EXECUTION COPY
CREDIT AGREEMENT
dated as of August 3, 2001
among
A.C. MOORE INCORPORATED,
as Borrower
The Lenders Party Hereto
and
KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent and Lead Arranger
--------------------------------
A.C. MOORE INCORPORATED
CREDIT AGREEMENT
TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS.........................................................1
SECTION 1.1 DEFINED TERMS.................................................... 1
SECTION 1.2 CLASSIFICATION OF LOANS AND BORROWINGS ......................... 18
SECTION 1.3 TERMS GENERALLY ................................................ 18
SECTION 1.4 ACCOUNTING TERMS; GAAP.......................................... 19
ARTICLE 2. THE CREDITS........................................................19
SECTION 2.1 COMMITMENTS..................................................... 19
SECTION 2.2 REVOLVING LOANS AND REVOLVING BORROWINGS........................ 19
SECTION 2.3 REQUESTS FOR REVOLVING BORROWINGS .............................. 20
SECTION 2.4 FUNDING OF REVOLVING BORROWINGS ................................ 21
SECTION 2.5 TERMINATION AND REDUCTION OF REVOLVING COMMITMENTS.............. 22
SECTION 2.6 REPAYMENT OF LOANS; EVIDENCE OF DEBT............................ 22
SECTION 2.7 PREPAYMENT OF LOANS............................................. 23
SECTION 2.8 SWINGLINE LOANS ................................................ 24
SECTION 2.9 LETTERS OF CREDIT .............................................. 26
SECTION 2.10 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SETOFFS .... 30
ARTICLE 3. INTEREST, FEES, YIELD PROTECTION, ETC. ............................32
SECTION 3.1 INTEREST........................................................ 32
SECTION 3.2 INTEREST ELECTIONS RELATING TO REVOLVING BORROWINGS ............ 33
SECTION 3.3 FEES ........................................................... 34
SECTION 3.4 ALTERNATE RATE OF INTEREST ..................................... 35
SECTION 3.5 INCREASED COSTS; ILLEGALITY .................................... 35
SECTION 3.6 BREAK FUNDING PAYMENTS.......................................... 37
SECTION 3.7 TAXES .......................................................... 37
SECTION 3.8 MITIGATION OBLIGATIONS.......................................... 38
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.....................................38
SECTION 4.1 ORGANIZATION; POWERS ........................................... 39
SECTION 4.2 AUTHORIZATION; ENFORCEABILITY .................................. 39
SECTION 4.3 GOVERNMENTAL APPROVALS; NO CONFLICTS............................ 39
SECTION 4.4 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE................. 39
SECTION 4.5 PROPERTIES...................................................... 40
SECTION 4.6 LITIGATION AND ENVIRONMENTAL MATTERS ........................... 40
SECTION 4.7 COMPLIANCE WITH LAWS AND AGREEMENTS............................. 40
SECTION 4.8 INVESTMENT AND HOLDING COMPANY STATUS........................... 41
SECTION 4.9 TAXES .......................................................... 41
SECTION 4.10 ERISA ......................................................... 41
SECTION 4.11 DISCLOSURE..................................................... 41
SECTION 4.12 SUBSIDIARIES .................................................. 42
SECTION 4.13 INSURANCE ..................................................... 42
SECTION 4.14 LABOR MATTERS ................................................. 42
SECTION 4.15 SOLVENCY....................................................... 42
SECTION 4.16 FEDERAL RESERVE REGULATIONS.................................... 42
SECTION 4.17 EXISTING LETTERS OF CREDIT..................................... 43
ARTICLE 5. CONDITIONS.........................................................43
SECTION 5.1 EFFECTIVE DATE ................................................. 43
SECTION 5.2 EACH CREDIT EVENT .............................................. 46
ARTICLE 6. AFFIRMATIVE COVENANTS..............................................46
SECTION 6.1 FINANCIAL STATEMENTS AND OTHER INFORMATION ..................... 46
SECTION 6.2 NOTICES OF MATERIAL EVENTS ..................................... 48
SECTION 6.3 EXISTENCE; CONDUCT OF BUSINESS ................................. 49
SECTION 6.4 PAYMENT AND PERFORMANCE OF OBLIGATIONS.......................... 49
SECTION 6.5 MAINTENANCE OF PROPERTIES ...................................... 49
SECTION 6.6 BOOKS AND RECORDS; INSPECTION RIGHTS............................ 49
SECTION 6.7 COMPLIANCE WITH LAWS............................................ 50
SECTION 6.8 USE OF PROCEEDS................................................. 50
SECTION 6.9 INFORMATION REGARDING COLLATERAL ............................... 50
SECTION 6.10 INSURANCE ..................................................... 50
SECTION 6.11 CASUALTY AND CONDEMNATION...................................... 50
SECTION 6.12 ADDITIONAL SUBSIDIARIES........................................ 51
SECTION 6.13 FURTHER ASSURANCES ............................................ 51
SECTION 6.14 ENVIRONMENTAL COMPLIANCE ...................................... 52
SECTION 6.15 LANDLORD CONSENT AGREEMENTS.................................... 53
ARTICLE 7. NEGATIVE COVENANTS.................................................53
SECTION 7.1 INDEBTEDNESS; PREFERRED EQUITY INTERESTS........................ 53
SECTION 7.2 LIENS .......................................................... 54
SECTION 7.3 FUNDAMENTAL CHANGES ............................................ 55
SECTION 7.4 INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS ...... 56
SECTION 7.5 ASSET SALES..................................................... 57
SECTION 7.6 SALE AND LEASE-BACK TRANSACTIONS ............................... 57
SECTION 7.7 HEDGING AGREEMENTS ............................................. 57
SECTION 7.8 RESTRICTED PAYMENTS............................................. 57
SECTION 7.9 TRANSACTIONS WITH AFFILIATES.................................... 58
SECTION 7.10 RESTRICTIVE AGREEMENTS......................................... 58
SECTION 7.11 ORGANIZATIONAL DOCUMENTS ...................................... 58
SECTION 7.12 FIXED CHARGE COVERAGE RATIO.................................... 59
SECTION 7.13 LEVERAGE RATIO................................................. 59
SECTION 7.14 CAPITALIZATION RATIO........................................... 59
SECTION 7.15 CAPITAL EXPENDITURES........................................... 59
ARTICLE 8. EVENTS OF DEFAULT..................................................59
ARTICLE 9. THE ADMINISTRATIVE AGENT...........................................62
ARTICLE 10. MISCELLANEOUS ....................................................64
SECTION 10.1 NOTICES........................................................ 64
SECTION 10.2 WAIVERS; AMENDMENTS............................................ 64
SECTION 10.3 EXPENSES; INDEMNITY; DAMAGE WAIVER............................. 65
SECTION 10.4 SUCCESSORS AND ASSIGNS ........................................ 67
SECTION 10.5 SURVIVAL....................................................... 69
SECTION 10.6 COUNTERPARTS; INTEGRATION; EFFECTIVENESS ...................... 69
SECTION 10.7 SEVERABILITY................................................... 70
SECTION 10.8 RIGHT OF SETOFF................................................ 70
SECTION 10.9 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS .... 70
SECTION 10.10 WAIVER OF JURY TRIAL ......................................... 71
SECTION 10.11 HEADINGS ..................................................... 71
SECTION 10.12 INTEREST RATE LIMITATION...................................... 71
ii
SCHEDULES:
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Schedule 2.1 List of Commitments
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Schedule 4.5 List of Real Property
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Schedule 4.6 Disclosed Matters
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Schedule 4.12 List of Subsidiaries
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Schedule 4.13 List of Insurance
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Schedule 4.17 List of Existing Letters of Credit
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Schedule 7.1 List of Existing Indebtedness
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Schedule 7.2 List of Existing Liens
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Schedule 7.4 List of Existing Investments
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Schedule 7.10 Existing Restrictions
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EXHIBITS:
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Exhibit A Form of Assignment and Acceptance
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Exhibit B Form of Opinion of Counsel to the Loan Parties
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Exhibit C Form of Note
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Exhibit D Form of Guarantee Agreement
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Exhibit E Form of Security Agreement
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Exhibit F Form of Borrowing Base Certificate
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Exhibit G Form of Compliance Certificate
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Exhibit H Form of Landlord Consent Agreement
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iii
A.C. MOORE INCORPORATED
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of August 3, 2001, among A.C. MOORE
INCORPORATED, the LENDERS party hereto and KEYBANK NATIONAL ASSOCIATION, as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Defined Terms
As used in this Credit Agreement, the following terms have the meanings
specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Additional Letter of Credit" has the meaning assigned to such term in
Section 2.9(a).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means KeyBank National Association, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agreement Date" means the first date appearing herein.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" means, with respect to Eurodollar Borrowings,
Swingline Loans and fees payable under Section 3.3(b), at all times from and
after the Agreement Date and during the applicable periods set forth below, the
percentage set forth below under the heading "Applicable Margin":
===============================================================================
When the Fixed Charge Coverage Ratio is Applicable Margin
greater than or equal to and less than
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1.625:1.00 1.500%
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1.400:1.00 1.625:1.00 1.750%
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1.400:1.00 2.000%
===============================================================================
Changes in the Applicable Margin resulting from a change in the Fixed
Charge Coverage Ratio shall be based upon the Compliance Certificate most
recently delivered under Section 6.1(c) and shall become effective five Business
Days after the later to occur of (a) the date such Compliance Certificate is
delivered to the Administrative Agent, and (b) 90 days after the fiscal year
end, or 45 days after the fiscal quarter end, in either case in respect of which
such Compliance Certificate shall have been delivered. Notwithstanding anything
to the contrary in this definition, (i) if the Borrower shall fail to deliver to
the Administrative Agent a Compliance Certificate on or prior to any date
required hereby, the Fixed Charge Coverage Ratio for purposes of this defined
term only shall be deemed to be less than 1.400:1.00 from and including such
date to the fifth Business Day following the date of delivery to the
Administrative Agent of such Compliance Certificate and (ii) during the period
commencing on the Agreement Date and ending on the fifth Business Day after the
later to occur of (A) the date the first such Compliance Certificate is
delivered to the Administrative Agent, and (B) the 45th day after the fiscal
quarter end in respect of which such first Compliance Certificate shall have
been delivered, the Fixed Charge Coverage Ratio for purposes of this defined
term only shall be deemed to be greater than or equal to 1.400:1.00 and less
than 1.625:1.00.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Approved Fund" means, with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.4), and accepted by the Administrative Agent,
substantially in the form of Exhibit A or any other form approved by the
Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Revolving Commitments.
