereafter be selected by the Credit Parties and shall
irrevocably agree in writing to so serve, as their administrative agent to
receive on their behalf, service of all process in any such proceedings in
any such court, such service being hereby acknowledged by each Credit Party
to be effective and binding service in every respect. A copy of such
process so served shall be mailed by registered mail to any Credit Parties
at the address provided for Holdings and the Borrower in Section 12.03 of
this Agreement except that unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of
process. If any agent appointed by the Credit Parties refuses to accept
service, the Credit Parties hereby agree that service upon them by mail
shall constitute sufficient notice. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the
right of the Administrative Agent to bring proceedings against any Credit
Party in the courts of any other jurisdiction.
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(b) Each party hereto 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 Agreement
or any other Credit Document brought in the courts referred to in Section
12.08(a) 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.
12.09. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
12.10. HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.11. AMENDMENT OR WAIVER. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Required Banks; PROVIDED, HOWEVER, that no such change, waiver,
discharge or termination shall, without the consent of each affected Bank and
the Administrative Agent, (a) extend the scheduled final maturity date of any
Loan, or any portion thereof, or reduce the rate or extend the time of payment
of interest thereon or fees or reduce the principal amount thereof, or increase
the Commitments of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute a change in the terms of
any Commitment of any Bank), (b) release all or substantially all of the
Collateral (except as expressly permitted by the Credit Documents), (c) amend,
modify or waive any provision of this Section, or Section 1.10, 1.11, 3.05, 8,
11.07, 12.01, 12.02, 12.04, 12.06, 12.07 or 12.12, (d) reduce any percentage
specified in, or otherwise modify, the definition of Required Banks or (e)
consent to the assignment or transfer by any Credit Party of any of its rights
and obligations under this Agreement. No provision of Section 12 may be amended
without the consent of the Administrative Agent.
12.12. SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.11, 3.05, 10.07 or 12.01 shall survive the execution
and delivery of this Agreement and the making of the Loans, the repayment of the
Obligations and the termination of the Total Commitments.
12.13. DOMICILE OF LOANS. Each Bank may transfer and carry its Loans at,
to or for the account of any branch office, subsidiary or Affiliate of such
Bank; PROVIDED, HOWEVER, that any
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such transfer shall not result in the Borrower paying additional amounts as of
the time of such transfer pursuant to any provision of any Credit Document.
12.14. WAIVER OF JURY TRIAL. Each of the parties to this Agreement hereby
irrevocably waives all rights to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement or the other Credit
Documents or the transactions contemplated hereby or thereby.
12.15. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
12.16. REINSTATEMENT. If, at any time, all or part of any payment of the
Obligations made by the Borrower is rescinded or otherwise must be returned by
any Bank or the Administrative Agent for any reason whatsoever (including the
insolvency, bankruptcy or reorganization of the Borrower), this Agreement shall
be reinstated as to the Obligations which were satisfied by the payment to be
rescinded or returned, all as though such payment had not been made.
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[Amended and Restated Credit Agreement]
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
COLOR SPOT NURSERIES, INC.
By: /s/ Michael F. Vukelich
-------------------------------
Name:
Title:
CSN, Inc.
By: /s/ Michael F. Vukelich
-------------------------------
Name:
Title:
BANQUE INDOSUEZ, NEW YORK BRANCH
as a Bank and as Administrative Agent
By: /s/ Patricia Frankel
-------------------------------
Name: PATRICIA FRANKEL
Title: FIRST VICE PRESIDENT
By: [ILLEGIBLE]
-------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as a Bank and as Co-Agent
By: /s/ DeVer G. Warner
-------------------------------
Name: DeVer G. Warner
Title: Managing Director
Total Term A Loan Commitment: $25,000,000
Total Term B Loan Commitment: $35,000,000
Total Revolving Loan Commitment: $27,500,000
Total Acquisition Term Loan Commitment: $15,000,000
SCHEDULE A
LIST OF BANKS
COMMITMENTS
Term A Loan Term B Loan
----------- -----------
$17,779,780 $24,891,700
7,220,220 10,108,300
----------- -----------
$25,000,000 $35,000,000
Revolving Loan Acquisition Term Loan
-------------- ---------------------
$19,557,760 $10,667,870
7,942,240 4,332,130
----------- -----------
$27,500,000 $15,000,000
Banque Indosuez, New York Branch
IBJ Schroder Bank & Trust Co.
ASSIGNEE BANKS
SCHEDULE 12.03
BANK ADDRESSES
Banque Indosuez, New York Branch
1211 Avenue of the Americas - 7th Floor
New York, New York 10036
IBJ Schroder Bank & Trust Co.
One State Street
New York, NY 10004
AMENDMENT NO. 4
This Amendment No. 4 (this "AMENDMENT") is made and entered into as of
September 3, 1997, by and among CSN Inc., a Delaware corporation ("HOLDINGS"),
Color Spot Nurseries, Inc., a Delaware corporation (the "BORROWER"), Credit
Agricole Indosuez (formerly Banque Indosuez, New York branch), as Administrative
Agent for itself and the other Banks (each as defined in the Credit Agreement
referenced below) (the "ADMINISTRATIVE AGENT"), IBJ Schroder Bank & Trust
Company, as Co-Agent (together with the Administrative Agent, "THE AGENTS") and
the other Banks party hereto. The parties agree as follows:
1. REFERENCE TO CREDIT AGREEMENT; DEFINITIONS. Reference is made to the
Amended and Restated Credit Agreement dated as of February 20, 1997, as
amended and in effect on the date hereof prior to giving effect to this
Agreement (the "CREDIT AGREEMENT"), among Holdings, the Borrower, the Banks
and the Agents. Terms defined in the Credit Agreement as amended hereby
(the "AMENDED CREDIT AGREEMENT") and not otherwise defined herein are used
herein with the meanings so defined. References in this Agreement to
"Sections" and "Exhibits", except as the context otherwise dictates, are
references to sections hereof and exhibits hereto.
2. BACKGROUND.
2.1. The Borrower desires to enter into a transaction (the "ODA
ACQUISITION") pursuant to which it shall acquire a nursery
business located in California and owned and operated by Oda
Nursery, Inc., a California corporation.
2.2. The Oda Acquisition will be financed through the incurrence by
the Borrower of up to an additional $15.5 million in
indebtedness under the Credit Agreement (as described below).
2.3. Pursuant to the Credit Agreement, as of the date hereof, (i)
the Borrower has heretofore incurred Term A Loans in the
aggregate principal amount of $27.5 million, Term B Loans in an
aggregate principal amount of $47 million; (ii) the Total
Acquisition Term Loan Commitment is $15 million, (all of which
is currently outstanding in principal amount of Acquisition
Term Loan); and (iii) the Total Revolving Loan Commitment is
$37.5 million, of which $7.8 million is drawn.
3. AMENDMENTS AND WAIVERS. Subject to all the terms and conditions hereof,
and in reliance upon the representations and warranties set forth in
Section 4, the Credit Agreement is hereby amended as follows, effective
upon the date (the "AMENDMENT DATE") that the conditions in Section 5 are
satisfied, which conditions must be satisfied not later than September 15,
1997 or this Agreement will be of no force or effect:
3.1. Schedule A to the Credit Agreement is hereby amended to add
the following column to the right side of the table of Banks:
Oda Term A Loan Oda Term B Loan
--------------- ---------------
$7,500,000 $8,000,000
0 0
3.2. Section 1.01 of the Credit Agreement is hereby amended as
follows:
(a) clause (i) of the first paragraph of Section 1.01 is
amended to read in its entirety as follows:
"(i) in the case of any Borrowings under the Term A
Portion or the Term B Portion, (x) on the Closing Date
with respect to Term A Loans and Term B Loans other than
the Texas Term B Loans, the Summersun Term A Loans,
Summersun Term B Loans, Oda Term A Loans and Oda Term B
Loans, (y) on the Texas Acquisition Closing Date with
respect to the Texas Term B Loans, (z) on the Summersun
Acquisition Closing Date with respect to the Summersun
Terms A Loans and the Summersun Term B Loans, and (aa) on
the Oda Acquisition Closing Date with respect to Oda Term
A Loans and the Oda Term B Loans";
(b) the first sentence of Section 1.01(a) is amended to read
in its entirety as follows:
"(a) Loans under the Term A Portion of the Loan Facility
(each a "TERM A LOAN") shall, (i) with respect to the Term
A Loans other than the Summersun Term A Loans and the Oda
Term A Loans, be made to the Borrower on the Closing Date,
(ii) with respect to the Summersun Term A Loans, be made
to the Borrower on the Summersun Acquisition Closing Date,
and (iii) with respect to the Oda Term A Loans, be made to
the Borrower on the Oda Acquisition Closing Date";
(c) the lead in of clause (i) of the second sentence of
Section 1.01(a) is amended to read in its entirety as
follows:
"(i) except as hereinafter provided, shall initially be
Base Rate Loans and, 30 days after the Closing Date, the
Summersun Acquisition Closing Date or the Oda Acquisition
Closing Date, as applicable, or such earlier time as"
(d) the first sentence of Section 1.01(b) is amended to read
in its entirety as follows:
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"(b) Loans under the Term B Portion of the Loan Facility
(each a "TERM B LOAN") shall, (i) with respect to the Term
B Loans other than the Texas Term B Loans, the Summersun
Term B Loans and the Oda Term B Loans, be made to the
Borrower on the Closing Date, (ii) with respect to the
Texas Term B Loans, be made to the Borrower on the Texas
Acquisition Closing Date, (iii) with respect to the
Summersun Term B Loans, be made to the Borrower on the
Summersun Acquisition Closing Date, and (iv) with respect
to the Oda Term B Loans, be made to the Borrower in the
Oda Acquisition Closing Date."
(e) the lead in to clause (i) of the second sentence of
Section 1.01(b) is amended to read in its entirety as
follows:
"(i) except as hereinafter provided, shall initially be
Base Rate Loans and, 30 days after the Closing Date, the
Texas Acquisition Closing Date, the Summersun Acquisition
Closing Date or the Oda Acquisition Closing Date, as
applicable, or such earlier time as"
3.3. Clause (i) of Section 1.02 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(i) the Banks' Term A Loan Commitments and Term B Loan
Commitments shall terminate, on a pro rata basis, with
respect to any portion of the Total Term A Loan
Commitments or the Total Term B Loan Commitments, as the
case may be, not utilized by the Borrower on the Closing
Date (except for the Texas Term B Loan Commitment, the
Summersun Term A Loan Commitment, the Summersun Term B
Loan Commitment, the Oda Term A Loan Commitment and the
Oda Term B Loan Commitment, which shall each terminate as
to any portion not utilized on the Texas Acquisition
Closing Date, the Summersun Acquisition Closing Date or
the Oda Acquisition Closing Date, as the case may be) and"
3.4. Clause (iii) of Section 1.05(b) is hereby amended to read in
its entirety as follows:
"(iii) be dated the Closing Date (except that the Term A
Notes evidencing the Summersun Term A Loans shall be dated
the Summersun Acquisition Closing Date and the Term A
Notes evidencing the Oda Term A Loans shall be dated the
Oda Acquisition Closing Date),"
3.5. Clause (iii) of Section 1.05(c) is hereby amended to read in
its entirety as follows:
-3-
"(iii) be dated the Closing Date (except that the Term B
Notes evidencing the Texas Term B Loans shall be dated the
Texas Acquisition Closing Date, the Term B Notes
evidencing the Summersun Term B Loans shall be dated the
Summersun Acquisition Closing Date and the Term B Notes
evidencing the Oda Term B Loans shall be dated the Oda
Acquisition Closing Date),"
3.6. Section 1.12 of the Credit Agreement is hereby amended to add
the following immediately after the second sentence of such
Section:
"As of the Summersun Acquisition Closing Date, the amount of (a)
the Total Commitment is $142.5 million, (b) the Total Term A
Loan Commitment is $35 million (c) the Total Term B Loan
Commitment is $55 million, (d) the Total Revolving Loan
Commitment is $37.5 million and (e) the Total Acquisition Term
Loan Commitment is $15 million (all of which is currently
outstanding in aggregate principal amount under Acquisition
Term Loans)."
3.7. Clause (c) of Section 2.02 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"Each of the Term A Loan Commitments and the Term B Loan
Commitments shall terminate as of the close of business on the
Closing Date (except with respect to (i) the Texas Term B Loan
Commitments, which shall terminate as of the close of business
on the Texas Acquisition Closing Date, (ii) the Summersun Term
A Loans Commitments and the Summersun Term B Loan Commitments,
which shall terminate on the Summersun Acquisition Closing
Date, and the Oda Term A Loans Commitments and (iii) the Oda
Term B Loan Commitments, which shall terminate on the Oda
Acquisition Closing Date), and any amounts not borrowed with
respect to each of the Term A Loans and the Term B Loans on the
Closing Date (or the Texas Acquisition Closing Date, the
Summersun Acquisition Date or the Oda Acquisition Closing Date,
as the case may be) shall cease to be available."
3.8. Section 2.02 shall be amended to add clause (h) immediately
following clause (g) thereof which shall read in its entirety
as follows:
"(h) The Oda Term A Loan Commitment and the Oda Term B Loan
Commitment shall be reduced proportionately by the amount of
any reduction in the cash purchase price to be paid by the
Borrower to consummate the Oda Acquisition."
3.9. Section 5.05 of the Credit Agreement is hereby amended to add
clause (g) immediately following clause (f) which shall read in
its entirety as follows:
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"(g) All proceeds of the Oda Term A Loans and the Oda Term B
Loans shall be used by the Borrower to (i) to pay the cash
consideration to be paid by the Borrower in connection with the
Oda Acquisition and (ii) to pay fees and expenses related to
the consummation of the Oda Acquisition."
3.10. Section 10 of the Credit Agreement is hereby amended as follows:
(a) the following definitions are hereby added to Section 10:
"ODA ACQUISITION" means the acquisition by the Borrower,
of a nursery business located in California and owned and
operated by Oda Nursery, Inc., a California corporation
("ODA"), which is to be accomplished by the acquisition of
all of the outstanding capital stock of Oda by the
Borrower, and in consideration of such acquisition the
shareholders of Oda will receive approximately $15 million
in cash and a Seller Note for $1,000,000 in accordance
with the Stock Purchase Agreement dated as of September 3,
1997 among the Borrower, Oda and the shareholders of Oda
(the "ODA PURCHASE AGREEMENT").
"ODA ACQUISITION CLOSING DATE" shall mean September 3,
1997.
"ODA ACQUISITION DOCUMENTS" means the Oda Purchase
Agreement, as amended and in effect on the date hereof,
and the other documents evidencing or implementing the
transactions contemplated thereby.
"ODA TERM A LOAN" means loans under the portion of the
Loan Facility evidenced by the Oda Term A Loan Commitment.
"ODA TERM A LOAN COMMITMENT" means, with respect to each
Bank, the amount set forth below such Bank's name on
Exhibit A hereto directly below the column entitled "Oda
Term A Loan," as same may be reduced from time to time
pursuant to Sections 2.01, 3.03 and/or 8.
"ODA TERM B LOAN" means loans under the portion of the
Loan Facility evidenced by the Oda Term B Loan Commitment.
"ODA TERM B LOAN COMMITMENT" means, with respect to each
Bank, the amount set forth below such Bank's name on
Exhibit A hereto directly below the column entitled "Oda
Term B Loan," as same may be reduced from time to time
pursuant to Sections 2.01, 3.03 and/or 8.
-5-
(b) The following definitions are hereby amended to read in
their entirety as follows:
"SCHEDULED TERM A LOAN PRINCIPAL PAYMENTS" means, with
respect to the principal payments on the Term A Loan to be
made on the last Business Day of each calendar quarter
specified in the table below, the Dollar amount specified
opposite such date in such table:
Scheduled Term A Loan
Date Principal Payment
---- ---------------------
March 31, 1997 $450,000
June 30, 1997 $625,000
September 30, 1997 $886,233
December 31, 1997 $886,233
March 31, 1998 $1,382,524
June 30, 1998 $1,382,524
September 30, 1998 $1,382,524
December 31, 1998 $1,382,524
March 31, 1999 $1,595,220
June 30, 1999 $1,595,220
September 30, 1999 $1,595,220
December 31, 1999 $1,595,220
March 31, 2000 $1,701,568
June 30, 2000 $1,701,568
September 30, 2000 $1,701,568
December 31, 2000 $1,701,568
March 31, 2001 $1,985,160
June 30, 2001 $1,985,160
September 30, 2001 $1,985,160
December 31, 2001 $1,985,160
March 31, 2002 $2,747,323
June 30, 2002 $2,747,323
"SCHEDULED TERM B LOAN PRINCIPAL PAYMENTS" means, with
respect to the Term B Loan, principal payments to be made
on the last Business Day of each calendar quarter
specified in the table below, in each case, in the Dollar
amount specified opposite such period in such table:
-6-
Scheduled Term B Loan
Period Principal Payment
------ ---------------------
January 1, 1997 through
June 30, 1997 $87,620
July 1, 1997 through
June 30, 1997 $117,812
July 1, 1997 through
June 30, 2002 $137,940
July 1, 2002 through
December 31, 2003 $8,677,660
"Total Term A Loan Commitment" means the sum of the Term A Loan
Commitments, the Summersun Term A Loan Commitments and the Oda
Term A Loan Commitments of each of the Banks.
"Total Term B Loan Commitment" means the sum of the Term B Loan
Commitments, the Texas Term B Loan Commitments, the Summersun
Term B Loan Commitments and the Oda Term B Loan Commitments of
each of the Banks.
3.11. WAIVER. The Banks hereby waive compliance with the
requirements of only Sections 4.03(d), 6.14, 6.15 and 6.18 as
to the Staging Area Real Property until the period ending
September 30, 1997
4. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank and the Agents
to enter into this Amendment, the Borrower represents and warrants to each
of the Banks and the Agent that:
4.1. NO DEFAULT. Immediately after giving effect to this Agreement,
no Default will exist.
4.2. INCORPORATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Section 5 of the
Amended Credit Agreement are true and correct on the date
hereof as if originally made on and as of the date hereof
(except to the extent any representation or warranty refers to
a specific earlier date).
4.3. DISCLOSURE. The Oda Acquisition Documents and the other
information and certificates furnished to or to be furnished to
the Administrative Agent in connection with the Oda Acquisition
and this Amendment do not contain and will not contain any
untrue statement of a material fact or omit to state any
material fact and, to the knowledge of the Credit Parties,
there is no material fact relating to Oda or the Oda
Acquisition which may adversely affect the same which has not
been disclosed in writing to the Administrative Agent.
-7-
5. CONDITIONS. The effectiveness of this Amendment, and the making of the Oda
Term A Loans and the Oda Term B Loans to be made on the Oda Acquisition
Closing Date, provided for hereby, are subject to the satisfaction of the
following conditions:
5.1. CREDIT DOCUMENTS.
(a) This Amendment and each other Credit Document (to the
extent not previously executed and delivered), including,
without limitation, the Subsidiary Guarantee of Oda and
any related security documentation evidencing the
guarantees and pledges by each of the Borrower and Oda,
shall (A) have been, on or before the Oda Acquisition
Closing Date, duly authorized, executed and delivered by
each of the parties signatory thereto and (B) constitute
the legal, valid and binding obligation of each Credit
Party, enforceable in accordance with its terms (subject
to bankruptcy and principles of equity).
(b) There shall have been delivered to the Administrative
Agent (i) for the account of each of the Banks which are
extending Oda Term A Loans and Oda Term B Loans, Term A
Notes and Term B Notes evidencing such Borrowings, each
duly executed by the Borrower in the amount and maturity
and as otherwise provided in the Amended Credit Agreement
and (ii) updated Schedules 5.13, 5.16 and 5.17 after
giving effect to the Oda Acquisition, the merger of Peters
into LSGR Holdings and the related asset transfers.
5.2. OFFICERS' CERTIFICATE. The Administrative Agent shall have
received a certificate dated the Oda Acquisition Closing Date
signed by the appropriate officer(s) of the Borrower on behalf
of the Borrower in substantially the form of Exhibit 4.01(b)
stating that (i) all of the conditions set forth in this
Section 5 have been either satisfied or waived in writing by
the Administrative Agent, and the Required Banks as of such
date, (ii) immediately before and after giving effect to this
Agreement, the Oda Acquisition, the Borrowings related thereto,
the merger of Peters into LSGR Holdings and the related asset
transfers, all representations and warranties contained herein
or in any other Credit Document (except as expressly amended
hereunder or under another Credit Document) shall be true and
correct, (iii) no Default or Event of Default has occurred or
will have occurred after giving effect to this Agreement, the
Oda Acquisition, the Borrowings related thereto, the merger of
Peters into LSGR Holdings and the related asset transfers and
(iv) since June 30, 1996 no material adverse change in the
business, assets, prospects, properties or condition (financial
or otherwise) of Holdings and its Subsidiaries shall have
occurred.
-8-
5.3. OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion dated the Oda Acquisition Closing Date
addressed to each of the Banks from each of (i) Brownstein
Hyatt Farber & Strickland, P.C., counsel to the Credit Parties
and (ii) Butterwick, Bright & O'Laughlin, Inc., counsel to Oda,
in each case, in form and substance reasonably acceptable to
the Administrative Agent.
5.4. CORPORATE PROCEEDINGS. All corporate and legal proceedings and
all instruments and agreements in connection with the Oda
Acquisition, the merger of Peters into LSGR Holdings and the
related asset transfers, the execution of this Amendment and
the other Credit Documents to be executed in connection with
the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received all
information and copies of all certificates, documents and
papers, including records of corporate proceedings and
governmental approvals, if any, which it may have reasonably
requested from the Credit Parties or in connection therewith,
such documents and papers where appropriate to be certified by
proper corporate or governmental authorities. Without limiting
the foregoing, the Administrative Agent shall have received
from each Credit Party:
(a) resolutions of the board of each such Person which shall
include, without limitation, (1) resolutions approving
such documents and actions as are contemplated by this
Amendment or the Oda Acquisition, and any related
transactions to the extent such Person is a party thereto
and (2) resolutions as to the due authorization, execution
and delivery of this Amendment and the Oda Acquisition
Documents, to the extent such Person is a party thereto,
all such resolutions to be in form and substance
reasonably satisfactory to the Administrative Agent; and
(b) signature and incumbency certificates of each officer of
each such Credit Party executing instruments, documents or
agreements required to be executed in connection with the
transactions contemplated by this Amendment and the Oda
Acquisition Documents.
5.5. ACQUISITION DOCUMENTS.
(a) The Oda Acquisition Documents and any amendments thereto,
shall be in form and substance satisfactory to the
Administrative Agent; and on the Oda Acquisition Closing
Date each of the conditions to closing contained in each
of the Oda Acquisition Documents shall have been satisfied
in all material respects (or waived in writing, such
waiver to be reasonably satisfactory to the Administrative
Agent) to the reasonable satisfaction of the
Administrative Agent. Each Credit Party and each of the
other parties to the Oda Acquisition Documents shall have
done and
-9-
performed such acts and observed such covenants which each
is required to do or perform under the Oda Acquisition
Documents on or prior to the Oda Acquisition Closing Date
(or such acts and covenants shall have been waived in
writing, such waiver to be reasonably satisfactory to the
Administrative Agent). Full, complete and accurate copies
of each of the Oda Acquisition Documents (including all
schedules and exhibits thereto) shall have been provided
to the Administrative Agent.
(b) Holdings and the Borrower shall have provided evidence
satisfactory in form and substance to the Administrative
Agent that the Oda Acquisition has been consummated or
will be consummated simultaneously with the closing of the
transactions contemplated by this Agreement.
5.6. CAPITAL STRUCTURE. On the Oda Acquisition Closing Date, after
giving effect to the Oda Acquisition, (i) there shall be no
outstanding Capital Stock of Holdings other than as set forth
in Schedule 5.17, (ii) the Borrower shall be a Wholly Owned
Subsidiary of Holdings, (iii) Holdings shall have no direct
Subsidiaries other than the Borrower, and no indirect
Subsidiaries other than as set forth on Schedule 5.13.
5.7. ORGANIZATIONAL DOCUMENTATION, ETC. On or prior to the Oda
Acquisition Closing Date, the Administrative Agent shall have
received a true and complete certified copy of the following
documents of each of Holdings, the Borrower, and Oda, the
provisions of which shall be reasonably satisfactory to the
Agents:
(a) Copies of its certificate of incorporation, or certificate
of limited partnership, as the case may be, which (A)
shall be certified by, and accompanied by a good standing
certificate from, the Secretary of State or similar
official of the jurisdiction of its organization and (B)
in the case of Holdings, the Borrower, and Oda shall be
accompanied by good standing certificates from each
jurisdiction in which it is required to be qualified to do
business as a foreign corporation, each to be dated a
recent date prior to the Oda Acquisition Closing Date;
(b) Copies of its by-laws or limited partnership agreement as
the case may be, certified as of a recent date prior to
the Oda Acquisition Closing Date by its corporate
secretary or other person serving in a similar capacity.
5.8. CERTAIN FEES; INTEREST ON OUTSTANDING LOANS. All fees and
reasonable costs and expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
payable to the Agents or the Banks by Holdings or the Borrower
shall have been paid in full, and there shall have been paid in
full all accrued interest and all accrued commitment fees on
the Outstanding Loans and
-10-
all other fees and expenses (including, without limitation,
reasonable legal fees and expenses) of the Agents or the Banks,
in each case to the extent due and payable and, with respect to
costs and expenses, invoiced or presented on or before the Oda
Acquisition Closing Date. In addition, on or prior to the Oda
Acquisition Closing Date, there shall have been delivered to
the Agents evidence satisfactory to the Agents that the fees
and expenses payable by Holdings and its Subsidiaries in
connection with the Oda Acquisition shall not exceed $_________
in the aggregate.
5.9. FINANCIAL STATEMENTS, ETC. On or before the Oda Acquisition
Closing Date, the Agents shall have received: (i) a pro forma
balance sheet for Holdings and its Subsidiaries, as of
_______________ after giving effect to the Texas Acquisitions,
the Summersun Acquisition, the Oda Acquisition, the Oda Term A
Loans and Oda Term B Loans contemplated hereby; and (ii) a
revised annual plan, giving effect to the Texas Acquisitions,
the Summersun Acquisition, the Oda Acquisition, the Oda Term A
Loans and the Oda Term B Loans contemplated hereby for each of
Holdings' and its Subsidiaries' and projections for five
calendar years commencing on or about January 1, 1997, in each
case, accompanied by a statement by Holdings that such
projections are based on estimates and assumptions believed by
Holdings in good faith to be reasonable in light of the
conditions which existed at the time of their preparation as to
the future financial performance of Holdings, each in form,
scope and substance satisfactory to the Administrative Agent,
prepared in accordance with Holdings' normal accounting
procedures applied on a consistent basis, including (A)
forecasted balance sheets and statements of operations,
stockholders' equity and cash flows of Holdings and its
Subsidiaries for such periods, (B) the amount of forecasted
capital expenditures (including the amount of such costs to be
capitalized, if any) for such periods, and (C) Holdings and its
Subsidiaries' forecasted compliance with Sections 7.01 through
7.05 of the Amended Credit Agreement. Each of the items
delivered pursuant to this Section 4.9, shall be satisfactory
to the Administrative Agent in its reasonable discretion.
Since the time of the preparation of such financial
projections, no fact or facts have come to the attention of any
Credit Party to cause such Person to believe that any of the
estimates and assumptions on which such projections are based
are not reasonable.
5.10. LITIGATION. Except as set forth on Schedule 4.01(l), there
shall be no litigation pending or threatened by any entity
(private or governmental) involving any Credit Party or any
other party to any Oda Acquisition Document or any of the
properties or assets of any such Person that could reasonably
be expected to restrain, enjoin or result in the obtaining of a
judgment for substantial damages with respect to the Oda
Acquisition or the consummation of the transactions
contemplated by the Oda Acquisition Documents, and there shall
be no pending or threatened litigation involving any Credit
Party or involving any other party to
-11-
any Oda Acquisition Document or any of the properties or assets
of any such Person that could reasonably be expected to have a
material adverse effect on the operations or properties being
acquired in the Oda Acquisition or the ability of the Credit
Parties to operate the same or that could reasonably be
expected to have a Material Adverse Effect.