2
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means A.C. Moore Incorporated, a Delaware corporation.
"Borrowing" means (i) Revolving Loans, of the same Type made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect or (ii) a Swingline Loan.
"Borrowing Base Amount" means, on any date of determination, an amount
equal to the 50% of Eligible Inventory.
"Borrowing Base Certificate" means a certificate substantially in the
form of Exhibit F.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.3.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in Cleveland, Ohio or White Plains, New York are
authorized or required by law to remain closed, provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capital Expenditures" of any Person means expenditures (whether paid
in cash or other consideration or accrued as a liability) for fixed or capital
assets (excluding any capitalized interest and any such asset acquired in
connection with normal replacement and maintenance programs properly charged to
current operations and excluding any replacement assets acquired with the
proceeds of insurance or of condemnation or eminent domain awards) made by such
Person.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Capitalization Ratio" means, as of the last day of any fiscal quarter,
the ratio of a (i) Consolidated Funded Debt to (ii) Consolidated Total
Capitalization, in each case on such date.
"Change in Control" means (i) the ownership, directly or indirectly,
beneficially or of record, by any Person or "group" (within the meaning of the
Securities Exchange Act of 1934), other than the Principals, of shares
representing 20% or more of the aggregate ordinary voting power or economic
interests represented by the issued and outstanding Equity Interests of the
Parent on a fully diluted basis, (ii) the occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Parent by Persons who
were neither (a) nominated by the board of directors of the Parent nor (b)
appointed by directors so nominated, or (iii) the failure of the Parent to own
3
directly, beneficially and of record, 100% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the Borrower
on a fully diluted basis. For purposes of this defined term, "Principals" means
(i) William Kaplan, (i) John E. Parker, (iii) the respective spouses and issue
of William Kaplan and John E. Parker, (iv) any trust, for the benefit only of
any Person referred to in clauses (i), (ii) or (iii) and/or any charity exempt
from federal income tax, that is controlled by either William Kaplan or John E.
Parker, and/or (v) the Kaplan Family Foundation.
"Change in Law" means (i) the adoption of any law, rule or regulation
after the Agreement Date, (ii) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the Agreement Date or (iii) compliance by any Credit Party (or, for purposes of
Section 3.5(b), by any lending office of such Credit Party or by such Credit
Party's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the Agreement Date.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Swingline Loans.
"Closing Date" has the meaning set forth in Section 10.6.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means any and all "Collateral" as defined in any
applicable Security Document.
"Compliance Certificate" means a certificate, substantially in the form
of Exhibit G.
"Consolidated EBITDA" means, for any period, net income for such period
of the Parent and its subsidiaries, determined on a consolidated basis in
accordance with GAAP, plus, without duplication and to the extent deducted in
determining such net income, the sum of (i) Consolidated Interest Expense for
such period, (ii) provision for income taxes for such period, and (iii) the
aggregate amount attributable to depreciation and amortization for such period,
minus, without duplication and to the extent added in determining such net
income for such period, the aggregate amount of extraordinary, non-cash and
non-recurring additions to income during such period.
"Consolidated Fixed Charges" means, for any period, the sum of each of
the following with respect to the Parent and its subsidiaries, determined on a
consolidated basis in accordance with GAAP: (i) Consolidated Interest Expense
for such period, (ii) the aggregate of all scheduled principal amounts that
become payable during such period in respect of Consolidated Funded Debt
(excluding any prepayment under Section 2.7(b) resulting from a reduction of the
Revolving Commitments pursuant to Section 2.5(c)), (iii) the aggregate amount of
all cash income taxes paid during such period, (iv) Consolidated Rent Expense
4
(v) the aggregate amount of all dividends paid during such period and (vi) the
aggregate amount of all Restricted Payments made pursuant to Section 11.8(iii)
of the Guarantee Agreement.
"Consolidated Funded Debt" means, as of any date, the aggregate
principal amount of all funded Indebtedness of the Parent and its subsidiaries
that would be reflected as liabilities on a consolidated balance sheet of the
Parent and its subsidiaries as of such date prepared in accordance with GAAP,
including the undrawn amount under all Letters of Credit and each other letter
of credit for the account of the Parent or any subsidiary thereof.
"Consolidated Interest Expense" means, for any period, the interest
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations), accrued or paid by the Parent and its
subsidiaries during such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Worth" means, as of any date, all amounts which
would, in conformity with GAAP, be included under "shareholders' equity" (or any
like caption) on a consolidated balance sheet of the Parent and its subsidiaries
as at such date.
"Consolidated Rent Expense" means, for any period, the aggregate rental
expense (excluding any contingent or percentage rental expense) of the Parent
and its subsidiaries on a consolidated basis paid or accrued during such period
in respect of all rent obligations under all operating leases for real or
personal property.
"Consolidated Total Capitalization" means, as of the last day of any
fiscal quarter, the sum of (i) Consolidated Net Worth plus (ii) Consolidated
Funded Debt.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Parties" means the Administrative Agent, the Issuing Bank and
the Lenders.
"Default" means any event or condition which constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 4.6.
"dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 5.1 are satisfied (or waived in accordance with Section 10.2).
5
"Eligible Inventory" means, as of any date, all inventory of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, that would be reflected as such on a consolidated balance sheet of
the Borrower prepared as at such date.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means, as to any Person, any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of such Person
directly or indirectly resulting from or based upon (i) violation of any
Environmental Law, (ii) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (iii) exposure to any
Hazardous Materials, (iv) the release or threatened release of any Hazardous
Materials into the environment or (v) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"Equity Interest" means (i) shares of corporate stock, partnership
interests, membership interests, and any other interest that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person, and (ii) all warrants, options or other rights to
acquire any Equity Interest set forth in clause (i) of this defined term (but
excluding any debt security that is convertible into, or exchangeable for, any
such Equity Interest).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Parent, the Borrower or any Subsidiary, is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA Event" means (i) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (ii) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (iii)
the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of
an application for a waiver of the minimum funding standard with respect to any
Plan; (iv) the incurrence by the Parent, the Borrower, any Subsidiary or any
ERISA Affiliate of any liability under Title IV of ERISA with respect to the
termination of any Plan; (v) the receipt by the Parent, the Borrower, any
Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (vi) the incurrence by the Parent, the Borrower,
any Subsidiary or any ERISA Affiliate of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (vii)
the receipt by the Parent, the Borrower, any Subsidiary or any ERISA Affiliate
6
of any notice, or the receipt by any Multiemployer Plan from the Parent, the
Borrower, any Subsidiary or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.
"Eurodollar", when used in reference to any Revolving Loan or Revolving
Borrowing, refers to whether such Revolving Loan, or the Revolving Loans
comprising such Revolving Borrowing, are bearing interest at a rate determined
by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article 8.
"Excluded Taxes" means, with respect to any Credit Party or any other
recipient of any payment to be made by or on account of any obligation of any
Loan Party under any Loan Document, (i) income or franchise taxes imposed on (or
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Credit Party, in which its
applicable lending office is located, (ii) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which such Loan Party is located and (iii) in the case of a
Foreign Lender, any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 3.7(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from such Loan
Party with respect to such withholding tax pursuant to Section 3.7(a).
"Existing Bank Debt" means the Indebtedness of the Borrower under the
Existing KeyBank Loan Documents.