5.11. INDEBTEDNESS, ETC. (i) Each Credit Party shall have received
all necessary consents or waivers or shall have amended,
supplemented or otherwise modified, repaid or defeased its
outstanding Indebtedness in a manner and on terms satisfactory
to the Agents such that there exists no default or potential
default (as a result of the consummation of the Oda
Acquisition) with respect to such Indebtedness or under any
note, evidence of indebtedness, capital lease, mortgage, deed
of trust, security document or other agreement relating to such
Indebtedness and such indentures, notes, evidences of
indebtedness, capital lease mortgages, deeds of trust or other
agreements relating to such Indebtedness shall not contain (i)
any restriction on the ability of Holdings or any of its
Subsidiaries to grant any Lien in favor of the Banks (other
than in the case of Capital Leases, or purchase money debt
(excluding Real Property leases), a Lien on the property
financed thereby) or any financial covenants or tests
applicable to Holdings or any of its Subsidiaries.
(ii) The terms and conditions of any Indebtedness of
Holdings and its Subsidiaries as of the Oda Acquisition
Closing Date which remains outstanding after giving effect
to the Oda Acquisition and the making of the Oda Term A
Loans and the Oda Term B Loans, the extent to which any
Indebtedness of Oda remains outstanding as Indebtedness of
the Borrower after giving effect to the Oda Acquisition
and the making of the Oda Term A Loans and Oda Term B
Loans shall, in each case, be reasonably acceptable to the
Agents. The Administrative Agent shall have received
evidence satisfactory to it that the Indebtedness
reflected on Schedule A hereto as being paid as of the Oda
Acquisition Closing Date is being paid with the proceeds
of the Oda Term A Loans and Oda Term B Loans made on the
date hereof.
5.12. SECURITY DOCUMENTS. In each case, to the extent the same shall
not have been previously delivered to the Administrative Agent,
the Security Documents and Additional Security Document,
including the Subsidiary Guarantee and Security Agreement of
Oda, shall have been duly executed and delivered by each of the
Credit Parties party thereto and there shall have been
delivered to the Administrative Agent: (i) executed financing
statements for filing under the provisions of the UCC in each
of the offices where such filing is necessary or appropriate,
including those set forth on Schedule B hereto to grant the
Administrative Agent a perfected first priority Lien in the
Collateral acquired in the Oda Acquisition and the assets
transferred in connection with the merger of
-12-
Peters into LSGR Holdings as to which a security interest may
be perfected by the filing of a financing statement, which Lien
shall be superior to and prior to the rights of all third
persons and subject to no other Liens; (ii) certified copies of
Requests for Information (Form UCC-11 or the equivalent), or
equivalent reports or lien search reports listing all effective
financing statements which name the Borrower, its subsidiaries,
or Oda and which are filed in any jurisdiction in which any of
such Collateral is located and the jurisdiction in which such
Person's principal place of business is located (none of which
shall cover the Collateral covered, or purported to be covered,
by the Security Documents and Additional Security Documents
other than Permitted Encumbrances); and (iv) evidence of the
completion of all recordings and filings (or of the making of
arrangements to file contemporaneously with the making of
additional Borrowings contemplated hereby) of each such
Security Document and delivery of such other security and other
documents as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created,
or purported or intended to be created, by such Security
Documents; and (v) payoff letters executed by the holders of
any Indebtedness reflected as being paid as of the Oda
Acquisition Closing Date on Schedule A hereto setting forth the
amount required to discharge such Indebtedness, and evidence
that the proceeds of the Oda Term A Loans and Oda Term B Loans
will be used to so discharge such Indebtedness.
5.13. LEASES. All Capital Leases and Operating Leases of Holdings
and its Subsidiaries and all Capital Leases and Operating
Leases of Oda shall remain outstanding after giving effect to
the Oda Acquisition and the making of the Oda Term A Loans and
Oda Term B Loans hereunder.
5.14. CONSENTS, ETC. All necessary or required governmental and
third party approvals and consents (including, without
limitation, all approvals and consents required in connection
with any Environmental Laws), in connection with the Oda
Acquisition or the transactions contemplated by this Amendment
and the Oda Acquisition Documents and otherwise referred to
herein or therein to be completed on or before the Oda
Acquisition Closing Date shall have been disclosed to the
Administrative Agent and shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which
restrains, prevents or imposes, in the reasonable judgment of
the Administrative Agent, material adverse conditions upon the
consummation of the Oda Acquisition. There shall not exist any
judgment or order enjoining or otherwise restraining the making
of the Oda Term A Loans or Oda Term B Loans hereunder or the
consummation of the Oda Acquisitions.
5.15. BORROWING BASE; BORROWING BASE CERTIFICATE. The Administrative
Agent and the Banks shall have received and the Required Banks
shall be satisfied in all
-13-
reasonable respects with a Borrowing Base Certificate which
shall be substantially in the form of Exhibit 6.01(m) to the
Credit Agreement and shall be prepared as of a date prior to
the Oda Acquisition Closing Date that is reasonably
satisfactory to the Agents. Such Borrowing Base Certificate
shall indicate that the Borrowing Base on the Oda Acquisition
Closing Date (before and after giving effect to the Oda
Acquisition) exceeds the amount of the Revolving Loans to be
outstanding as of such date by not less than $5 million.
5.16. NO MATERIAL ADVERSE CHANGE. Since June 30, 1996 nothing shall
have occurred or become known to any Credit Party which the
Administrative Agent shall have determined has or could
reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the business or operations of
Holdings and its Subsidiaries or on the business or operations
of Oda or has resulted or could result in a material adverse
change in the business, assets, prospects, properties or
condition (financial or otherwise) of any Credit Party or of
Oda or in the ability of the Borrower or any of its
Subsidiaries (after giving effect to the Oda Acquisition and
the Borrowings provided for in connection therewith) as of the
Oda Acquisition Closing Date to conduct its operations in
accordance with the revised projections furnished to the
Administrative Agent pursuant to Section 4.9 hereof. As of the
Oda Acquisition Closing Date, there shall not have occurred and
be continuing a material disruption of, or material adverse
change in, United States financial, banking or capital markets,
as reasonably determined by the Administrative Agent in its
sole discretion.
The acceptance of the proceeds of each Borrowing of Oda Term A Loans and
Oda Term B Loans in connection with the Oda Acquisition shall constitute a
representation and warranty by the Borrower to each of the Banks that all
of the applicable conditions specified above have been satisfied or waived
as of that time. All of the certificates, legal opinions and other
documents and papers referred to in this Section 4, unless otherwise
specified, shall be delivered to the Agents at the Agent's Office (or such
other location as may be specified by the Agents) for the account of each
of the Banks and in sufficient counterparts for each of the Banks and shall
be reasonably satisfactory in form and substance to the Agents.
6. CREDIT AGREEMENT OTHERWISE UNAFFECTED. The Amended Credit Agreement and
all of the Credit Documents are each confirmed as being in full force and
effect. This Amendment, the Amended Credit Agreement and the other Credit
Documents referred to herein or therein constitute the entire understanding
of the parties with respect to the subject matter hereof and thereof and
supersede all prior and current understandings and agreements, whether
written or oral, with respect to such subject matter. The invalidity or
unenforceability of any provision hereof shall not affect the validity or
enforceability of any other term or provision hereof. The headings in this
Amendment are for convenience of reference only and shall not alter, limit
or otherwise affect the meaning hereof. Each of this Amendment and the
Amended Credit Agreement is a
-14-
Credit Document and may be executed in any number of counterparts, which
together shall constitute one instrument, and shall bind and inure to the
benefit of the parties and their respective permitted successors and
assigns.
7. APPLICABLE LAW. The amendments and waivers set forth herein shall be
governed by, and shall be construed and enforced in accordance with the law
and as set forth in Section 12.08 of the Credit Agreement, and this
Amendment shall be in all respects a part of the Credit Agreement.
-15-
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment and Waiver to be duly executed and delivered as of the date first
above written.
COLOR SPOT NURSERIES, INC.
By: /s/ Karla D. Vukelich
-------------------------------
Name: Karla D. Vukelich
Title: EVP/Administration
CREDIT AGRICOLE INDOSUEZ
(formerly known as Banque Indosuez,
New York Branch)
as Administrative Agent
By: /s/ Patricia Frankel
-------------------------------
Name: Patricia Frankel
Title: First Vice President
By: /s/ Melissa Marano
-------------------------------
Name: Melissa Marano
Title: Vice President
Consented to:
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ Merily McLaughlin
-------------------------------
Name: Merily McLaughlin
Title: Vice President
FIRST SOURCE FINANCIAL LLP,
an Illinois registered limited
liability partnership
By: First Source Financial, Inc.,
its manager
By: /s/ James W. Wilson
-------------------------------
Name: James W. Wilson
Title: Senior Vice President
-16-
CREDITANSTALT-BANKVEREIN
By /s/ (illegible)
----------------------------
Name:
Title:
By /s/ Patrick J. Rounds
----------------------------
Name: Patrick J. Rounds
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Linda E.C. Alto
---------------------------
Name: Linda Alto
Title: VP
BANK OF THE WEST
By: /s/ Dale J. Kobsar
---------------------------
Name: DALE J. KOBSAR
Title: REGIONAL VICE PRESIDENT
LEHMAN COMMERCIAL PAPER, INC.
By
----------------------------
Name:
Title:
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By ING Capital Advisors, Inc. as
Investment Advisor
By: /s/ Kathleen Lenarcic
---------------------------
Name: KATHLEEN A. LENARCIC
Title: VICE PRESIDENT &
PORTFOLIO MANAGER
-17-
CREDIT AGRICOLE INDOSUEZ
(formerly known as Banque Indosuez,
New York Branch)
By /s/ (illegible)
----------------------------
Name:
Title:
By /s/ Melissa Marano
----------------------------
Name: Melissa Marano
Title: Vice President
INDOSUEZ CAPITAL FUNDING II,
LIMITED
By: INDOSUEZ CAPITAL
LUXEMBOURG, S.A.,
as Collateral Manager
By /s/ Francoise Berthelot
----------------------------
Name: FRANCOISE BERTHELOT
Title: AUTHORIZED SIGNATORY
INDOSUEZ CAPITAL FUNDING III,
LIMITED
By: INDOSUEZ CAPITAL
LUXEMBOURG, S.A.,
as Collateral Manager
By /s/ Francoise Berthelot
----------------------------
Name: FRANCOISE BERTHELOT
Title: AUTHORIZED SIGNATORY
-18-
COMMERCIAL LOAN FUNDING
TRUST I
By: Lehman Commercial Paper, Inc.,
not in its individual capacity
but as Administrative Agent
By /s/ Michele Swanson
----------------------------
Name: MICHELE SWANSON
Title: AUTHORIZED SIGNATORY
-19-
AMENDMENT NO. 2 AND WAIVER
This Amendment No. 2 and Waiver (this "Amendment and Waiver") is made and
entered into as of July 31, 1997, by and among CSN Inc., a Delaware
corporation ("Holdings"), Color Spot Nurseries, Inc., a Delaware corporation
(the "Borrower"),Credit Agricole Indosuez (formerly Banque Indosuez, New York
branch), as Administrative Agent for itself and the other Banks (each as
defined in the Credit Agreement referenced below) (the "Administrative
Agent"), IBJ Schroder Bank & Trust Company, as Co-Agent (together with the
Administrative Agent, "the Agents") and the other Banks party hereto. The
parties agree as follows:
1. REFERENCE TO CREDIT AGREEMENT; DEFINITIONS. Reference is made to the
Amended and Restated Credit Agreement dated as of February 20, 1997, as
amended and in effect on the date hereof prior to giving effect to this
Agreement (the "CREDIT AGREEMENT"), among Holdings, the Borrower, the
Banks and the Agents. Terms defined in the Credit Agreement as amended
hereby (the "AMENDED CREDIT AGREEMENT") and not otherwise defined herein
are used herein with the meanings so defined. References in this
Agreement to "Sections" and "Exhibits", except as the context otherwise
dictates, are references to sections hereof and exhibits hereto.
2. BACKGROUND.
2.1. The Borrower desires to enter into a series of transactions
(collectively the "Texas Acquisitions") pursuant to which it
shall acquire, either directly or indirectly through Lone
Star Growers, L.P. ("Lone Star"), (i) a nursery business
located in Texas and owned and operated by Peters Wholesale
Greenhouses, Inc., a Texas corporation, (ii) a nursery
business located in Texas and owned and operated by Plants,
Inc., Waller Greenhouse Corp., Huntsville Greenhouse Corp.
and Murphy Properties, (iii) a nursery business located in
Texas and owned and operated by Wolfe Greenhouses, LLC, a
Texas limited liability company and (iv) a Christmas tree
business located in Florida, Michigan and North Carolina and
owned and operated by Cracon Inc. (d/b/a Happy Holiday
Christmas Trees), a Florida corporation.
2.2. The Texas Acquisitions will be financed through the
incurrence by the Borrower of up to an additional $16 million
in indebtedness under the Credit Agreement (as described
below).
2.3. Pursuant to the Credit Agreement, as of the date hereof, (i)
the Borrower has heretofore incurred Term A Loans in the
aggregate principal amount of $25 million, Term B Loans in an
aggregate principal amount of $35 million; and the Total
Acquisition Term Loan Commitment is $15 million, with respect
to which there are outstanding Acquisition Term Loans in the
aggregate
principal amount of $8.2 million; and the Total Revolving
Loan Commitment is $27.5 million, of which $7.8 million is
drawn.
3. AMENDMENTS AND WAIVERS. Subject to all the terms and conditions hereof,
and in reliance upon the representations and warranties set forth in
Section 4, the Credit Agreement is hereby amended as follows, effective
upon the date (the "AMENDMENT DATE") that the conditions in Section 5 is
satisfied, which conditions must be satisfied not later than August 30,
1997 or this Agreement will be of no force or effect:
3.1. Schedule A to the Credit Agreement is hereby amended to add
the following columns to the right side of the table of
Banks:
TEXAS TERM B LOAN ADDITIONAL REVOLVING LOAN
$6,000,000 $10,000,000
0 0
3.2. Section 1.01 of the Credit Agreement is hereby amended as
follows:
(a) clause (i) of the first paragraph of Section 1.01 is amended
to read in its entirety as follows:
"(i) in the case of any Borrowings under the Term A Portion
or the Term B Portion, (x) on the Closing Date with respect
to Term A Loans and Term B Loans other than the Texas Term B
Loans, and (y) on the Texas Acquisition Closing Date with
respect to the Texas Term B Loans,";
(b) the first sentence of Section 1.01(b) is amended to read in its
entirety as follows:
"(b) Loans under the Term B Portion of the Loan Facility
(each a "TERM B LOAN") shall, with respect to the Term B
Loans other than the Texas Term B Loans, be made to the
Borrower on the Closing Date, and, with respect to the Texas
Term B Loans, be made to the Borrower on the Texas
Acquisition Closing Date."
(c) the lead in to clause (i) of the second sentence of Section
1.01(b) is amended to read in its entirety as follows:
"(i) except as hereinafter provided, shall initially be Base
Rate Loans and, 30 days after the Closing Date or the Texas
Acquisition Closing Date, as applicable, or such earlier time
as"
3.3. Clause (i) of Section 1.02 of the Credit Agreement is hereby
amended to read in its entirety as follows:
-2-
"(i) the Banks' Term A Loan Commitments and Term B Loan
Commitments shall terminate, on a pro rata basis, with
respect to any portion of the Total Term A Loan Commitments
or the Total Term B Loan Commitments, as the case may be, not
utilized by the Borrower on the Closing Date (except for the
Texas Term B Loan Commitments, which shall each terminate as
to any portion not utilized on the Texas Acquisition Closing
Date) and"
3.4. Clause (iii) of Section 1.05(c) is hereby amended to read in
its entirety as follows:
"(iii) be dated the Closing Date (except that the Term B
Notes evidencing the Texas Term B Loans shall be dated the
Texas Acquisition Closing Date),"
3.5. Section 1.12 of the Credit Agreement is hereby amended to add
the following immediately after the first sentence of such
Section:
"As of the Texas Acquisition Closing Date, the amount of (a) the Total
Commitment is $118.5 million, (b) the Total Term A Loan Commitment is
$25 million (c) the Total Term B Loan Commitment is $41 million,
(d) the Total Revolving Loan Commitment is $37.5 million and (e) the
Total Acquisition Term Loan Commitment is $15 million (all of which is
currently outstanding in aggregate principal amount under Acquisition
Term Loans); provided, however, if the Holiday Acquisition is not
consummated on or before August 15, 1997 the Total Term B Loan
Commitment shall be reduced to $39.6 million."
3.6. Clause (c) of Section 2.02 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"Each of the Term A Loan Commitments and the Term B Loan Commitments
shall terminate as of the close of business on the Closing Date
(except with respect to the Texas Term B Loan Commitments, which shall
terminate as of the close of business on the Texas Acquisition Closing
Date), and any amounts not borrowed with respect to each of the Term A
Loans and the Term B Loans on the Closing Date (or the Texas
Acquisition Closing Date, with respect to the Texas Term B Loans)
shall cease to be available."
3.7. Section 2.02 shall be amended to add clause (f) immediately
following clause (e) thereof which shall read in its entirety
as follows:
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"(f) The Texas Term B Loan Commitment shall be reduced by the amount
of any reduction in the cash purchase price to be paid by the Borrower
or any of its Subsidiaries to consummate the Texas Acquisitions."
3.8. Paragraph (a) of Section 3.02 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"(a) The Borrower shall prepay the outstanding principal amount of
(x) the Revolving Loans on any date on which the sum of the aggregate
outstanding principal amount of such Loans (after giving effect to any
other repayments or prepayments on such date) and the then outstanding
Letters of Credit Usage exceeds the Total Revolving Loan Commitment,
in an amount equal to the amount of such excess, (y) the Acquisition
Term Loans on any date on which the aggregate outstanding principal
amount of such Loans (after giving effect to any other repayments or
prepayments on such date) exceeds the Total Acquisition Term Loan
Commitment, in an amount equal to the amount of such excess, or (z)
the Texas Term B Loans on any date on which the aggregate outstanding
principal amount of such Loans (after giving effect to any other
repayments or prepayments on such date) exceeds the Texas Term B Loan
Commitment, in an amount equal to the amount of such excess."
3.9. Paragraph (d) of Section 4.03 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"(d) On or before the applicable Acquisition Term Loan Closing Date,
the Borrower shall have complied, in all material respects, with the
provisions of Sections 6.14 and 6.15 as to any property acquired or to
be acquired in connection with any such Permitted Business Acquisition
(other than the Holiday Acquisition), except for any such provisions
with which compliance is waived by the Administrative Agent,
including, without limitation, that the Borrower and its Subsidiaries
(including any Subsidiary so acquired) shall execute and deliver to
the Administrative Agent any Additional Security Documents (or
Subsidiary Guarantees) required to provide the Administrative Agent
for the benefit of the Banks with a valid, perfected security interest
in any Collateral to be acquired in such Permitted Business
Acquisition; and"
3.10. The preamble to paragraph (e) of Section 4.03 of the Credit
Agreement is hereby amended to read in its entirety as
follows:
"(e) Without limiting the foregoing clause (d), with respect to any
Real Property (whether fee title or leasehold) in which an interest is
acquired in connection with any such Permitted Business Acquisition
other than the Holiday Acquisition
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(including any such interest held by any Subsidiary of the Borrower
acquired in such acquisition), the following conditions shall be
satisfied on or before the Acquisition Term Loan Closing Date, except,
solely with respect to any Permitted Business Acquisition as to which
the amount of the related Borrowings is less than $6,500,000, for any
such conditions with which compliance is waived by the Administrative
Agent:"
3.11. Section 5.05 of the Credit Agreement is hereby amended to
add clause (f) immediately following clause (e) which shall
read in its entirety as follows:
"(f) All proceeds of the Texas Term B Loans shall be used by the
Borrower to (i) to pay the cash consideration to be paid by the
Borrower and Lone Star, L.P. in connection with the Texas Acquisitions
and (ii) to pay fees and expenses related to the consummation of the
Texas Acquisitions."
3.12. Paragraph (d) of Section 6.03 of the Credit Agreement is
hereby amended to read in its entirety as follows:
" (d) The Borrower will use commercially reasonably efforts to
obtain, by no later than 90 days after the Effective Date, key man
life insurance with respect to Jerry Halamuda, which is in form and
substance acceptable to the Administrative Agent, and such insurance
shall be maintained thereafter in full force and effect, with no
material reduction or alteration in such coverage except as is
reasonable acceptable to the Administrative Agent."
3.13. Section 7.01 of the Credit Agreement is hereby amended to
read in its entirety as follows:
" CAPITAL EXPENDITURES. Holdings will not, and will not permit any of
its Subsidiaries to, make Consolidated Capital Expenditures for any
purpose, in excess of the amount specified in the table below for each
of the calendar years specified in such table:
YEAR ENDING AMOUNT
----------------- -------------
December 31, 1997.......................$10.4 million
December 31, 1998.......................$11.7 million
December 31, 1999....................... $10 million
December 31, 2000.........................$10 million
December 31, 2001 ........................$10 million
December 31, 2002.........................$10 million
December 31, 2003.........................$10 million
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; PROVIDED, HOWEVER, that for purposes of this Section 7.01, the
aggregate amount of Capitalized Lease Obligations incurred by Holdings
and its Subsidiaries, on a consolidated basis, shall be included in
the calculation of Consolidated Capital Expenditures in the year in
which such Capitalized Lease Obligations were incurred; PROVIDED,
FURTHER, that if Holdings and its Subsidiaries make Consolidated
Capital Expenditures in any calendar year in an amount less than the
amount set forth above for such period (such unused portion the
"CARRYOVER AMOUNT"), Holdings and its Subsidiaries may make
Consolidated Capital Expenditures in the immediately succeeding
calendar year in an amount not to exceed the sum of (i) the amount set
forth above for such calendar year and (ii) the Carryover Amount;
PROVIDED, FURTHER, that (i) the Carryover Amount calculated for any
calendar year may only be used during the immediately succeeding
calendar year and will not be added to the amount of Consolidated
Capital Expenditure availability for such succeeding calendar year for
purposes of calculating the Carryover Amount for such calendar year,
and (ii) the Capital Expenditures for a given calendar year shall be
counted, first, against the amount set forth above for such calendar
year and, second, against the Carryover Amount."
3.14. Section 7.05 of the Credit Agreement is hereby amended to
read in its entirety as follows:
"MINIMUM CONSOLIDATED EBITDA. The Borrower will not permit
Consolidated EBITDA for any Test Period ending on or about the date
specified in the table below to be less than the amount specified in
such table opposite such date:
TEST PERIOD ENDING AMOUNT
---------------------- ----------------
June 30, 1997 . . . . . . . . . . . . . $13.5 million
September 30, 1997. . . . . . . . . . . $20.5 million
December 31, 1997 . . . . . . . . . . . $20.5 million
March 31, 1998. . . . . . . . . . . . . $20.5 million
June 30, 1998 . . . . . . . . . . . $26 million
September 30, 1998. . . . . . . . . $26 million
December 31, 1998 . . . . . . . . . $26 million
March 31, 1999. . . . . . . . . . . . . . $26 million
June 30, 1999 . . . . . . . . . . . . . . $30 million
September 30, 1999. . . . . . . . . . . . $30 million
December 31, 1999 . . . . . . . . . . . . $30 million
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March 31, 2000. . . . . . . . . . . . . . $30 million
June 30, 2000 . . . . . . . . . . . . . . $35 million
September 30, 2000. . . . . . . . . . . . $35 million
December 31, 2000 . . . . . . . . . . . . $35 million
March 31, 2001. . . . . . . . . . . . . . $35 million
June 30, 2001 . . . . . . . . . . . . . . $35 million
September 30, 2001. . . . . . . . . . . . $35 million
December 31, 2001 . . . . . . . . . . . . $35 million
March 31, 2002. . . . . . . . . . . . . . $35 million
June 30, 2002 . . . . . . . . . . . . . . $35 million
September 30, 2002. . . . . . . . . . . . $35 million
December 31, 2002 . . . . . . . . . . . . $35 million
March 31, 2003. . . . . . . . . . . . . . $35 million
June 30, 2003 . . . . . . . . . . . . . . $35 million
September 30, 2003. . . . . . . . . . . . $35 million
December 31, 2003 . . . . . . . . . . . . $35 million"
3.15. Section 10 of the Credit Agreement is hereby amended as
follows:
(a) the following definitions are hereby added to Section 10:
"Additional Revolving Loan Commitment" means, with respect to
each Bank, the amount set forth below such Bank's name on
Exhibit A hereto directly below the column entitled "Additional
Revolving Loan," as same may be reduced from time to time
pursuant to Sections 2.01, 3.03 and/or 8.
"Expansion Capital Expenditures" means up to $7.5 million of
Consolidated Capital Expenditures incurred during the
period from the Texas Acquisition Closing Date to and
including January 31, 1998 in connection with the existing
properties and buildings located in the Texas cities of
Huntsville , Houston, Waco, Waller and Walnut Springs.
"Holiday Acquisition" means the acquisition by the Borrower,
either directly or indirectly through a Subsidiary, of a
Christmas tree business located in Florida, Michigan and
North Carolina and owned and operated by Cracon Inc. (d/b/a
Happy Holiday Christmas Trees), a Florida corporation
("Holiday"), which is to be accomplished by the acquisition
of substantially all the assets of Holiday by Color Spot
Christmas Trees, Inc. (Signature Tree), and in consideration
of such acquisition Holiday will receive approximately
$1,425,000 in cash, 25,000 shares of common stock of
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Holdings and five annual payments which total $1,600,000, in
accordance with the Asset Purchase Agreement dated as of July
31, 1997 among Holdings, Signature Tree and Holiday (the
"Holiday Purchase Agreement").
"Peters Acquisition" means the acquisition by the Borrower of
a nursery business located in Texas and owned and operated by
Peters Wholesale Greenhouses, Inc., a Texas corporation
("Peters") which is to be accomplished by the acquisition by
the Borrower of all of the outstanding capital stock of
Peters, and in consideration for such merger the sellers of
Peters will receive approximately $5,697,879 in cash in
accordance with the Stock Purchase Agreement dated as of July
31, 1997, among the Borrower, Peters and the Shareholders of
Peters (the "Peters Purchase Agreement").
"Plants Acquisition" means the acquisition by the Borrower,
either directly or indirectly through a Subsidiary, of a
nursery business located in Texas and owned and operated by
Plants, Inc., Waller Greenhouse Corp., Huntsville Greenhouse
Corp. and Murphy Properties (collectively referred to as
"Plants") which is to be accomplished by the acquisition of
substantially all the assets of Plants by Acquisition and in
consideration of such acquisition the sellers of Plants will
receive approximately $2,600,000 in cash, will be repaid the
then outstanding amount under certain shareholder loans made
to Plants (which shall not exceed $698,497) and Acquisition
will assume certain liabilities of Plants, in accordance
with the Asset Purchase Agreement dated as of July 31, 1997
among Acquisition and Plants (the "Plants Purchase
Agreement").
"Texas Acquisition Closing Date" shall mean July 31, 1997.
"Texas Acquisition Documents" means the Peters Purchase
Agreement, the Plants Purchase Agreement, the Wolfe Merger
Agreement, and the Holiday Purchase Agreement, each as
amended and in effect on the date hereof, and the other
documents evidencing or implementing the transactions
contemplated thereby.
"Texas Acquisitions" means all of the Peters Acquisition, the
Plants Acquisition, the Wolfe Acquisition and the Holiday
Acquisition, taken together.
"Texas Term B Loan" loans under the portion of the Loan
Facility evidenced by the Texas Term B Loan Commitment.
"Texas Term B Loan Commitment" means, with respect to each
Bank, the amount set forth below such Bank's name on Exhibit
A hereto directly
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below the column entitled "Texas Term B Loan," as same may be
reduced from time to time pursuant to Sections 2.01, 3.03
and/or 8.
"Wolfe Acquisition" means the acquisition by the Borrower,
either directly or indirectly through a Subsidiary, of a
nursery business located in Texas and owned and operated by
Wolfe Greenhouses, Inc., a Texas limited liability company
("Wolfe") which is to be accomplished by the merger of Wolfe
with and into Acquisition, with Acquisition surviving and in
consideration of this merger the sellers shall receive
approximately $6,160,000 in cash, in accordance with the
Merger Agreement dated as of July 31, 1997 among Acquisition,
Wolfe and the members of Wolfe (the "Wolfe Merger Agreement").
(b) The following definitions are hereby amended to read in their
entirety as follows:
"Borrowing Base" means, at any date of determination, an
amount equal to the sum of (x) 85% of Eligible Accounts
Receivable PLUS (y) the lesser of (a) $20,000,000 and (b)(i)
for the period May 1 through October 31, 40% of Eligible
Inventory or (ii) for the period November 1 through April 30,
60% of Eligible Inventory, in each case as shown on the most
recent Borrowing Base Certificate delivered prior to such
date of determination; PROVIDED that during any Clean-down
Period, the Borrowing Base shall be the lesser of (x) the
amount derived from the foregoing calculation and (y) the
Clean-down Amount.