"Existing KeyBank Loan Documents" means, collectively, (i) the Loan
Agreement, dated as of March 11, 1998, by and between the Borrower and KeyBank,
(ii) the Security Agreement, dated as of March 11, 1998, by and between KeyBank
and the Borrower and (iii) each other Loan Document as defined in such Loan
Agreement.
"Existing Letters of Credit" means, collectively, the Letters of Credit
listed on Schedule 4.17, each of which was issued by KeyBank.
"Federal Funds Effective Rate" means, for any day, a rate per annum
(expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100
of 1%) equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Effective Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Effective
Rate for such day shall be the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by it.
7
"Financial Officer" means the chief financial officer, vice-president
of finance, principal accounting officer, treasurer or controller of the
Borrower and the Parent.
"Fixed Charge Coverage Ratio" means, as of the end of any fiscal
quarter, the ratio of (i) the sum of (a) Consolidated EBITDA plus (b)
Consolidated Rent Expense to (ii) Consolidated Fixed Charges, in each case for
the period of the four consecutive fiscal quarters ending thereon.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the applicable Loan Party is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (ii) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor as to enable the primary obligor to pay such
Indebtedness or other obligation or (iv) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business. The term
"Guaranteed" has a meaning correlative thereto.
"Guarantee Agreement" means the Guarantee Agreement, substantially in
the form of Exhibit D, among the Parent, the Borrower, the Subsidiary Guarantors
and the Administrative Agent, for the benefit of the Secured Parties.
8
"Guarantee Documents" means the Guarantee Agreement and each other
guarantee agreement, instrument or other document executed or delivered pursuant
to Section 6.12 or 6.13 to guarantee any of the Obligations.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price swap, cap, collar,
hedging or other like arrangement.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by or otherwise in respect of bonds, debentures, notes or
similar instruments, including seller paper, (iii) all obligations of such
Person upon which interest charges are customarily paid, (iv) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (v) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business), (vi) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (vii) all Guarantees by such Person of
Indebtedness of others, (viii) all Capital Lease Obligations of such Person,
(ix) all obligations, contingent or otherwise, of such Person as an account
party in respect of letters of credit and letters of guaranty, (x) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted (e.g., take-or-pay obligations) or
similar obligations, and (xi) all obligations, contingent or otherwise, of such
Person in respect of bankers' acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning assigned to such term in Section 10.3(b).
"Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 3.2.
"Interest Payment Date" means (i) with respect to any ABR Loan, the
last day of each March, June, September and December, (ii) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Eurodollar Loan is a part and, in the case of a Eurodollar Loan
with an Interest Period of more than three months' duration, each day prior to
9
the last day of such Interest Period that occurs at intervals of three months'
duration after the first day of such Interest Period, (iii) as to all Revolving
Loans, the Maturity Date, and (iv) with respect to any Swingline Loan, the day
that such Swingline Loan is required to be repaid.
"Interest Period" means the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the calendar month
that is one, two, three or six months thereafter, as the Borrower may elect,
provided that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
"Inventory" means inventory of the Borrower or any Subsidiary Guarantor
consisting of first quality finished products held for sale to customers in the
ordinary course of business, valued at the lower of average cost or market value
which approximates a first-in-first-out basis.
"Issuing Bank" means KeyBank, in its capacity as issuer of Letters of
Credit.
"KeyBank" means KeyBank National Association and its successors.
"Landlord Consent Agreement" means a Landlord Consent Agreement,
substantially in the form of Exhibit H, among the applicable Loan Party, the
landlord party thereto and the Administrative Agent for the benefit of the
Secured Parties.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC Exposure" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn amount of all outstanding Letters of Credit at such time
plus (ii) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any
Lender at any time shall be its Applicable Percentage of the total LC Exposure
at such time.
"Lenders" means the Persons listed on Schedule 2.1 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means, collectively, the Existing Letters of Credit
and the Additional Letters of Credit, and, individually, any thereof, in each
case together with any successive renewals thereof.
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"Leverage Ratio" means, as of any date, the ratio of (i) the sum of (a)
Consolidated Funded Debt at such date plus (b) an amount equal to Consolidated
Rent Expense for the period of four consecutive fiscal quarters ending on, or
most recently before, such date multiplied by six to (ii) the sum of (a)
Consolidated EBITDA for such period plus (b) an amount equal to Consolidated
Rent Expense for such period.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate of interest per annum as determined by the
Administrative Agent, equal to the rate, as reported by KeyBank to the
Administrative Agent, quoted by KeyBank to leading banks in the London interbank
market as the rate at which KeyBank is offering dollar deposits in an amount
approximately equal to its ratable share of such Eurodollar Borrowing for dollar
deposits with a maturity comparable to such Interest Period at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (i) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (ii) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset and (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loan Documents" means this Credit Agreement, the Notes, the Guarantee
Documents, the documentation in respect of each Letter of Credit and the
Security Documents.
"Loan Parties" means the Parent, the Borrower, the Subsidiary
Guarantors and each other Person that executes and delivers the Security
Documents and the Guarantee Agreement, in each case in accordance with the terms
of the Loan Documents.
"Loans" means the loans made by the Lenders to the Borrower pursuant
hereto.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations, prospects or condition, financial or otherwise, of
(x) the Borrower and the Subsidiaries, taken as a whole, or (y) the Parent and
its subsidiaries, taken as a whole, (ii) the ability of any Loan Party to
perform any of its obligations under any Loan Document or (iii) the rights of or
benefits available to any Credit Party under any Loan Document.
"Material Obligations" means Indebtedness (other than Indebtedness
under the Loan Documents) or other obligations of any one or more of the Parent
or any of its subsidiaries in an aggregate principal amount exceeding
$1,000,000. For purposes of determining Material Obligations, the "principal
amount" of the obligations of the Parent or any of its subsidiaries in respect
of any Hedging Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Parent or any of its
subsidiaries, as applicable, would be required to pay if such Hedging Agreement
were terminated at such time.
"Maturity Date" means July 30, 2004.
11
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event, (i) the cash proceeds
received in respect of such event, including (A) any cash received in respect of
any non-cash proceeds, but only as and when received, (B) in the case of a
casualty, insurance proceeds, (C) in the case of a condemnation or similar
event, condemnation awards and similar payments, (D) in the case of the issuance
of Equity Interests, any cash subscription payment or other cash consideration
paid in connection therewith, (E) in the case of the incurrence of any
Indebtedness (other than Indebtedness under the Loan Documents, the principal
amount thereof, and (F) in the case of a litigation, arbitration or comparable
proceeding or any other material recovery event, the amount received by way of
judgment, settlement or otherwise, (ii) net of the sum of (A) all reasonable
fees and out-of-pocket expenses paid by the Parent or any of its subsidiaries to
third parties in connection with such event, (B) in the case of a sale,
transfer, lease or other disposition of an asset (including pursuant to a sale
and leaseback transaction), or the issuance of Equity Interests, the amount of
all payments required to be made by the Parent or any of its subsidiaries as a
result of such event to repay Indebtedness (other than Indebtedness under the
Loan Documents) secured by such asset or otherwise subject to mandatory payment
as a result of such event and (C) the amount of all taxes paid (or reasonably
estimated to be payable) by the Parent or any of its subsidiaries and the amount
of any reserves established by the Parent or any of its subsidiaries to fund
contingent liabilities reasonably estimated to be payable, in each case during
the year that such event occurred or the next succeeding year and that are
directly attributable to such event (as determined reasonably and in good faith
by the chief financial officer of the Borrower); provided, however, that, with
respect to any sale, transfer, lease or other disposition of an asset (including
pursuant to a sale and leaseback transaction or, subject to Section 6.11, a
casualty or other insured damage or condemnation or similar proceeding), if the
Borrower shall deliver a certificate of a Financial Officer to the
Administrative Agent at the time of such sale, transfer, lease or other
disposition setting forth the Parent's or such subsidiary's intent to use the
proceeds of such sale, transfer, lease or other disposition to replace or repair
the assets that are the subject thereof with, or otherwise purchase other assets
to be used in the same line of business within 180 days of receipt of such
proceeds and no Default shall have occurred and shall be continuing at the time
of such certificate or at the proposed time of the application of such proceeds,
such proceeds shall not constitute Net Proceeds except to the extent not so used
at the end of such 180-day period, at which time such proceeds shall be deemed
Net Proceeds, provided, however, that if within such 180-day period, the Parent
or such subsidiary enters into a legally binding agreement to replace or repair
such assets, such 180-day period shall be extended for an additional 90 days.
"Note" means, with respect to each Lender, a promissory note evidencing
such Lender's Loans payable to the order of such Lender (or, if required by such
Lender, to such Lender and its registered assigns) substantially in the form of
Exhibit C.
"Obligations" has the meaning assigned to such term in the Security
Agreement.
"Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, the Loan Documents.
12
"Parent" means A.C. Moore Arts & Crafts, Inc., a Pennsylvania
corporation.