"Clean-down Amount" means $10,000,000.
"Consolidated EBITDAC" for any Person, means, for any period,
Consolidated EBITDA minus Consolidated Capital Expenditures
(other than Expansion Capital Expenditures).
"SCHEDULED TERM B LOAN PRINCIPAL PAYMENTS" means, with
respect to the Term B Loan, principal payments to be made on
the last Business Day of each calendar quarter specified in
the table below, in each case, in the Dollar amount specified
opposite such period in such table:
SCHEDULED TERM B LOAN
PERIOD PRINCIPAL PAYMENT
------ ----------------------
January 1, 1997 through
June 30, 1997 $87,620
July 1, 1997 through
June 30, 2002 $102,716
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July 1, 2002 through
December 31, 2003 $6,461,740
"Total Revolving Loan Commitment" means the sum of the
Revolving Loan Commitments and the Additional Revolving Loan
Commitments of each of the Banks.
"Total Term B Loan Commitment" means the sum of the Term B
Loan Commitments and the Texas Term B Loan Commitments of
each of the Banks.
4. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank and the Agents
to enter into this Agreement, the Borrower represents and warrants to each
of the Banks and the Agent that:
4.1. NO DEFAULT. Immediately after giving effect to this
Agreement, no Default will exist.
4.2. INCORPORATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Section 5 of the
Amended Credit Agreement are true and correct on the date
hereof as if originally made on and as of the date hereof
(except to the extent any representation or warranty refers
to a specific earlier date).
5. CONDITIONS. The effectiveness of this Amendment and Waiver, and the making
of the Texas Term B Loans and the Acquisition Term Loans to be made on the
Texas Acquisition Closing Date, provided for hereby, are subject to the
satisfaction of the following conditions:
5.1. CREDIT DOCUMENTS.
(a) This Amendment and Waiver and each other Credit Document (to
the extent not previously executed and delivered),
including, without limitation, the Subsidiary Guarantee of
Peters and any related security documentation evidencing the
guarantees and pledges by each of the Borrower, Lone Star and
Peters, shall (A) have been, on or before the Texas
Acquisition Closing Date, duly authorized, executed and
delivered by each of the parties signatory thereto and (B)
constitute the legal, valid and binding obligation of each
Credit Party, enforceable in accordance with its terms
(subject to bankruptcy and principles of equity).
(b) There shall have been delivered to the Administrative Agent
(i) for the account of each of the Banks which are extending
Texas Term B Loans and which are increasing their Revolving
Loan Commitments, Term B Notes evidencing such Borrowings and
Revolving Loan Notes in the principal amounts of such
commitments, each duly executed by the Borrower in the amount
and maturity and
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as otherwise provided in the Amended Credit Agreement and
(ii) updated Schedules 5.13 and 5.16 after giving effect to
the Texas Acquisitions.
5.2. EQUITY CONTRIBUTION. KCSN Acquisition Company, L.P., Heller
Equity Capital Corporation and members of the management of
the Borrower shall have made an additional equity
contribution of $5.6 million to the Borrower on or before the
Texas Acquisition Closing Date.
5.3. OFFICERS' CERTIFICATE. The Administrative Agent shall have
received a certificate dated the Texas Acquisition Closing
Date signed by the appropriate officer(s) of the Borrower on
behalf of the Borrower in substantially the form of Exhibit
4.01(b) stating that (i) all of the conditions set forth in
this Section 5 have been either satisfied or waived in
writing by the Administrative Agent, and the Required Banks
as of such date, (ii) immediately before and after giving
effect to this Agreement, the Texas Acquisitions and the
Borrowings related thereto, all representations and
warranties contained herein or in any other Credit Document
(except as expressly amended hereunder or under another
Credit Document) shall be true and correct, (iii) no Default
or Event of Default has occurred or will have occurred after
giving effect to this Agreement, the Texas Acquisitions and
the Borrowings related thereto and (iv) since June 30, 1996
no material adverse change in the business, assets,
prospects, properties or condition (financial or otherwise)
of Holdings and its Subsidiaries shall have occurred;.
5.4. OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion dated the Texas Acquisition Closing Date
addressed to each of the Banks from each of (i) Brownstein
Hyatt Farber & Strickland, P.C., counsel to the Credit
Parties, (ii) Shannon, Gracey, Ratliff & Miller, L.L.P.,
counsel to Peters, and (iii) Sheehey, Lovelace & Mayfield,
P.C., counsel to Wolfe, in each case, in form and substance
reasonably acceptable to the Administrative Agent.
5.5. CORPORATE PROCEEDINGS. All corporate and legal proceedings
and all instruments and agreements in connection with the
Texas Acquisitions, the execution of this Amendment and
Waiver and the other Credit Documents to be executed in
connection with the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have
received all information and copies of all certificates,
documents and papers, including records of corporate
proceedings and governmental approvals, if any, which it may
have reasonably requested from the Credit Parties or in
connection therewith, such documents and papers where
appropriate to be certified by proper corporate or
governmental authorities. Without limiting the foregoing, the
Administrative Agent shall have received from each Credit
Party:
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(a) resolutions of the board of each such Person which shall
include, without limitation, (1) resolutions approving
such documents and actions as are contemplated by this
Amendment and Waiver each of the Texas Acquisitions, and any
related transactions to the extent such Person is a party
thereto and (2) resolutions as to the due authorization,
execution and delivery of this Amendment and Waiver and the
Texas Acquisition Documents, to the extent such Person is a
party thereto, all such resolutions to be in form and
substance reasonably satisfactory to the Administrative
Agent; and
(b) signature and incumbency certificates of each officer of each
such Credit Party executing instruments, documents or
agreements required to be executed in connection with the
transactions contemplated by this Amendment and Waiver and
the Texas Acquisition Documents.
5.6. ACQUISITION DOCUMENTS.
(a) The Texas Acquisition Documents and any amendments thereto,
shall be in form and substance satisfactory to the
Administrative Agent; and on the Texas Acquisition Closing
Date each of the conditions to closing contained in each of
the Texas Acquisition Documents shall have been satisfied in
all material respects (or waived in writing, such waiver to
be reasonably satisfactory to the Administrative Agent) to
the reasonable satisfaction of the Administrative Agent.
Each Credit Party and each of the other parties to the Texas
Acquisition Documents shall have done and performed such acts
and observed such covenants which each is required to do or
perform under the Texas Acquisition Documents on or prior to
the Texas Acquisition Closing Date (or such acts and
covenants shall have been waived in writing, such waiver to
be reasonably satisfactory to the Administrative Agent).
Full, complete and accurate copies of each of the Texas
Acquisition Documents (including all schedules and exhibits
thereto) shall have been provided to the Administrative Agent.
(b) Holdings and the Borrower shall have provided evidence
satisfactory in form and substance to the Administrative
Agent that the Texas Acquisitions have been consummated or
will be consummated simultaneously with the closing of the
transactions contemplated by this Agreement.
5.7 CAPITAL STRUCTURE. On the Texas Acquisition Closing Date,
after giving effect to the Texas Acquisitions, (i) there
shall be no outstanding Capital Stock of Holdings other than
as set forth in Schedule 5.17, (ii) the Borrower shall be a
Wholly Owned Subsidiary of Holdings, (iii) Holdings shall
have no direct Subsidiaries other than the Borrower, and no
indirect Subsidiaries other than as set forth on Schedule
5.13.
5.8. ORGANIZATIONAL DOCUMENTATION, ETC. On or prior to the Texas
Acquisition Closing Date, the Administrative Agent shall
have received a true and complete certified
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copy of the following documents of each of Holdings, the
Borrower, Lone Star, Signature Tree, the provisions of which
shall be reasonably satisfactory to the Agents:
(a) Copies of its certificate of incorporation, or certificate of
limited partnership, as the case may be, which (A) shall be
certified by, and accompanied by a good standing certificate
from, the Secretary of State or similar official of the
jurisdiction of its organization and (B) in the case of
Holdings, the Borrower, Lone Star and Signature Tree shall be
accompanied by good standing certificates from each
jurisdiction in which it is required to be qualified to do
business as a foreign corporation, each to be dated a recent
date prior to the Texas Acquisition Closing Date;
(b) Copies of its by-laws or limited partnership agreement as the
case may be, certified as of a recent date prior to the Texas
Acquisition Closing Date by its corporate secretary or other
person serving in a similar capacity.
5.9. CERTAIN FEES; INTEREST ON OUTSTANDING LOANS. All fees and
reasonable costs and expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
payable to the Agents or the Banks by Holdings or the
Borrower shall have been paid in full, and there shall have
been paid in full all accrued interest and all accrued
commitment fees on the Outstanding Loans and all other fees
and expenses (including, without limitation, reasonable legal
fees and expenses) of the Agents or the Banks, in each case
to the extent due and payable and, with respect to costs and
expenses, invoiced or presented on or before the Texas
Acquisition Closing Date. In addition, on or prior to the
Texas Acquisition Closing Date, there shall have been
delivered to the Agents evidence satisfactory to the Agents
that the fees and expenses payable by Holdings and its
Subsidiaries in connection with the Texas Acquisitions shall
not exceed $_________ in the aggregate.
5.10. FINANCIAL STATEMENTS, ETC. On or before the Texas
Acquisition Closing Date, the Agents shall have received:
(i) a pro forma balance sheet for Holdings and its
Subsidiaries, as of the Texas Acquisition Closing Date after
giving effect to the Texas Acquisitions, the proposed
acquisitions of nursery businesses owned and operated by Oda
Nurseries and Summersun Greenhouse Company, and the Texas
Term B Loans contemplated hereby and the Acquisition Term
Loans made on the Texas Acquisition Closing Date; and (ii) a
revised annual plan, giving effect to the Texas Acquisitions,
the proposed acquisitions of nursery businesses owned and
operated by Oda Nurseries and Summersun Greenhouse Company,
the Texas Term B Loans and the Acquisition Term Loans made on
the Texas Acquisition Closing Date contemplated hereby for
each of Holdings' and its Subsidiaries' and projections for
five calendar years commencing on or about January 1, 1997,
in each case, accompanied by a statement by Holdings that
such projections are based on estimates and assumptions
believed by Holdings in good faith to be reasonable in
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light of the conditions which existed at the time of their
preparation as to the future financial performance of
Holdings, each in form, scope and substance satisfactory to
the Administrative Agent, prepared in accordance with
Holdings' normal accounting procedures applied on a
consistent basis, including (A) forecasted balance sheets and
statements of operations, stockholders' equity and cash flows
of Holdings and its Subsidiaries for such periods, (B) the
amount of forecasted capital expenditures (including the
amount of such costs to be capitalized, if any) for such
periods, and (C) Holdings and its Subsidiaries' forecasted
compliance with Sections 7.01 through 7.05 of the Amended
Credit Agreement. Each of the items delivered pursuant to
this Section 4.9, shall be satisfactory to the Administrative
Agent in its reasonable discretion. Since the time of the
preparation of such financial projections, no fact or facts
have come to the attention of any Credit Party to cause such
Person to believe that any of the estimates and assumptions
on which such projections are based are not reasonable.
5.11. LITIGATION. Except as set forth on Schedule 4.01(l), there
shall be no litigation pending or threatened by any entity
(private or governmental) involving any Credit Party or any
other party to any Texas Acquisition Document or any of the
properties or assets of any such Person that could reasonably
be expected to restrain, enjoin or result in the obtaining of
a judgment for substantial damages with respect to the Texas
Acquisitions or the consummation of the transactions
contemplated by the Texas Acquisition Documents, and there
shall be no pending or threatened litigation involving any
Credit Party or involving any other party to any Texas
Acquisition Document or any of the properties or assets of
any such Person that could reasonably be expected to have a
material adverse effect on the operations or properties being
acquired in the Texas Acquisitions or the ability of the
Credit Parties to operate the same or that could reasonably
be expected to have a Material Adverse Effect.
5.12. INDEBTEDNESS, ETC. (i) Each Credit Party shall have received
all necessary consents or waivers or shall have amended,
supplemented or otherwise modified, repaid or defeased its
outstanding Indebtedness in a manner and on terms
satisfactory to the Agents such that there exists no default
or potential default (as a result of the con summation of the
Texas Acquisitions) with respect to such Indebtedness or
under any note, evidence of indebtedness, capital lease,
mortgage, deed of trust, security document or other agreement
relating to such Indebtedness and such indentures, notes,
evidences of indebtedness, capital lease mortgages, deeds of
trust or other agreements relating to such Indebtedness shall
not contain (i) any restriction on the ability of Holdings or
any of its Subsidiaries to grant any Lien in favor of the
Banks (other than in the case of Capital Leases, or purchase
money debt (excluding Real Property leases), a Lien on the
property financed thereby) or any financial covenants or
tests applicable to Holdings or any of its Subsidiaries.
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(ii) The terms and conditions of any Indebtedness of
Holdings and its Subsidiaries as of the Texas Acquisition
Closing Date which remains outstanding after giving effect to
the Texas Acquisitions and the making of the Texas Term B
Loans, the extent to which any Indebtedness of any of Peters,
Plants, Wolfe or Holiday remains outstanding as Indebtedness
of the Borrower, Lone Star or Peters after giving effect to
the Texas Acquisitions and the making of the Texas Term B
Loans and the Acquisition Term Loans shall, in each case, be
reasonably acceptable to the Agents. The Administrative Agent
shall have received evidence satisfactory to it that the
Indebtedness reflected on Schedule A hereto as being paid as
of the Texas Acquisition Closing Date is being paid with the
proceeds of the Acquisition Term Loans and the Texas Term B
Loans made on the date hereof.