"Participant" has the meaning assigned to such term in Section 10.4(e).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 6.4;
(b) landlords', vendors', carriers', warehousemen's,
mechanics', materialmen's, repairmen's and other like Liens imposed by
law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 6.4;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article 8;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower and the
Subsidiaries;
(g) Liens on the assets of any Subsidiary Guarantor in favor
of the Borrower or any other Subsidiary Guarantor, and Liens on assets
of the Borrower in favor of any Subsidiary Guarantor; and
(h) Liens on Margin Stock to the extent that a prohibition on
such Liens would violate Regulation U.
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"Permitted Investments" means:
(a) debt obligations maturing within one year from the date of
acquisition thereof to the extent the principal thereof and interest
thereon is backed by the full faith and credit of the United States of
America;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, or
any successor thereto, or from Moody's Investors Service, Inc. or any
successor thereto;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $500,000,000 or, to the extent
not otherwise included, any Lender;
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) of this
definition and entered into with a financial institution satisfying the
criteria described in clause (c) of this definition;
(e) (i) corporate securities, including commercial paper,
which securities are rated and have a credit rating of at least "P-l"
by Moody's and "A-l+" by S&P, and (ii) corporate debt instruments,
including medium term notes and floating rate notes issued by any
foreign or domestic corporation that are payable in U.S. dollars, which
instruments are rated and have a credit rating of at least "A" by
Moody's and "A" by S&P, provided, that: (1) no single issuer shall
account for more than 10% of all investments made under this clause
(e), (2) in no event shall this clause (e) include any synthetic
securities, any derivatives, any securities with ratings containing an
"r" subscript, or any IOs or POs, and (3) no investment under this
clause (e) shall mature later than two years from the date of purchase
thereof by the Borrower or any Subsidiary.
(f) money market mutual funds, 90% of the investments of which
are in cash or investments contemplated by clauses (a), (b), (c) and
(e) of this defined term.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Parent, any
of its subsidiaries or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
14
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by KeyBank as its prime commercial lending rate at its
principal office in Cleveland, Ohio; each change in the Prime Rate being
effective from and including the date such change is publicly announced as being
effective. The Prime Rate is not intended to be lowest rate of interest charged
by KeyBank in connection with extensions of credit to borrowers.
"Reduction Event" means, without duplication:
(a) any sale, transfer, lease or other disposition (including
pursuant to a sale and leaseback transaction) of any property or asset
of the Parent or any of its subsidiaries, other than (i) dispositions
described in clauses (a) and (b) of Section 7.5 and clauses (a) and (b)
of Section 11.5 of the Guarantee Agreement, (ii) other dispositions
resulting in aggregate Net Proceeds not exceeding $1,000,000 during any
fiscal year;
(b) any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of the Parent or any of its subsidiaries,
other than casualties, insured damage or takings resulting in aggregate
Net Proceeds not exceeding $1,000,000 during any fiscal year;
(c) the receipt by the Parent or any of its subsidiaries of
any recovery in respect of any litigation, arbitration or comparable
proceeding, by reason of a judgment, settlement or otherwise, or any
other material recovery event;
(d) the issuance by the Borrower of any Equity Interest, or
the receipt by the Borrower or any Subsidiary Guarantor of any capital
contribution, other than (i) any such issuance to the Borrower or any
Subsidiary Guarantor, (ii) the receipt of any such capital contribution
from the Borrower or any Subsidiary Guarantor, (iii) the receipt of any
such capital contribution from the Parent, provided that the proceeds
thereof had been received by the Parent in the form of a capital
contribution, or (iv) the issuance of restricted Equity Interests for
executive compensation, or in connection with any other employee stock
ownership plan, in either case the ordinary course of business; and
(e) the incurrence by the Parent or any of its subsidiaries of
any Indebtedness, other than Indebtedness permitted by Section 7.1(a)
or Section 11.1(a) of the Guarantee Agreement, as applicable.
"Register" has the meaning assigned to such term in Section 10.4(c).
"Regulation D" means Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
15
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Total Credit
Exposures representing at least 66-2/3% of the sum of the aggregate Total
Credit Exposures of all Lenders.
"Restricted Payment" means, as to any Person, (i) any dividend or other
distribution by such Person (whether in cash, securities or other property) with
respect to any Equity Interests of such Person, (ii) any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interest, (iii) any payment of
principal or interest or any purchase, redemption, retirement, acquisition or
defeasance with respect to any Indebtedness of such Person which is subordinated
to the payment of the Obligations, and (iv) the acquisition for value by such
Person of any Equity Interests issued by such Person or any other Person that
Controls such Person.
"Revolving Commitment" means the commitment of each Lender to make
Revolving Loans and to acquire participations in Letters of Credit and Swingline
Loans hereunder in an aggregate outstanding amount not exceeding the amount of
such Lender's Revolving Commitment as set forth on Schedule 2.1, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable, as such commitment may be reduced or
increased from time to time pursuant to Section 2.5 or pursuant to assignments
by or to such Lender pursuant to Section 10.4. The initial aggregate amount of
the Revolving Commitments on the Agreement Date is $50,000,000.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the aggregate outstanding principal amount of such Lender's
Revolving Loans, LC Exposure and its Swingline Exposure at such time.
"Revolving Loan" means a Loan referred to in Section 2.1(a) and made
pursuant to Section 2.4.
"Secured Parties" means the "Secured Parties" as defined in the
Security Agreement.
"Security Agreement" means the Security Agreement, substantially in the
form of Exhibit E, among the Parent, the Borrower, the Subsidiary Guarantors and
the Administrative Agent, for the benefit of the Secured Parties.
"Security Documents" means the Security Agreement and each other
security agreement, instrument or other document executed or delivered pursuant
to Sections 6.12 or 6.13 or Articles 4 or 11 of the Security Agreement to secure
any of the Obligations.
16
"Standby Letter of Credit" means an Additional Letter of Credit issued
by the Issuing Bank hereunder or an Existing Letter of Credit, in each case
other than a Trade Letter of Credit, including direct-pay Letters of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D). Such reserve percentages shall include those imposed pursuant to
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power is or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held by the parent or one or more
subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Guarantor" means any Subsidiary that executes and delivers
the Security Documents and the Guarantee Agreement, in each case in accordance
with Sections 5.1(g), 5.1(h), 6.12 and 6.13.
"Swingline Commitment" means, with respect to the Swingline Lender, the
commitment of the Swingline Lender to make Swingline Loans hereunder. The
initial amount of the Swingline Lender's Swingline Commitment is $2,000,000.
"Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the Swingline Exposure
at such time.
"Swingline Lender" means KeyBank in its capacity as lender of Swingline
Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.8.
17
"Swingline Rate" means, with respect to a Swingline Loan, a rate per
annum equal to KeyBank's cost of funds for such Swingline Loan (as determined by
KeyBank in accordance with its customary procedures) plus the Applicable Margin.
"Taxes" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Credit Exposure" means, with respect to any Lender at any time,
(i) prior to the earlier to occur of the first Borrowing and the issuance of the
first Letter of Credit, the sum of such Lender's Revolving Commitment, and (ii)
at all other times, the sum of such Lender's Revolving Credit Exposure and
unused Revolving Commitment.
"Trade Letter of Credit" means an Additional Letter of Credit issued by
the Issuing Bank hereunder or an Existing Letter of Credit, in each case in
support of trade obligations of the Borrower or any Subsidiary incurred in the
ordinary course of business and that requires, as a condition to drawing
thereunder, the presentation to the Issuing Bank of negotiable bills of lading,
invoices or other documents as may be specified therein.
"Transactions" means (i) the execution, delivery and performance by
each Loan Party of each Loan Document to which it is a party, (ii) the borrowing
of the Loans and the issuance of the Letters of Credit, (iii) the use of the
proceeds of the Loans and the Letters of Credit.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to (i) in the case of a Revolving
Borrowing, the Adjusted LIBO Rate or the Alternate Base Rate, or (ii) in the
case of a Swingline Loan, the Swingline Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.2 Classification of Loans and Borrowings
For purposes of this Credit Agreement, Loans may be classified and
referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar
Loan"). Borrowings may also be classified and referred to by Class (e.g., a
"Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing").
Section 1.3 Terms Generally
The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
18
other document as from time to time amended, supplemented or otherwise modified,
(ii) any definition of or reference to any law shall be construed as referring
to such law as from time to time amended and any successor thereto and the rules
and regulations promulgated from time to time thereunder, (iii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iv) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Credit Agreement in its entirety and
not to any particular provision hereof, (v) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Credit Agreement, and (vi) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
Section 1.4 Accounting Terms; GAAP
Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time, provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the Agreement Date
in GAAP or in the application thereof on the operation of such provision (or if
the Administrative Agent notifies the Borrower that the Required Lenders request
an amendment to any provision hereof for such purpose), regardless of whether
any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith. Unless the context otherwise requires, any reference to
a fiscal period shall refer to the relevant fiscal period of the Parent.
ARTICLE 2. THE CREDITS
Section 2.1 Commitments
Subject to the terms and conditions set forth herein, each Lender
agrees to make Revolving Loans to the Borrower in dollars from time to time
during the Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Credit Exposure exceeding the lesser of (i)
such Lender's Revolving Commitment or (ii) such Lender's Applicable Percentage
of the Borrowing Base Amount. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.
Section 2.2 Revolving Loans and Revolving Borrowings
(a) Each Revolving Loan shall be made as part of a Borrowing consisting
of Revolving Loans made by the Lenders ratably in accordance with their
respective Revolving Commitments. The failure of any Lender to make any
Revolving Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder, provided that the Revolving
19
Commitments of the Lenders are several, and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Subject to Section 3.4, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans, as applicable, in each case as the
Borrower may request in accordance herewith. Each Lender at its option may make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan, provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms hereof.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $2,000,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000 and not less than $2,000,000, provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Revolving Commitments or in an aggregate amount than is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.9(e). Borrowings of more than one Type may be outstanding at the same
time, provided that there shall not at any time be more than a total of twelve
Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision hereof, the Borrower shall not
be entitled to request, or to elect to convert or continue, any Eurodollar
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
Section 2.3 Requests for Revolving Borrowings
(a) To request a Revolving Borrowing, the Borrower shall notify the
Administrative Agent of such request by telephone (i) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, two
Business Days before the date of the proposed Borrowing or (ii) in the case of
an ABR Borrowing, not later than 11:00 a.m., New York City time, on the Business
Day of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent signed by the Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.2:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period";
20
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.4; and
(vi) a reasonably detailed calculation of the Leverage Ratio
on a pro forma basis immediately after giving effect to such Borrowing.
(b) If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
Section 2.4 Funding of Revolving Borrowings
(a) Each Lender shall make each Revolving Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., New York City time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders.
Subject to Section 5.2, the Administrative Agent will make such Revolving Loans
available to the Borrower by promptly crediting or otherwise transferring the
amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent and designated by the Borrower in the applicable
Borrowing Request, provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.9(e) shall be remitted by the
Administrative Agent to the Issuing Bank, provided further that ABR Loans made
to finance the repayment of a Swingline Loan as provided in Section 2.8(c) shall
be remitted by the Administrative Agent to the Swingline Lender.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such Revolving
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section,
paragraph (c) of Section 2.8 or paragraph (e) of Section 2.9 and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Revolving Borrowing available to the Administrative Agent, then the
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
that would be otherwise applicable to such Revolving Borrowing. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Revolving Loan included in such Revolving Borrowing.
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Section 2.5 Termination and Reduction of Revolving Commitments
(a) Unless previously terminated, the Revolving Commitments shall
terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Revolving Commitments, provided that (i) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.7, the
sum of the Revolving Credit Exposures would exceed the total Revolving
Commitments, and (ii) each such reduction shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.
(c) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Parent or any of its subsidiaries in respect of
any Reduction Event, then, immediately after such Net Proceeds are received, the
Revolving Commitments shall be automatically reduced by the aggregate amount of
such Net Proceeds.
(d) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Revolving Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable, provided that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Each reduction, and any termination, of the
Revolving Commitments shall be permanent and each reduction of the Revolving
Commitments shall be made ratably among the Lenders in accordance with their
respective Revolving Commitments.
Section 2.6 Repayment of Loans; Evidence of Debt
(a) The Borrower hereby unconditionally promises to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan on the Maturity Date, and (ii) to the Swingline
Lender the then unpaid principal amount of each Swingline Loan on the earlier of
(x) the maturity date selected by the Borrower for such Swingline Loan and (y)
the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the debt of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
22
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) or (c) of this Section shall, to the extent not inconsistent with any
entries made in the Notes, be prima facie evidence of the existence and amounts
of the obligations recorded therein, provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms hereof.
(e) Any Lender may request that the Loans made by it be evidenced by a
Note. In such event, the Borrower shall prepare, execute and deliver to such
Lender, a Note payable to the order of such Lender, substantially in the form of
Exhibit C. In addition, if requested by a Lender, its Note may be made payable
to such Lender and its registered assigns in which case all Loans evidenced by
such Note and interest thereon shall at all times (including after assignment
pursuant to Section 10.4) be represented by one or more Notes in like form
payable to the order of the payee named therein and its registered assigns.
Section 2.7 Prepayment of Loans
(a) The Borrower shall have the right at any time and from time to time
to prepay any Revolving Borrowing in whole or in part without premium or penalty
(but subject to Section 3.6), subject to the requirements of this Section.
(b) In the event of any partial reduction or termination of the
Revolving Commitments, then (i) at or prior to the date of such reduction or
termination, the Administrative Agent shall notify the Borrower and the Lenders
of the sum of the Revolving Credit Exposures after giving effect thereto and
(ii) if such sum would exceed the lesser of (x) the total Revolving Commitments
after giving effect to such reduction or termination and (y) the Borrowing Base
Amount, then the Borrower shall, on the date of such reduction or termination,
prepay Revolving Borrowings in an amount sufficient to eliminate such excess.
(c) If on any day the total Revolving Credit Exposures exceeds the
Borrowing Base Amount, the Borrower shall, within one Business Day of such day,
prepay the Revolving Loans in an amount equal to the lesser of (i) such excess
and (ii) the total Revolving Credit Exposures. Until such excess has been
prepaid, the Borrower shall not be entitled to borrow additional Revolving Loans
or Swingline Loans or request the issuance, extension, renewal or amendment of
any Letter of Credit.
(d) The Borrower shall notify the Administrative Agent by telephone
(confirmed by facsimile) of any prepayment hereunder (i) in the case of a
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, two Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
23
portion thereof to be prepaid, provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Revolving
Commitments as contemplated by Section 2.5, then such notice of prepayment may
be revoked if such notice of termination is revoked in accordance with Section
2.5. Promptly following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing under Section 2.7(a) shall, when added to
the amount of each concurrent reduction of the Revolving Commitments and
prepayment of Borrowings under such Sections, be in an integral multiple of
$500,000 and not less than $2,000,000. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.1.
Section 2.8 Swingline Loans
(a) Subject to the terms and conditions set forth herein, the Swingline
Lender agrees to make Swingline Loans to the Borrower in dollars from time to
time on any Business Day during the period from the Effective Date to the tenth
Business Day preceding the Maturity Date in an aggregate principal amount at any
time outstanding that will not result in (i) the Swingline Exposure exceeding
the lesser of (A) the Swingline Commitment and (B) the Borrowing Base Amount or
(ii) the sum of the total Revolving Credit Exposures exceeding the lesser of (A)
the total Revolving Commitments and (B) the Borrowing Base Amount, provided that
the Swingline Lender shall not be obligated to make a Swingline Loan to
refinance an outstanding Swingline Loan. Notwithstanding the foregoing, the
Swingline Lender shall not be required to make a Swingline Loan if (i) prior
thereto or simultaneously therewith the Borrower shall not have borrowed
Revolving Loans, (ii) any Lender shall be in default of its obligations
hereunder or (iii) any Credit Party shall have notified the Swingline Lender and
the Borrower in writing at least one Business Day prior to the date of Borrowing
with respect to such Swingline Loan, that the conditions set forth in Section
5.2 have not been satisfied and such conditions remain unsatisfied as of the
requested time of the making of such Swingline Loan. Each Swingline Loan shall
be due and payable on the maturity thereof, provided that in no event shall such
maturity be later than the tenth Business Day preceding the Maturity Date.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent and the Swingline Lender by telephone (confirmed by
facsimile) no later than 12.00 p.m., New York City time, on the day of the
relevant Swingline Loan. Each such notice shall be irrevocable and shall specify
(i) the aggregate principal amount to be borrowed, (ii) the requested date
(which shall be a Business Day) and (iii) the maturity date of the requested
Swingline Loan which shall be not earlier than seven days and not later than
thirty days after the making of such Swingline Loan. The Swingline Lender will
make the requested amount available promptly on that same day, to the
Administrative Agent (for the account of the Borrower as set forth in Section
2.4) who, thereupon, will promptly make such amount available to the Borrower in
like funds as provided therein or, in the case of a Swingline Loan made to
finance the reimbursement of an LC Disbursement as provided in Section 2.8(d) by
remittance to the Issuing Bank. Each Swingline Loan shall be in an aggregate
amount that is an integral multiple of $500,000. The Borrower shall have the
right at any time and from time to time to prepay any Swingline Borrowing in
whole or in part without premium or penalty (but subject to Section 3.6),
provided that the Borrower shall notify the Administrative Agent and the
Swingline Lender by telephone (confirmed by facsimile) no later than 11:00 a.m.,
24
New York City time, on the day of the proposed prepayment. Each such notice
shall be irrevocable and shall specify (i) the principal amount to be prepaid,
which shall be in an amount that is an integral multiple of $500,000, or the
remaining outstanding principal amount of the Swingline Loan being prepaid, and
(ii) the date of prepayment (which shall be a Business Day). Prepayments shall
be accompanied by accrued interest to the extent required by Section 3.1.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day notify the Administrative Agent that the Swingline Lender is
requesting that the Lenders make an ABR Borrowing in an amount equal to the
outstanding principal balance and accrued interest on the Swingline Loans, in
which case (i) the Administrative Agent shall notify each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of such ABR
Borrowing, and (ii) each Lender shall, whether or not any Default shall have
occurred and be continuing, any representation or warranty shall be accurate,
any condition to the making of any loan hereunder shall have been fulfilled, or
any other matter whatsoever, make the Loan to be made by it under this paragraph
by wire transfer of immediately available funds to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders, (A) on such date, in the event that such Lender shall have
received notice of such ABR Borrowing prior to 12:00 noon, New York City time,
or (B) if such notice has not been received by such Lender prior to such time on
such date, then not later than 1:00 p.m., New York City time, on (X) the
Business Day that such Lender receives such notice, if such notice is received
prior to 12:00 noon, New York City time, on the day of receipt or (Y) the
Business Day immediately following the day that such Lender receives such
notice, if such notice is not received prior to such time on the day of receipt.