5.13. SECURITY DOCUMENTS. In each case, to the extent the same
shall not have been previously delivered to the
Administrative Agent, the Security Documents and Additional
Security Documents shall have been duly executed and
delivered by each of the Credit Parties party thereto and
there shall have been delivered to the Administrative Agent:
(i) executed financing statements for filing under the
provisions of the UCC in each of the offices where such
filing is necessary or appropriate, including those set forth
on Schedule B hereto to grant the Administrative Agent a
perfected first priority Lien in the Collateral acquired in
the Texas Acquisitions as to which a security interest may be
perfected by the filing of a financing statement, which Lien
shall be superior to and prior to the rights of all third
persons and subject to no other Liens; (ii) certified copies
of Requests for Information (Form UCC-11 or the equivalent),
or equivalent reports or lien search reports listing all
effective financing statements which name the Borrower, its
subsidiaries, Peters, Plants, Wolfe or Holiday and which are
filed in any jurisdiction in which any of such Collateral is
located and the jurisdiction in which such Person's principal
place of business is located (none of which shall cover the
Collateral covered, or purported to be covered, by the
Security Documents and Additional Security Documents other
than Permitted Encumbrances); and (iv) evidence of the
completion of all recordings and filings (or of the making of
arrangements to file contemporaneously with the making of
additional Borrowings contemplated hereby) of each such
Security Document and delivery of such other security and
other documents as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created,
or purported or intended to be created, by such Security
Documents; and (v) payoff letters executed by the holders of
any Indebtedness reflected as being paid as of the Texas
Acquisition Closing Date on Schedule A hereto setting forth
the amount required to discharge such Indebtedness, and
evidence that the proceeds of the Texas Term B Loans or the
Acquisition Term Loans made on the Texas Acquisition Closing
Date will be used to so discharge such Indebtedness.
-15-
5.14. LEASES. All Capital Leases and Operating Leases of Holdings
and its Subsidiaries and all Capital Leases and Operating
Leases of each of Peters, Plants, Wolfe and Holiday acquired
by Holdings or its Subsidiaries pursuant to the Texas
Acquisitions shall remain outstanding after giving effect to
the Texas Acquisitions and the making of the Texas Term B
Loans hereunder and the Acquisition Term Loans made on the
Texas Acquisition Closing Date.
5.15. CONSENTS, ETC. All necessary or required governmental and
third party approvals and consents (including, without
limitation, all approvals and consents required in connection
with any Environmental Laws), in connection with the Texas
Acquisitions or the transactions contemplated by this
Amendment and Waiver and the Texas Acquisition Documents and
otherwise referred to herein or therein to be completed on or
before the Texas Acquisition Closing Date shall have been
disclosed to the Administrative Agent and shall have been
obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes,
in the reasonable judgment of the Administrative Agent,
material adverse conditions upon the consummation of the
Texas Acquisitions. There shall not exist any judgment or
order enjoining or otherwise restraining the making of the
Texas Term B Loans hereunder or the consummation of the Texas
Acquisitions.
5.16. BORROWING BASE; BORROWING BASE CERTIFICATE. The
Administrative Agent and the Banks shall have received and
the Required Banks shall be satisfied in all reasonable
respects with a Borrowing Base Certificate which shall be
substantially in the form of Exhibit 6.01(m) to the Credit
Agreement and shall be prepared as of a date prior to the
Texas Acquisition Closing Date that is reasonably
satisfactory to the Agents. Such Borrowing Base Certificate
shall indicate that the Borrowing Base on the Texas
Acquisition Closing Date (before and after giving effect to
the Texas Acquisitions) exceeds the amount of the Revolving
Loans to be outstanding as of such date by not less than $10
million.
5.17. NO MATERIAL ADVERSE CHANGE. Since June 30, 1996 nothing
shall have occurred or become known to any Credit Party
which the Administrative Agent shall have determined has or
could reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the business or
operations of Holdings and its Subsidiaries or on the
business or operations of any of Peters, Plants, Wolfe or
Holiday or has resulted or could result in a material adverse
change in the business, assets, prospects, properties or
condition (financial or otherwise) of any Credit Party or of
any of Peters, Plants, Wolfe or Holiday or in the ability of
the Borrower or any of its Subsidiaries (after giving effect
to the Texas Acquisitions and the Borrowings provided for in
connection therewith) as of the Texas Acquisition Closing
Date to conduct its operations in accordance with the revised
projections furnished to the Administrative Agent pursuant to
Section 4.9 hereof. As of the Texas Acquisition
-16-
Closing Date, there shall not have occurred and be continuing
a material disruption of, or material adverse change in,
United States financial, banking or capital markets, as
reasonably determined by the Administrative Agent in its sole
discretion.
The acceptance of the proceeds of each Borrowing of Texas Term B Loans or
Acquisition Term Loans in connection with the Texas Acquisitions shall
constitute a representation and warranty by the Borrower to each of the
Banks that all of the applicable conditions specified above have been
satisfied or waived as of that time. All of the certificates, legal
opinions and other documents and papers referred to in this Section 4,
unless otherwise specified, shall be delivered to the Agents at the Agent's
Office (or such other location as may be specified by the Agents) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be reasonably satisfactory in form and substance to the
Agents.
6. CREDIT AGREEMENT OTHERWISE UNAFFECTED. The Amended Credit Agreement
and all of the Credit Documents are each confirmed as being in full
force and effect. This Amendment and Waiver, the Amended Credit
Agreement and the other Credit Documents referred to herein or therein
constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral, with respect
to such subject matter. The invalidity or unenforceability of any
provision hereof shall not affect the validity or enforceability of
any other term or provision hereof. The headings in this Amendment
and Waiver are for convenience of reference only and shall not alter,
limit or otherwise affect the meaning hereof. Each of this Amendment
and Waiver and the Amended Credit Agreement is a Credit Document and
may be executed in any number of counterparts, which together shall
constitute one instrument, and shall bind and inure to the benefit of
the parties and their respective permitted successors and assigns.
7. WAIVER. The conditions set forth in Section 5 hereof are hereby
waived with respect to the Holiday Acquisition until the earlier of
the consummation of the Holiday Acquisition and August 15, 1997.
8. APPLICABLE LAW. The amendments and waivers set forth herein shall be
governed by, and shall be construed and enforced in accordance with
the law and as set forth in Section 12.08 of the Credit Agreement, and
this Amendment and Waiver shall be in all respects a part of the
Credit Agreement.
-17-
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment and Waiver to be duly executed and delivered as of the date first
above written.
COLOR SPOT NURSERIES, INC.
By: /s/ Karla D. Vukelich
--------------------------------
Name: KARLA D. VUKELICH
Title: CORPORATE SECRETARY
CREDIT AGRICOLE INDOSUEZ
(formerly known as Banque Indosuez, New York
Branch)
as Administrative Agent
By: /s/[illigible]
---------------------------------
Name:
---------------------------
Title:
--------------------------
By: /s/ [illigible]
----------------------------------
Name:
--------------------------
Title:
--------------------------
Consented to:
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ M McLaughlin
---------------------------------
Name: MARY McLAUGHLIN
Title: VICE PRESIDENT
FIRST SOURCE FINANCIAL LLP,
an Illinois registered limited liability
partnership
By: First Source Financial, Inc., its
manager
By: /s/ Gary L. Francis
--------------------------------
Name: GARY L. FRANCIS
Title: SENIOR VICE PRESIDENT
CREDITANSTALT-BANKVEREIN
By /s/ John P. Macukas
---------------------------------
Name: JOHN P. MACUKAS
Title: SENIOR VICE PRESIDENT
By /s/ Patrick J. Rounds
---------------------------------
Name: Patrick J. Rounds
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By: /S/ Linda E.C. Alto
---------------------------------
Name: LINDA ALTO
Title: V P
BANK OF THE WEST
By: /s/ Dale J. Kobsar
---------------------------------
Name: DALE J. KOBSAR
Title: REGIONAL VICE PRESIDENT
LEHMAN COMMERCIAL PAPER, INC.
By /s/ Michele Swanson
--------------------------------
Name: Michele Swanson
Title: Authorized Signatory
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By ING Capital Advisors, Inc. as
Investment Advisor
By: /s/ Kathleen A. Lenarcic
---------------------------------
Name: KATHLEEN A. LENARCIC
Title: VICE PRESIDENT & PORTFOLIO MANAGER
CREDIT AGRICOLE INDOSUEZ (formerly
known as Banque Indosuez, New York
Branch)
By /s/ Patricia Frank
--------------------------------
Name: Patricia Frank
Title: First Vice President
By /s/ [illigible]
--------------------------------
Name: [illigible]
Title: Vice President
INDOSUEZ CAPITAL FUNDING II,
LIMITED
By: INDOSUEZ CAPITAL
LUXEMBOURG, S.A.,
as Collateral Manager
By /s/ Francoise Berthelot
--------------------------------
Name: FRANCOISE BERTHELOT
Title: AUTHORIZED SIGNATORY
INDOSUEZ CAPITAL FUNDING III,
LIMITED
By: INDOSUEZ CAPITAL
LUXEMBOURG, S.A.,
as Collateral Manager
By /s/ Francoise Berthelot
-------------------------------
Name: FRANCOISE BERTHELOT
Title: AUTHORIZED SIGNATORY
AMENDMENT NO. 3
This Amendment No. 3 (this "AMENDMENT") is made and entered into as of
August 11, 1997, by and among CSN Inc., a Delaware corporation ("HOLDINGS"),
Color SPOT Nurseries, Inc., a Delaware corporation (the "BORROWER"), Credit
Agricole Indosuez (formerly Banque Indosuez, New York branch), as Administrative
Agent for itself and the other Banks (each as defined in the Credit Agreement
referenced below) (the "ADMINISTRATIVE AGENT"), IBJ Schroder Bank & Trust
Company, as Co-Agent (together with the Administrative Agent, "THE AGENTS") and
the other Banks party hereto. The parties agree as follows:
1. REFERENCE TO CREDIT AGREEMENT; DEFINITIONS. Reference is made to the
Amended and Restated Credit Agreement dated as of February 20, 1997, as
amended and in effect on the date hereof prior to giving effect to this
Agreement (the "CREDIT AGREEMENT"), among Holdings, the Borrower, the Banks
and the Agents. Terms defined in the Credit Agreement as amended hereby
(the "AMENDED CREDIT AGREEMENT") and not otherwise defined herein are used
herein with the meanings so defined. References in this Agreement to
"Sections" and "Exhibits", except as the context otherwise dictates, are
references to sections hereof and exhibits hereto.
2. BACKGROUND.
2.1. The Borrower desires to enter into a transaction (collectively
the "SUMMERSUN ACQUISITION") pursuant to which it shall acquire a
nursery business located in Washington and Oregon and owned and
operated by Summersun Greenhouse Co., a Washington corporation.
2.2. The Summersun Acquisition will be financed through the incurrence
by the Borrower of up to an additional $8.5 million in
indebtedness under the Credit Agreement (as described below).
2.3. Pursuant to the Credit Agreement, as of the date hereof, (i) the
Borrower has heretofore incurred Term A Loans in the aggregate
principal amount of $25 million, Term B Loans in an aggregate
principal amount of $41 million; (ii) the Total Acquisition Term
Loan Commitment is $15 million, (all of which is currently
outstanding in principal amount of Acquisition Term Loan); and
(iii) the Total Revolving Loan Commitment is $37.5 million, of
which $7.8 million is drawn.
2.4. In connection with the recent Peters Acquisition, the Borrower
desires to create a new subsidiary, LSGR Holdings, Inc., a
Delaware corporation ("LSGR HOLDINGS") to which it will
contribute all of the Borrower's limited partnership interests in
Lone Star Growers, L.P. ("LONE STAR") and desires to have its
subsidiary, Peters Wholesale Greenhouses, Inc. ("PETERS")
contribute all of its assets (other than its real property) to
Lone Star in exchange for a 12% limited partnership interest in
Lone Star.
3. AMENDMENTS AND WAIVERS. Subject to all the terms and conditions hereof,
and in reliance upon the representations and warranties set forth in
Section 4, the Credit Agreement is hereby amended as follows, effective
upon the date (the "AMENDMENT DATE") that the conditions in Section 5 are
satisfied, which conditions must be satisfied not later than August 30,
1997 or this Agreement will be of no force or effect:
3.1. Schedule A to the Credit Agreement is hereby amended to add the
following column to the right side of the table of Banks:
Summersun Term A Loan Summersun Term B Loan
--------------------- ---------------------
$2,500,000 $6,000,000
0 0
3.2. Section 1.01 of the Credit Agreement is hereby amended as
follows:
(a) clause (i) of the first paragraph of Section 1.01 is amended
to read in its entirety as follows:
"(i) in the case of any Borrowings under the Term A Portion
or the Term B Portion, (x) on the Closing Date with respect
to Term A Loans and Term B Loans other than the Texas Term B
Loans, (y) on the Texas Acquisition Closing Date with
respect to the Texas Term B Loans, and (z) on the Summersun
Acquisition Closing Date with respect to the Summersun Terms
A Loans and the Summersun Term B Loans";
(b) the first sentence of Section 1.01(a) is amended to read in
its entirety as follows:
"(a) Loans under the Term A Portion of the Loan Facility
(each a "TERM A LOAN") shall, with respect to the Term A
Loans other than the Summersun Term A Loans, be made to the
Borrower on the Closing Date, and, with respect to the
Summersun Term A Loans, be made to the Borrower on the
Summersun Acquisition Closing Date";
(c) the lead in of clause (i) of the second sentence of Section
1.01(a) is amended to read in its entirety as follows:
" (i) except as hereinafter provided, shall initially be
Base Rate Loans and, 30 days after the Closing Date or the
Summersun Acquisition Closing Date, as applicable, or such
earlier time as"
-2-
(d) the first sentence of Section 1.01(b) is amended to read in
its entirety as follows:
"(b) Loans under the Term B Portion of the Loan Facility
(each a "TERM B LOAN") shall, (i) with respect to the Term B
Loans other than the Texas Term B Loans and the Summersun
Term B Loans, be made to the Borrower on the Closing Date,
(ii) with respect to the Texas Term B Loans, be made to the
Borrower on the Texas Acquisition Closing Date, and, (iii)
with respect to the Summersun Term B Loans, be made to the
Borrower on the Summersun Closing Date."