Such Loans shall, for all purposes hereof, be deemed to be an ABR Borrowing
referred to in Section 2.1(a) and made pursuant to Section 2.3, and the Lenders
obligations to make such Loans shall be absolute and unconditional. The
Administrative Agent will make such Loans available to the Swingline Lender by
promptly crediting or otherwise transferring the amounts so received, in like
funds, to the Swingline Lender for the purpose of repaying in full the Swingline
Loans and all accrued interest thereon.
(d) If the Borrower fails to make any payment with respect to a
Swingline Loan, or if any such sum paid by the Borrower is required to be
refunded to the Borrower for any reason, the Administrative Agent shall notify
each Lender of the applicable Swingline Loan, the payment then due from the
Borrower in respect thereof and such Lender's Applicable Percentage thereof.
Each Lender shall purchase a participation in such Swingline Loan by paying to
the Administrative Agent its Applicable Percentage of the payment then due from
the Borrower, in the same manner as provided in Section 2.4 with respect to
Loans made by such Lender (and Section 2.4 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), by wire transfer of immediately available
funds to the account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders, (A) on such date, in the event that
such Lender shall have received notice thereof prior to 12:00 noon, New York
City time, or (B) if such notice has not been received by such Lender prior to
such time on such date, then not later than 1:00 p.m., New York City time, on
(X) the Business Day that such Lender receives such notice, if such notice is
received prior to 12:00 noon, New York City time, on the day of receipt or (Y)
the Business Day immediately following the day that such Lender receives such
25
notice, if such notice is not received prior to such time on the day of receipt.
The Administrative Agent shall promptly pay to the Swingline Lender the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment in respect of such Swingline Loan from the
Borrower, the Administrative Agent shall distribute such payment to the
Swingline Lender or, to the extent that Lenders have made payments pursuant to
this paragraph to reimburse the Swingline Lender, then to such Lenders and the
Swingline Lender as their interests may appear. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Swingline Loans is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Revolving Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
Section 2.9 Letters of Credit
(a) General. KeyBank issued the Existing Letters of Credit. As of the
Effective Date, each Lender (other than KeyBank) severally assumes a portion of
the risk associated with the Existing Letters of Credit in accordance with its
Applicable Percentage. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Standby Letters of Credit and Trade Letters
of Credit (each, an "Additional Letter of Credit" and collectively, the
"Additional Letters of Credit") denominated in dollars for its own account, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the period from the Effective Date to the
fifteenth Business Day prior to the Maturity Date. In the event of any
inconsistency between the terms and conditions of this Credit Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrower to, or entered into by the Borrower with,
the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Credit Agreement shall control. Standby Letters of Credit shall be issued
for the account of the Borrower to support the Borrower's and the Subsidiaries'
obligations in respect of workers' compensation, utility deposits and similar
needs. Trade Letters of Credit and related acceptances shall be issued for the
account of the Borrower to support the Borrower's and the Subsidiaries' imports
of inventory.
(b) Notice of Issuance; Amendment; Renewal; Extension; Certain
Conditions. To request the issuance of an Additional Letter of Credit (or the
amendment, renewal or extension of an outstanding Standby Letter of Credit), the
Borrower shall hand deliver or facsimile (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (not later than three
Business Days before the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of an Additional Letter of Credit
(specifying whether the requested Additional Letter of Credit is to be a Standby
Letter of Credit or a Trade Letter of Credit), or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof, the documentation to be delivered to the Issuing Bank
in connection with any payment thereunder, and such other information as shall
be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the Issuing
26
Bank, the Borrower also shall submit a letter of credit application on the
Issuing Bank's standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if
(and, upon issuance, amendment, renewal or extension of each Letter of Credit,
the Borrower shall be deemed to represent and warrant that), after giving effect
to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not
exceed $7,500,000 and (ii) the total Revolving Credit Exposures shall not exceed
the lesser of the total Revolving Commitments and the Borrowing Base Amount.
(c) Expiration Date. Each Standby Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date that is one year
after the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and (ii)
the date that is fifteen Business Days prior to the Maturity Date, provided that
any Standby Letter of Credit may provide for the renewal thereof for additional
one-year periods (which shall in no event extend beyond the date that is fifteen
Business Days prior to the Maturity Date). Each Trade Letter of Credit and each
related acceptance shall expire at or prior to the close of business on the
earlier of (i) the date that is six months after the date of the issuance of
such Letter of Credit and (ii) the date that is fifteen Business Days prior to
the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each such Lender hereby acquires from the
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
such Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by the Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each such Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever;
provided, however, that no Lender shall be obligated to make any payment to the
Administrative Agent for any wrongful LC Disbursement made by the Issuing Bank
as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Issuing Bank.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, then the Issuing Bank shall either (i) notify
the Borrower to reimburse the Issuing Bank therefor, in which case the Borrower
shall reimburse such LC Disbursement by paying to the Administrative Agent an
amount equal to such LC Disbursement and any accrued interest thereon on (A) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 12:00 noon, New York City time, on the day of receipt or (B) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt,
provided that, if the LC Disbursement is equal to or greater than $1,000,000,
27
the Borrower may, subject to the conditions of borrowing set forth herein,
request in accordance with Section 2.3 or Section 2.8 that such payment be
financed with an ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing, or (ii) notify the Administrative Agent
that the Issuing Bank is requesting that the Lenders make an ABR Borrowing in an
amount equal to such LC Disbursement and any accrued interest thereon, in which
case (1) the Administrative Agent shall notify each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of such ABR
Borrowing, and (2) each Lender shall, whether or not any Default shall have
occurred and be continuing, any representation or warranty shall be accurate,
any condition to the making of any loan hereunder shall have been fulfilled, or
any other matter whatsoever, make the Loan to be made by it under this paragraph
by wire transfer of immediately available funds to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders on (x) the Business Day that such Lender receives such notice, if
such notice is received prior to 12:00 noon, New York City time, on the day of
receipt or (y) the Business Day immediately following the day that such Lender
receives such notice, if such notice is not received prior to such time on the
day of receipt. Such Loans shall, for all purposes hereof, be deemed to be an
ABR Borrowing referred to in Section 2.1(a) and made pursuant to Section 2.3,
and the Lenders obligations to make such Loans shall be absolute and
unconditional. The Administrative Agent will make such Loans available to the
Issuing Bank by promptly crediting or otherwise transferring the amounts so
received, in like funds, to the Issuing Bank for the purpose of repaying in full
the LC Disbursement and all accrued interest thereon.
(f) Obligations Absolute. The Borrower's obligations to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms hereof under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Credit Agreement, or any term or provision therein or herein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither any Credit Party nor any of their respective Related Parties
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank;
provided that the foregoing shall not be construed to excuse the Issuing Bank
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
28
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by facsimile) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 3.1(b) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the Issuing Bank, except
that interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.
(i) Cash Collateral. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing at least 66- 2/3% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article 8. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower hereunder. The Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Such deposit shall not bear interest, nor shall the
Administrative Agent be under any obligation whatsoever to invest the same,
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provided, however, that, at the request of the Borrower, such deposit shall be
invested by the Administrative Agent in direct short-term obligations of, or
short-term obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America, in each case
maturing no later than the expiry date of the Letter of Credit giving rise to
the relevant LC Exposure. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Lenders with LC Exposure representing
at least 66-2/3% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower hereunder. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived.