(e) the lead in to clause (i) of the second sentence of Section
1.01(b) is amended to read in its entirety as follows:
"(i) except as hereinafter provided, shall initially be Base
Rate Loans and, 30 days after the Closing Date, the Texas
Acquisition Closing Date or the Summersun Acquisition
Closing Date, as applicable, or such earlier time as"
3.3. Clause (i) of Section 1.02 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(i) the Banks' Term A Loan Commitments and Term B Loan
Commitments shall terminate, on a pro rata basis, with respect to
any portion of the Total Term A Loan Commitments or the Total
Term B Loan Commitments, as the case may be, not utilized by the
Borrower on the Closing Date (except for the Texas Term B Loan
Commitment and the Summersun Term B Loan Commitment, which shall
each terminate as to any portion not utilized on the Texas
Acquisition Closing Date or the Summersun Acquisition Date, as
the case may be) and"
3.4. Clause (iii) of Section 1.05(b) is hereby amended to read in its
entirety as follows:
"(iii) be dated the Closing Date (except that the Term A
Notes evidencing the Summersun Term A Loans shall be dated
the Summersun Acquisition Closing Date),"
3.5. Clause (iii) of Section 1.05(c) is hereby amended to read in its
entirety as follows:
"(iii) be dated the Closing Date (except that the Term B
Notes evidencing the Texas Term B Loans shall be dated the
Texas Acquisition Closing
-3-
Date and the Term B Notes evidencing the Summersun Term B
Loans shall be dated the Summersun Acquisition Closing
Date),"
3.6. Section 1.12 of the Credit Agreement is hereby amended to add the
following immediately after the second sentence of such Section:
"As of the Summersun Acquisition Closing Date, the amount of (a)
the Total Commitment is $127 million, (b) the Total Term A Loan
Commitment is $27.5 million (c) the Total Term B Loan Commitment
is $47 million, (d) the Total Revolving Loan Commitment is $37.5
million and (e) the Total Acquisition Term Loan Commitment is $15
million (all of which is currently outstanding in aggregate
principal amount under Acquisition Term Loans)."
3.7. Clause (c) of Section 2.02 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"Each of the Term A Loan Commitments and the Term B Loan
Commitments shall terminate as of the close of business on the
Closing Date (except with respect to the Texas Term B Loan
Commitments, which shall terminate as of the close of business on
the Texas Acquisition Closing Date and the Summersun Term A Loans
Commitments and the Summersun Term B Loan Commitments, which
shall terminate on the Summersun Acquisition Closing Date), and
any amounts not borrowed with respect to each of the Term A Loans
and the Term B Loans on the Closing Date (or the Texas
Acquisition Closing Date, or the Summersun Acquisition Date, as
the case may be) shall cease to be available."
3.8. Section 2.02 shall be amended to add clause (g) immediately
following clause (f) thereof which shall read in its entirety as
follows:
"(g) The Summersun Term A Loan Commitment and the Summersun Term
B Loan Commitment shall be reduced proportionately by the amount
of any reduction in the cash purchase price to be paid by the
Borrower to consummate the Summersun Acquisition."
3.9. Section 5.05 of the Credit Agreement is hereby amended to add
clause (f) immediately following clause (e) which shall read in
its entirety as follows:
"(f) All proceeds of the Summersun Term A Loans and the Summersun
Term B Loans shall be used by the Borrower to (i) to pay the
cash consideration to be paid by the Borrower in connection with
the Summersun Acquisition and (ii) to pay fees and expenses
related to the consummation of the Summersun Acquisition."
-4-
3.10. Section 6 of the Credit Agreement is hereby amended by adding a
new Section 6.18 to the end thereof immediately following Section
6.17 which Section 6.18 shall read in its entirety as follows:
"6.18. STAGING AREA, MOUNT VERNON, WASHINGTON PROPERTY. On or
before August 30, 1997 with respect to the Real Property being
leased by the Borrower located in Mount Vernon, Skagit County,
Washington constituting the so-called "staging area" and not
previously made subject to a first leasehold mortgage or deed of
trust in favor of Administrative Agent, ("STAGING AREA REAL
PROPERTY"), the Borrower shall satisfy to the reasonable
satisfaction of the Administrative Agent all of the requirements
of Section 4.03(e) hereof."
3.11. Section 10 of the Credit Agreement is hereby amended as follows:
(a) the following definitions are hereby added to Section 10:
"SUMMERSUN ACQUISITION" means the acquisition by the
Borrower, of a nursery business located in Oregon and
Washington and owned and operated by Summersun Greenhouse
Co., a Washington corporation ("SUMMERSUN"), which is to be
accomplished by the acquisition of substantially all the
assets, excluding owned real estate and certain liabilities
of Summersun by the Borrower, and in consideration of such
acquisition Summersun will receive approximately $7,100,000
in cash in accordance with the Asset Purchase Agreement
dated as of August 11, 1997 among the Borrower and Summersun
(the "SUMMERSUN PURCHASE AGREEMENT").
"SUMMERSUN ACQUISITION CLOSING DATE" shall mean August 11,
1997.
"SUMMERSUN ACQUISITION DOCUMENTS" means the Summersun
Purchase Agreement, as amended and in effect on the date
hereof, and the other documents evidencing or implementing
the transactions contemplated thereby.
"SUMMERSUN TERM A LOAN" means loans under the portion of
the Loan Facility evidenced by the Summersun Term A Loan
Commitment.
"SUMMERSUN TERM A LOAN COMMITMENT" means, with respect to
each Bank, the amount set forth below such Bank's name on
Exhibit A hereto directly below the column entitled
"Summersun Term A Loan," as same may be reduced from time to
time pursuant to Sections 2.01, 3.03 and/or 8.
-5-
"SUMMERSUN TERM B LOAN" means loans under the portion of
the Loan Facility evidenced by the Summersun Term B Loan
Commitment.
"SUMMERSUN TERM B LOAN COMMITMENT" means, with respect to
each Bank, the amount set forth below such Bank's name on
Exhibit A hereto directly below the column entitled
"Summersun Term B Loan," as same may be reduced from time to
time pursuant to Sections 2.01, 3.03 and/or 8.
(b) The following definitions are hereby amended to read in
their entirety as follows:
"SCHEDULED TERM A LOAN PRINCIPAL PAYMENTS" means, with
respect to the principal payments on the Term A Loan to be
made on the last Business Day of each calendar quarter
specified in the table below, the Dollar amount specified
opposite such date in such table:
Scheduled Term A Loan
Date Principal Payment
---- ---------------------
March 31, 1997 $450,000
June 30, 1997 $625,000
September 30, 1997 $690,308
December 31, 1997 $690,308
March 31, 1998 $1,076,881
June 30, 1998 $1,076,881
September 30, 1998 $1,076,881
December 31, 1998 $1,076,881
March 31, 1999 $1,242,555
June 30, 1999 $1,242,555
September 30, 1999 $1,242,555
December 31, 1999 $1,242,555
March 31, 2000 $1,325,392
June 30, 2000 $1,325,392
September 30, 2000 $1,325,392
December 31, 2000 $1,325,392
March 31, 2001 $1,546,290
June 30, 2001 $1,546,290
September 30, 2001 $1,546,290
December 31, 2001 $1,546,290
-6-
March 31, 2002 $2,139,956
June 30, 2002 $2,139,956
"SCHEDULED TERM B LOAN PRINCIPAL PAYMENTS" means, with
respect to the Term B Loan, principal payments to be made on
the last Business Day of each calendar quarter specified in
the table below, in each case, in the Dollar amount
specified opposite such period in such table:
Scheduled Term B Loan
Period Principal Payment
------ ---------------------
January 1, 1997 through
June 30, 1997 $87,620
July 1, 1997 through
June 30, 2002 $117,812
July 1, 2002 through
December 31, 2003 $7,411,420
"Total Term A Loan Commitment" means the sum of the Term A Loan
Commitments and the Summersun Term A Loan Commitments of each of
the Banks.
"Total Term B Loan Commitment" means the sum of the Term B Loan
Commitments, the Texas Term B Loan Commitments and the Summersun
Term B Loan Commitments of each of the Banks.
3.12. WAIVER. The Banks hereby waive compliance with the requirements
of Sections 4.03(d), 6.14 and 6.15 as to the Staging Area Real
Property until the period ending August 30, 1997.
4. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank and the Agents
to enter into this Amendment, the Borrower represents and warrants to each
of the Banks and the Agent that:
4.1. NO DEFAULT. Immediately after giving effect to this Agreement,
no Default will exist.
4.2. INCORPORATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Section 5 of the
Amended Credit Agreement are true and correct on the date hereof
as if originally made on and as of the date hereof (except to the
extent any representation or warranty refers to a specific
earlier date).
-7-
4.3. DISCLOSURE. The Summersun Acquisition Documents and the other
information and certificates furnished to or to be furnished to
the Administrative Agent in connection with the Summersun
Acquisition and this Amendment do not contain and will not
contain any untrue statement of a material fact or omit to state
any material fact and, to the knowledge of the Credit Parties,
there is no material fact relating to Summersun or the Summersun
Acquisition which may adversely affect the same which has not
been disclosed in writing to the Administrative Agent.
5. CONDITIONS. The effectiveness of this Amendment, and the making of the
Summersun Term A Loans and the Summersun Term B Loans to be made on the
Summersun Acquisition Closing Date, provided for hereby, are subject to the
satisfaction of the following conditions:
5.1. CREDIT DOCUMENTS.
(a) This Amendment and each other Credit Document (to the extent
not previously executed and delivered), including, without
limitation, the Subsidiary Guarantee of LSGR Holdings and
any related security documentation evidencing the guarantees
and pledges by each of the Borrower, LSGR Holdings and
Peters, shall (A) have been, on or before the Summersun
Acquisition Closing Date, duly authorized, executed and
delivered by each of the parties signatory thereto and (B)
constitute the legal, valid and binding obligation of each
Credit Party, enforceable in accordance with its terms
(subject to bankruptcy and principles of equity).
(b) There shall have been delivered to the Administrative Agent
(i) for the account of each of the Banks which are extending
Summersun Term A Loans and Summersun Term B Loans, Term A
Notes and Term B Notes evidencing such Borrowings, each duly
executed by the Borrower in the amount and maturity and as
otherwise provided in the Amended Credit Agreement and (ii)
updated Schedules 5.13, 5.16 and 5.17 after giving effect to
the Summersun Acquisition, the creation of LSGR Holdings and
the related asset transfers.
5.2. OFFICERS' CERTIFICATE. The Administrative Agent shall have
received a certificate dated the Summersun Acquisition Closing
Date signed by the appropriate officer(s) of the Borrower on
behalf of the Borrower in substantially the form of Exhibit
4.01(b) stating that (i) all of the conditions set forth in this
Section 5 have been either satisfied or waived in writing by the
Administrative Agent, and the Required Banks as of such date,
(ii) immediately before and after giving effect to this
Agreement, the Summersun Acquisition, the Borrowings related
thereto, the creation of LSGR Holdings and the related asset
transfers, all representations and warranties contained herein or
in any other Credit
-8-
Document (except as expressly amended hereunder or under another
Credit Document) shall be true and correct, (iii) no Default or
Event of Default has occurred or will have occurred after giving
effect to this Agreement, the Summersun Acquisition, the
Borrowings related thereto, the creation of LSGR Holdings and the
related asset transfers and (iv) since June 30, 1996 no material
adverse change in the business, assets, prospects, properties or
condition (financial or otherwise) of Holdings and its
Subsidiaries shall have occurred.
5.3. OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion dated the Summersun Acquisition Closing Date
addressed to each of the Banks from each of (i) Brownstein Hyatt
Farber & Strickland, P.C., counsel to the Credit Parties,
(ii) Stoel Rieves, LLP, special Washington counsel to the Credit
Parties, and (iii) Jack R. Wallace, counsel to Summersun, in each
case, in form and substance reasonably acceptable to the
Administrative Agent.
5.4. CORPORATE PROCEEDINGS. All corporate and legal proceedings and
all instruments and agreements in connection with the Summersun
Acquisition, the creation of LSGR Holdings and the related asset
transfers, the execution of this Amendment and the other Credit
Documents to be executed in connection with the transactions
contemplated hereby shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative
Agent shall have received all information and copies of all
certificates, documents and papers, including records of
corporate proceedings and governmental approvals, if any, which
it may have reasonably requested from the Credit Parties or in
connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
Without limiting the foregoing, the Administrative Agent shall
have received from each Credit Party:
(a) resolutions of the board of each such Person which shall
include, without limitation, (1) resolutions approving such
documents and actions as are contemplated by this Amendment or
the Summersun Acquisition, and any related transactions to the
extent such Person is a party thereto and (2) resolutions as
to the due authorization, execution and delivery of this
Amendment and the Summersun Acquisition Documents, to the
extent such Person is a party thereto, all such resolutions to
be in form and substance reasonably satisfactory to the
Administrative Agent; and
(b) signature and incumbency certificates of each officer of each
such Credit Party executing instruments, documents or
agreements required to be executed in connection with the
transactions contemplated by this Amendment and the Summersun
Acquisition Documents.
5.5. ACQUISITION DOCUMENTS.
-9-
(a) The Summersun Acquisition Documents and any amendments
thereto, shall be in form and substance satisfactory to the
Administrative Agent; and on the Summersun Acquisition Closing
Date each of the conditions to closing contained in each of
the Summersun Acquisition Documents shall have been satisfied
in all material respects (or waived in writing, such waiver to
be reasonably satisfactory to the Administrative Agent) to the
reasonable satisfaction of the Administrative Agent. Each
Credit Party and each of the other parties to the Summersun
Acquisition Documents shall have done and performed such acts
and observed such covenants which each is required to do or
perform under the Summersun Acquisition Documents on or prior
to the Summersun Acquisition Closing Date (or such acts and
covenants shall have been waived in writing, such waiver to be
reasonably satisfactory to the Administrative Agent). Full,
complete and accurate copies of each of the Summersun
Acquisition Documents (including all schedules and exhibits
thereto) shall have been provided to the Administrative Agent.
(b) Holdings and the Borrower shall have provided evidence
satisfactory in form and substance to the Administrative Agent
that the Summersun Acquisition has been consummated or will be
consummated simultaneously with the closing of the
transactions contemplated by this Agreement.
5.6. CAPITAL STRUCTURE. On the Summersun Acquisition Closing Date,
after giving effect to the Summersun Acquisition, (i) there shall
be no outstanding Capital Stock of Holdings other than as set
forth in Schedule 5.17, (ii) the Borrower shall be a Wholly Owned
Subsidiary of Holdings, (iii) Holdings shall have no direct
Subsidiaries other than the Borrower, and no indirect
Subsidiaries other than as set forth on Schedule 5.13.
5.7. ORGANIZATIONAL DOCUMENTATION, ETC. On or prior to the Summersun
Acquisition Closing Date, the Administrative Agent shall have
received a true and complete certified copy of the following
documents of each of Holdings, the Borrower, and LSGR Holdings,
the provisions of which shall be reasonably satisfactory to the
Agents:
(a) Copies of its certificate of incorporation, or certificate
of limited partnership, as the case may be, which (A) shall
be certified by, and accompanied by a good standing
certificate from, the Secretary of State or similar official
of the jurisdiction of its organization and (B) in the case
of Holdings, the Borrower, and LSGR Holdings shall be
accompanied by good standing certificates from each
jurisdiction in which it is required to be qualified to do
business as a foreign corporation, each to be dated a recent
date prior to the Summersun Acquisition Closing Date;
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(b) Copies of its by-laws or limited partnership agreement as
the case may be, certified as of a recent date prior to the
Summersun Acquisition Closing Date by its corporate
secretary or other person serving in a similar capacity.