Section 2.10 Payments Generally; Pro Rata Treatment; Sharing of Setoffs
(a) Each Loan Party shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal of Loans, LC
Disbursements, interest or fees, or of amounts payable under Sections 3.5, 3.6,
3.7 or 10.3, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without setoff or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its office at 127 Public Square,
Cleveland, Ohio, 44114, or such other office as to which the Administrative
Agent may notify the other parties hereto, except payments to be made to the
Issuing Bank or Swingline Lender as expressly provided herein] and except that
payments pursuant to Sections 3.5, 3.6, 3.7 and 10.3 shall be made directly to
the Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal of Loans,
unreimbursed LC Disbursements, interest, fees and commissions then due
hereunder, such funds shall be applied (i) first, towards payment of interest,
fees and commissions then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest, fees and commissions then
due to such parties and (ii) second, towards payment of principal of Loans and
unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal of Loans and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of, or
interest on, any of its Loans or participations in LC Disbursements or Swingline
30
Loans resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and participations in LC Disbursements or
Swingline Loans and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements or Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of, and accrued interest on,
their respective Loans and participations in LC Disbursements or Swingline
Loans, provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms hereof or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements or Swingline Loans to any assignee
or participant, other than to the Borrower or any Subsidiary or Affiliate
thereof (as to which the provisions of this paragraph shall apply). Each Loan
Party consents to the foregoing and agrees, to the extent it may effectively do
so under applicable law, that any Lender acquiring a participation pursuant to
the foregoing arrangements may exercise against such Loan Party rights of setoff
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of such Loan Party in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from a
Loan Party prior to the date on which any payment is due to the Administrative
Agent for the account of the applicable Credit Parties hereunder that such Loan
Party will not make such payment, the Administrative Agent may assume that such
Loan Party has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to such Credit Parties the amount due.
In such event, if such Loan Party has not in fact made such payment, then each
such Credit Party severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Credit Party with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Credit Party shall fail to make any payment required to be
made by it pursuant to Section 2.4(b), 2.8(c) or 2.9(e), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Credit Party to satisfy such Credit Party's obligations under
such Sections until all such unsatisfied obligations are fully paid.
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ARTICLE 3. INTEREST, FEES, YIELD PROTECTION, ETC.
Section 3.1 Interest
(a) The Revolving Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate. The Loans comprising each Eurodollar
Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period
in effect for such Borrowing plus the Applicable Margin. Each Swingline Loan
shall bear interest at the Swingline Rate, unless a participation is required to
be made pursuant to Section 2.8(c), in which case such Loan shall bear interest
at the Alternate Base Rate.
(b) Notwithstanding the foregoing, if any principal of or interest on
any Loan, any reimbursement obligation in respect of any LC Disbursement or any
fee or other amount payable by the Borrower hereunder is not paid when due,
whether at stated maturity, upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate per annum equal
to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraph of this Section
or (ii) in the case of any other amount, 2% plus the rate applicable to ABR
Borrowings as provided in the preceding paragraph of this Section. In addition,
notwithstanding the foregoing, if an Event of Default has occurred and is
continuing, then, so long as such Event of Default is continuing, all
outstanding principal of each Loan and all unreimbursed reimbursement
obligations in respect of all LC Disbursements shall, without duplication of
amounts payable under the preceding sentence, bear interest, after as well as
before judgment, at a rate per annum equal to 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraph of this Section.
(c) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan, provided that (i) interest accrued pursuant
to paragraph (b) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than the prepayment of an ABR
Loan prior to the end of the Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(d) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate, LIBO Rate or Swingline Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent clearly
demonstrable error.
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Section 3.2 Interest Elections Relating to Revolving Borrowings
(a) Each Revolving Borrowing initially shall be of the Type specified
in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Revolving Borrowing to a
different Type or to continue such Revolving Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Revolving Borrowing, in which case each such portion
shall be allocated ratably among the Lenders.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.3 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information:
(i) the Revolving Borrowing to which such Interest Election
Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be
allocated to each resulting Revolving Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) of this
paragraph shall be specified for each resulting Revolving Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Revolving Borrowing is to be an
ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Revolving Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving
effect to such election, which shall be a period contemplated by the
definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
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(e) If the Borrower fails to deliver a timely Interest Election Request
prior to the end of the Interest Period applicable thereto, then, unless such
Revolving Borrowing is repaid as provided herein, at the end of such Interest
Period, such Borrowing shall be converted to an ABR Borrowing. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is
continuing and the Administrative Agent, at the request of the Required Lenders,
so notifies the Borrower, then, so long as an Event of Default is continuing,
(i) no outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
Section 3.3 Fees
(a) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender, a commitment fee, which shall accrue at a rate per annum
equal to 0.375% on the daily amount of the unused Revolving Commitment plus the
Swingline Exposure of such Lender during the period from and including the
Agreement Date to but excluding the date on which such Revolving Commitment
terminates. Accrued commitment fees shall be payable in arrears on the last day
of March, June, September and December of each year, each date on which the
Revolving Commitments are permanently reduced and on the date on which the
Revolving Commitments terminate, commencing on the first such date to occur
after the Agreement Date. All commitment fees shall be computed on the basis of
a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at rate per annum equal to the Applicable
Margin on the average daily amount of such Lender's LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the date on
which such Lender's Revolving Commitment terminates and the date on which such
Lender ceases to have any LC Exposure and (ii) to the Issuing Bank for its own
account a fronting fee, which shall accrue at the rate or rates per annum
separately agreed upon between the Borrower and the Issuing Bank on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Revolving Commitments and the date on which there ceases to be any such LC
Exposure, as well as the Issuing Bank's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Accrued participation fees and fronting fees shall be
payable in arrears on the last day of March, June, September and December of
each year, commencing on the first such date to occur after the Agreement Date;
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
ten days after demand. All participation fees and fronting fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
34
(c) The Borrower agrees to pay to each Credit Party, for its own
account, fees and other amounts payable in the amounts and at the times
separately agreed upon between the Borrower and such Credit Party.
(d) All fees and other amounts payable hereunder shall be paid on the
dates due, in immediately available funds. Fees and other amounts paid shall not
be refundable under any circumstances.
Section 3.4 Alternate Rate of Interest
If prior to the commencement of any Interest Period for a Eurodollar
Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO
Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by any Lender that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to such Lender
of making or maintaining its Loan included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or facsimile as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 3.5 Increased Costs; Illegality
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Credit Party (except any
such reserve requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Credit Party or the London interbank market
any other condition affecting this Credit Agreement, any Eurodollar
Loans made by such Credit Party or any participation therein or any
Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Credit Party of making or maintaining any Eurodollar Loan or the cost to such
Credit Party of issuing, participating in or maintaining any Letter of Credit
hereunder or to increase the cost to such Credit Party or to reduce the amount
of any sum received or receivable by such Credit Party hereunder (whether of
35
principal, interest or otherwise), then the Borrower will pay to such Credit
Party such additional amount or amounts as will compensate such Credit Party for
such additional costs incurred or reduction suffered.
(b) If any Credit Party determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Credit Party's capital or on the capital of such Credit Party's holding
company, if any, as a consequence of this Credit Agreement or the Loans made,
the Letters of Credit issued or the participations therein held, by such Credit
Party to a level below that which such Credit Party or such Credit Party's
holding company could have achieved but for such Change in Law (taking into
consideration such Credit Party's policies and the policies of such Credit
Party's holding company with respect to capital adequacy), then from time to
time the Borrower will pay to such Credit Party such additional amount or
amounts as will compensate such Credit Party or such Credit Party's holding
company for any such reduction suffered.
(c) A certificate of a Credit Party setting forth the amount or amounts
necessary to compensate such Credit Party or its holding company, as applicable,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be presumptively correct absent manifest error. The Borrower
shall pay such Credit Party the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) Failure or delay on the part of any Credit Party to demand
compensation pursuant to this Section shall not constitute a waiver of such
Credit Party's right to demand such compensation.
(e) Notwithstanding any other provision hereof, if any Change in Law
shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to any
Eurodollar Loan, then, by written notice to the Borrower and to the
Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods) and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans, whereupon any request for a Eurodollar Borrowing or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing, as applicable, for an additional Interest Period
shall, as to such Lender only, be deemed a request for an ABR Loan (or
a request to continue an ABR Loan as such for an additional Interest
Period or to convert a Eurodollar Loan into an ABR Loan, as
applicable), unless such declaration shall be subsequently withdrawn;
and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans, as of
the effective date of such notice as provided in the last sentence of
this paragraph.
36
In the event any Lender shall exercise its rights under clause (i) or (ii) of
this paragraph, all payments and prepayments of principal that would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Lender or the converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Loans made by such Lender in lieu of, or resulting from
the conversion of, such Eurodollar Loans, as applicable. For purposes of this
paragraph, a notice to the Borrower by any Lender shall be effective as to each
Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest
Period currently applicable to such Eurodollar Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrower.
Section 3.6 Break Funding Payments
In the event of (a) the payment or prepayment (voluntary or otherwise)
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto or any Swingline Loan other than on the
maturity thereof, (b) the conversion of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan or Swingline Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.7(d) and is revoked in accordance
therewith), then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate that such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be presumptively correct absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
Section 3.7 Taxes
(a) Any and all payments by or on account of any obligation of any Loan
Party hereunder and under any other Loan Document shall be made free and clear
of and without deduction for any Indemnified Taxes or Other Taxes, provided
that, if such Loan Party shall be required to deduct any Indemnified Taxes or
Other Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section), the applicable Credit
Party receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Party shall make such deductions and (iii)
such Loan Party shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
37
(b) In addition, the Loan Parties shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Each Loan Party shall indemnify each Credit Party, within ten days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by such Credit Party on or with respect to any payment by or on
account of any obligation of such Loan Party under the Loan Documents (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Credit Party, or by the
Administrative Agent on its own behalf or on behalf of a Credit Party, shall be
presumptively correct absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
relevant Loan Party is located, or any treaty to which such jurisdiction is a
party, with respect to payments under the Loan Documents shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate.