5.8. CERTAIN FEES; INTEREST ON OUTSTANDING LOANS. All fees and
reasonable costs and expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
payable to the Agents or the Banks by Holdings or the Borrower
shall have been paid in full, and there shall have been paid in
full all accrued interest and all accrued commitment fees on the
Outstanding Loans and all other fees and expenses (including,
without limitation, reasonable legal fees and expenses) of the
Agents or the Banks, in each case to the extent due and payable
and, with respect to costs and expenses, invoiced or presented on
or before the Summersun Acquisition Closing Date. In addition,
on or prior to the Summersun Acquisition Closing Date, there
shall have been delivered to the Agents evidence satisfactory to
the Agents that the fees and expenses payable by Holdings and its
Subsidiaries in connection with the Summersun Acquisition shall
not exceed $_________ in the aggregate.
5.9. FINANCIAL STATEMENTS, ETC. On or before the Summersun
Acquisition Closing Date, the Agents shall have received: (i) a
pro forma balance sheet for Holdings and its Subsidiaries, as of
_______________ after giving effect to the Texas Acquisitions,
the Summersun Acquisition, the proposed acquisition of a nursery
business owned and operated by Oda Nurseries, the Summersun Term
A Loans and Summersun Term B Loans contemplated hereby; and (ii)
a revised annual plan, giving effect to the Texas Acquisitions,
the Summersun Acquisition the proposed acquisition of a nursery
business owned and operated by Oda Nurseries, and the Summersun
Term B Loans contemplated hereby for each of Holdings' and its
Subsidiaries' and projections for five calendar years commencing
on or about January 1, 1997, in each case, accompanied by a
statement by Holdings that such projections are based on
estimates and assumptions believed by Holdings in good faith to
be reasonable in light of the conditions which existed at the
time of their preparation as to the future financial performance
of Holdings, each in form, scope and substance satisfactory to
the Administrative Agent, prepared in accordance with Holdings'
normal accounting procedures applied on a consistent basis,
including (A) forecasted balance sheets and statements of
operations, stockholders' equity and cash flows of Holdings and
its Subsidiaries for such periods, (B) the amount of forecasted
capital expenditures (including the amount of such costs to be
capitalized, if any) for such periods, and (C) Holdings and its
Subsidiaries' forecasted compliance with Sections 7.01 through
7.05 of the Amended Credit Agreement. Each of the items
delivered pursuant to this Section 4.9, shall be satisfactory to
the Administrative Agent in its reasonable discretion.
-11-
Since the time of the preparation of such financial projections,
no fact or facts have come to the attention of any Credit Party
to cause such Person to believe that any of the estimates and
assumptions on which such projections are based are not
reasonable.
5.10. LITIGATION. Except as set forth on Schedule 4.01(l), there shall
be no litigation pending or threatened by any entity (private or
governmental) involving any Credit Party or any other party to
any Summersun Acquisition Document or any of the properties or
assets of any such Person that could reasonably be expected to
restrain, enjoin or result in the obtaining of a judgment for
substantial damages with respect to the Summersun Acquisition or
the consummation of the transactions contemplated by the
Summersun Acquisition Documents, and there shall be no pending or
threatened litigation involving any Credit Party or involving any
other party to any Summersun Acquisition Document or any of the
properties or assets of any such Person that could reasonably be
expected to have a material adverse effect on the operations or
properties being acquired in the Summersun Acquisition or the
ability of the Credit Parties to operate the same or that could
reasonably be expected to have a Material Adverse Effect.
5.11. INDEBTEDNESS, ETC. (i) Each Credit Party shall have received all
necessary consents or waivers or shall have amended, supplemented
or otherwise modified, repaid or defeased its outstanding
Indebtedness in a manner and on terms satisfactory to the Agents
such that there exists no default or potential default (as a
result of the consummation of the Summersun Acquisition) with
respect to such Indebtedness or under any note, evidence of
indebtedness, capital lease, mortgage, deed of trust, security
document or other agreement relating to such Indebtedness and
such indentures, notes, evidences of indebtedness, capital lease
mortgages, deeds of trust or other agreements relating to such
Indebtedness shall not contain (i) any restriction on the ability
of Holdings or any of its Subsidiaries to grant any Lien in favor
of the Banks (other than in the case of Capital Leases, or
purchase money debt (excluding Real Property leases), a Lien on
the property financed thereby) or any financial covenants or
tests applicable to Holdings or any of its Subsidiaries.
(ii) The terms and conditions of any Indebtedness of Holdings
and its Subsidiaries as of the Summersun Acquisition Closing Date
which remains outstanding after giving effect to the Summersun
Acquisition and the making of the Summersun Term A Loans and the
Summersun Term B Loans, the extent to which any Indebtedness of
Summersun remains outstanding as Indebtedness of the Borrower
after giving effect to the Summersun Acquisition and the making
of the Summersun Term A Loans and Summersun Term B Loans shall,
in each case, be reasonably acceptable to the Agents. The
Administrative Agent shall have received evidence satisfactory to
it that the Indebtedness reflected on Schedule A
-12-
hereto as being paid as of the Summersun Acquisition Closing Date
is being paid with the proceeds of the Summersun Term A Loans and
Summersun Term B Loans made on the date hereof.
5.12. SECURITY DOCUMENTS. In each case, to the extent the same shall
not have been previously delivered to the Administrative Agent,
the Security Documents and Additional Security Document,
including the Subsidiary Guarantee and Security Agreement of
LSGR Holding, shall have been duly executed and delivered by each
of the Credit Parties party thereto and there shall have been
delivered to the Administrative Agent: (i) executed financing
statements for filing under the provisions of the UCC in each of
the offices where such filing is necessary or appropriate,
including those set forth on Schedule B hereto to grant the
Administrative Agent a perfected first priority Lien in the
Collateral acquired in the Summersun Acquisition and the assets
transferred in connection with the formation of LSGR Holdings as
to which a security interest may be perfected by the filing of a
financing statement, which Lien shall be superior to and prior to
the rights of all third persons and subject to no other Liens;
(ii) certified copies of Requests for Information (Form UCC-11 or
the equivalent), or equivalent reports or lien search reports
listing all effective financing statements which name the
Borrower, its subsidiaries, or Summersun and which are filed in
any jurisdiction in which any of such Collateral is located and
the jurisdiction in which such Person's principal place of
business is located (none of which shall cover the Collateral
covered, or purported to be covered, by the Security Documents
and Additional Security Documents other than Permitted
Encumbrances); and (iv) evidence of the completion of all
recordings and filings (or of the making of arrangements to file
contemporaneously with the making of additional Borrowings
contemplated hereby) of each such Security Document and delivery
of such other security and other documents as may be necessary
or, in the opinion of the Administrative Agent, desirable to
perfect the Liens created, or purported or intended to be
created, by such Security Documents; and (v) payoff letters
executed by the holders of any Indebtedness reflected as being
paid as of the Summersun Acquisition Closing Date on Schedule A
hereto setting forth the amount required to discharge such
Indebtedness, and evidence that the proceeds of the Summersun
Term A Loans and Summersun Term B Loans will be used to so
discharge such Indebtedness.
5.13. LEASES. All Capital Leases and Operating Leases of Holdings and
its Subsidiaries and all Capital Leases and Operating Leases of
Summersun acquired by Holdings or its Subsidiaries pursuant to
the Summersun Acquisition shall remain outstanding after giving
effect to the Summersun Acquisition and the making of the
Summersun Term A Loans and Summersun Term B Loans hereunder.
-13-
5.14. CONSENTS, ETC. All necessary or required governmental and third
party approvals and consents (including, without limitation, all
approvals and consents required in connection with any
Environmental Laws), in connection with the Summersun Acquisition
or the transactions contemplated by this Amendment and the
Summersun Acquisition Documents and otherwise referred to herein
or therein to be completed on or before the Summersun Acquisition
Closing Date shall have been disclosed to the Administrative
Agent and shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action
being taken by any competent authority which restrains, prevents
or imposes, in the reasonable judgment of the Administrative
Agent, material adverse conditions upon the consummation of the
Summersun Acquisition. There shall not exist any judgment or
order enjoining or otherwise restraining the making of the
Summersun Term A Loans or Summersun Term B Loans hereunder or the
consummation of the Summersun Acquisitions.
5.15. BORROWING BASE; BORROWING BASE CERTIFICATE. The Administrative
Agent and the Banks shall have received and the Required Banks
shall be satisfied in all reasonable respects with a Borrowing
Base Certificate which shall be substantially in the form of
Exhibit 6.01(m) to the Credit Agreement and shall be prepared as
of a date prior to the Summersun Acquisition Closing Date that is
reasonably satisfactory to the Agents. Such Borrowing Base
Certificate shall indicate that the Borrowing Base on the
Summersun Acquisition Closing Date (before and after giving
effect to the Summersun Acquisition) exceeds the amount of the
Revolving Loans to be outstanding as of such date by not less
than $10 million.
5.16. NO MATERIAL ADVERSE CHANGE. Since June 30, 1996 nothing shall
have occurred or become known to any Credit Party which the
Administrative Agent shall have determined has or could
reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the business or operations of Holdings
and its Subsidiaries or on the business or operations of
Summersun or has resulted or could result in a material adverse
change in the business, assets, prospects, properties or
condition (financial or otherwise) of any Credit Party or of
Summersun or in the ability of the Borrower or any of its
Subsidiaries (after giving effect to the Summersun Acquisition
and the Borrowings provided for in connection therewith) as of
the Summersun Acquisition Closing Date to conduct its operations
in accordance with the revised projections furnished to the
Administrative Agent pursuant to Section 4.9 hereof. As of the
Summersun Acquisition Closing Date, there shall not have occurred
and be continuing a material disruption of, or material adverse
change in, United States financial, banking or capital markets,
as reasonably determined by the Administrative Agent in its sole
discretion.
-14-
The acceptance of the proceeds of each Borrowing of Summersun Term A Loans
and Summersun Term B Loans in connection with the Summersun Acquisition
shall constitute a representation and warranty by the Borrower to each of
the Banks that all of the applicable conditions specified above have been
satisfied or waived as of that time. All of the certificates, legal
opinions and other documents and papers referred to in this Section 4,
unless otherwise specified, shall be delivered to the Agents at the Agent's
Office (or such other location as may be specified by the Agents) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be reasonably satisfactory in form and substance to the
Agents.
6. CREDIT AGREEMENT OTHERWISE UNAFFECTED. The Amended Credit Agreement and
all of the Credit Documents are each confirmed as being in full force and
effect. This Amendment, the Amended Credit Agreement and the other Credit
Documents referred to herein or therein constitute the entire understanding
of the parties with respect to the subject matter hereof and thereof and
supersede all prior and current understandings and agreements, whether
written or oral, with respect to such subject matter. The invalidity or
unenforceability of any provision hereof shall not affect the validity or
enforceability of any other term or provision hereof. The headings in this
Amendment are for convenience of reference only and shall not alter, limit
or otherwise affect the meaning hereof. Each of this Amendment and the
Amended Credit Agreement is a Credit Document and may be executed in any
number of counterparts, which together shall constitute one instrument, and
shall bind and inure to the benefit of the parties and their respective
permitted successors and assigns.
7. APPLICABLE LAW. The amendments and waivers set forth herein shall be
governed by, and shall be construed and enforced in accordance with the law
and as set forth in Section 12.08 of the Credit Agreement, and this
Amendment shall be in all respects a part of the Credit Agreement.
-15-
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment and Waiver to be duly executed and delivered as of the date first
above written.
COLOR SPOT NURSERIES, INC.
By: /s/ Karla D. Virkelich
-------------------------------------
Name: Karla D. Virkelich
Title: Corp. Secretary
CREDIT AGRICOLE INDOSUEZ
(formerly known as Banque Indosuez, New
York Branch)
as Administrative Agent
By: /s/ Illegible
-------------------------------------
Name:
Title:
By: /s/ Illegible
-------------------------------------
Name:
Title:
Consented to:
IBJ SCHRODER BANK & TRUST COMPANY
By /s/ M. McLaughlin
---------------------------------
Name: Mary McLaughlin
Title: Vice President
FIRST SOURCE FINANCIAL LLP,
an Illinois registered limited
liability partnership
By: First Source Financial, Inc.,
its manager
By: /s/ Gary L. Francis
--------------------------------
Name: Gary L. Francis
Title: Senior Vice President
CREDITANSTALT-BANKVEREIN
By /s/ Dennis O'Dowd
---------------------------------
Name: Dennis O'Dowd
Title: Chief Executive Officer
By /s/ Patrick J. Rounds
---------------------------------
Name: Patrick J. Rounds
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Linda EC. Alto
--------------------------------
Name: Linda Alto
Title: VP
BANK OF THE WEST
By: /s/ Dale J. Kobsar
--------------------------------
Name: Dale J. Kobsar
Title: Regional Vice President
LEHMAN COMMERCIAL PAPER, INC.
By /s/ Michele Swanson
---------------------------------
Name: Michele Swanson
Title: Authorized Signatory
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By ING Capital Advisors, Inc. as
Investment Advisor
By: /s/ Kathleen A. Lenarcic
--------------------------------
Name: Kathleen A. Lenarcic
Title: Vice President &
Portfolio Manager
CREDIT AGRICOLE INDOSUEZ
(formerly known as Banque Indosuez,
New York Branch)
By /s/ Illegible
---------------------------------
Name:
Title:
By /s/ Illegible
---------------------------------
Name:
Title:
INDOSUEZ CAPITAL FUNDING II,
LIMITED
By: INDOSUEZ CAPITAL
LUXEMBOURG, S.A.,
as Collateral Manager
By /s/ Francoise Berthelot
---------------------------------
Name: Francoise Berthelot
Title: Authorized Signatory
INDOSUEZ CAPITAL FUNDING III,
LIMITED
By: INDOSUEZ CAPITAL
LUXEMBOURG, S.A.,
as Collateral Manager
By /s/ Francoise Berthelot
---------------------------------
Name: Francoise Berthelot
Title: Authorized Signatory