Section 3.8 Mitigation Obligations
If any Lender requests compensation under Section 3.5, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.7,
then such Lender shall, only if duly requested by the Borrower, use reasonable
efforts to designate a different lending office for funding or booking its Loans
or Letters of Credit (or any participation therein) hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.5 or 3.7, as
applicable, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Credit Parties that:
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Section 4.1 Organization; Powers
Each of the Borrower and the Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
Section 4.2 Authorization; Enforceability
The Transactions are within the corporate, partnership or other
analogous powers of each of the Borrower and the Subsidiaries to the extent it
is a party thereto and have been duly authorized by all necessary corporate,
partnership or other analogous and, if required, equity holder action. Each Loan
Document has been duly executed and delivered by each of the Borrower and the
Subsidiaries to the extent it is a party thereto and constitutes a legal, valid
and binding obligation thereof, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally.
Section 4.3 Governmental Approvals; No Conflicts
The Transactions (i) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect, (ii)
will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any of the Subsidiaries or any
order of any Governmental Authority, (iii) will not violate or result in a
default under any material indenture, agreement or other instrument binding upon
the Borrower or any of the Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by the Borrower or any of the
Subsidiaries, and (iv) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of the Subsidiaries (other than Liens
permitted by Section 7.2).
Section 4.4 Financial Condition; No Material Adverse Change
(a) The Borrower has heretofore furnished or caused to be furnished to
the Credit Parties: (i) a copy of the Parent's Annual Report on Form 10-K for
the fiscal year ended on or about December 31, 2000, together with the financial
statements required to be filed therewith and (ii) a copy of the Parent's
Quarterly Report on Form 10-Q for the fiscal quarter ended on or about March 31,
2001, together with the financial statements required to be filed therewith. The
consolidated financial statements referred to in clauses (i) and (ii) above
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Parent and its consolidated subsidiaries as at
such dates, and for the indicated periods, subject to year-end audit adjustments
and the absence of footnotes in the case of the statements referred to in clause
(ii) above, and have been prepared in accordance with GAAP on a consistent basis
throughout the indicated periods.
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(b) Since December 31, 2000, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole or the Parent
and its subsidiaries, taken as a whole.
Section 4.5 Properties
(a) Each of the Borrower and the Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and the Subsidiaries owns, or is entitled to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and the
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 4.5 sets forth the address of each item of real property
that is owned or leased by the Borrower or any of the Subsidiaries on the
Agreement Date.
Section 4.6 Litigation and Environmental Matters
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of the
Subsidiaries (i) that, if adversely determined (and there exists a reasonable
possibility of such adverse determination), could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any Loan Document or the
Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
the Subsidiaries (i) have failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) have become subject to any Environmental
Liability, (iii) have received notice of any claim with respect to any
Environmental Liability or (iv) know of any basis for any Environmental
Liability.
(c) Since the Agreement Date, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.
Section 4.7 Compliance with Laws and Agreements
Each of the Borrower and the Subsidiaries is in compliance with all
laws, regulations and orders of any Governmental Authority applicable to it or
its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the
40
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
Section 4.8 Investment and Holding Company Status
Neither the Borrower nor any of the Subsidiaries are (i) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (ii) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
Section 4.9 Taxes
Each of the Borrower and the Subsidiaries has timely filed or caused to
be filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (i) Taxes
that are being contested in good faith by appropriate proceedings and for which
the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves or (ii) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.10 ERISA
No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $2,000,000 the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $2,000,000 the fair market value of the assets of all such underfunded
Plans.
Section 4.11 Disclosure
The Borrower has disclosed to the Credit Parties all agreements,
instruments and corporate or other restrictions to which it or any of the
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower or any Subsidiary to any
Credit Party in connection with the negotiation of the Loan Documents or
delivered thereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
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Section 4.12 Subsidiaries
Schedule 4.12 sets forth the name of, and the ownership interest of the
Borrower in, each Subsidiary and identifies each Subsidiary that is a Subsidiary
Guarantor, in each case on the Agreement Date.
Section 4.13 Insurance
Schedule 4.13 sets forth a description of all insurance maintained by
or on behalf of the Borrower and the Subsidiaries on the Agreement Date. As of
the Agreement Date, all premiums in respect of such insurance that are due and
payable have been paid.
Section 4.14 Labor Matters
Except for the Disclosed Matters, (i) there are no strikes, lockouts or
slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of
the Borrower, threatened, (ii) the hours worked by and payments made to
employees of the Borrower and the Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters, except where any such violations,
individually and in the aggregate, would not be reasonably likely to result in a
Material Adverse Effect, (iii) all material payments due from the Borrower or
any Subsidiary, or for which any claim may be made against the Borrower or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Borrower or such Subsidiary and (iv) the consummation of the Transactions will
not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which the Borrower or
any Subsidiary is bound.
Section 4.15 Solvency
Immediately after the consummation of each Transaction, (i) the fair
value of the assets of the Borrower and the Subsidiaries, taken as a whole, at a
fair valuation, will exceed their debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the property of
the Borrower and the Subsidiaries, taken as a whole, will be greater than the
amount that will be required to pay the probable liability of their debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each of the Borrower and
the Subsidiary Guarantors will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each of the Borrower and the Subsidiary
Guarantors will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following such date.
Section 4.16 Federal Reserve Regulations
(a) Neither the Borrower nor any of the Subsidiaries are engaged
principally, or as one of their important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.
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(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase, acquire or carry any Margin Stock or for any purpose
that entails a violation of, or that is inconsistent with, the provisions of the
regulations of the Board, including Regulation T, U or X.
Section 4.17 Existing Letters of Credit
The Existing Letters of Credit set forth on Schedule 4.17 constitute
all of the letters of credit issued for the account of the Borrower or any
Subsidiary which are outstanding on the Agreement Date.
ARTICLE 5. CONDITIONS
Section 5.1 Effective Date
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 10.2):
(a) Credit Agreement. The Administrative Agent (or its counsel) shall
have received from each party hereto either (i) a counterpart hereof signed on
behalf of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include facsimile transmission of a signed signature page of
this Credit Agreement) that such party has signed a counterpart hereof.
(b) Notes. The Administrative Agent shall have received a Note for each
Lender that shall have requested one, signed on behalf of the Borrower.
(c) Legal Opinion. The Administrative Agent shall have received a
favorable written opinion (addressed to the Credit Parties and dated the
Effective Date) from Drake, Sommers, Loeb, Tarshis & Catania on behalf of the
Loan Parties, substantially in the form of Exhibit B, and covering such other
matters relating to the Loan Parties, the Loan Documents and the Transactions as
the Required Lenders shall reasonably request. The Borrower hereby requests such
counsel to deliver such opinion.
(d) Organizational Documents, etc. The Administrative Agent shall have
received such documents and certificates as the Administrative Agent or its
counsel may reasonably request relating to the organization, existence and good
standing of each Loan Party, the authorization of the Transactions, the
incumbency of its officer or officers who may sign the Loan Documents, including
therein a signature specimen of such officer or officers and any other legal
matters relating to the Loan Parties, the Loan Documents or the Transactions,
all in form and substance satisfactory to the Administrative Agent and its
counsel.
(e) Officer's Certificate. The Administrative Agent shall have received
a certificate, dated the Effective Date and signed by the chief executive
43
officer or the chief financial officer of the Borrower, confirming compliance
with the conditions set forth in paragraphs (a) and (b) of Section 5.2.
(f) Fees and Expenses. The Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the Effective Date,
including, (i) an upfront fee for each Lender in an amount equal to 0.375% of
such Lender's final allocated Revolving Commitment, and (ii) to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.
(g) Guarantee Agreement. The Administrative Agent shall have received
counterparts of the Guarantee Agreement signed on behalf of the Parent, the
Borrower and each other subsidiary of the Parent.
(h) Security Agreement. The Administrative Agent shall have received
counterparts of the Security Agreement signed on behalf of the Parent, the
Borrower and each other subsidiary of the Parent, together with the following:
(i) any certificated securities representing shares of capital
stock or other similar interests owned by or on behalf of any Loan
Party constituting Collateral as of the Effective Date after giving
effect to the Transactions;
(ii) any promissory notes and other instruments evidencing all
loans, advances and other debt owed or owing to any Loan Party
constituting Collateral as of the Effective Date after giving effect to
the Transactions;
(iii) stock powers and instruments of transfer, endorsed in
blank, with respect to such certificated securities, promissory notes
and other instruments;
(iv) all instruments and other documents, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under
the Security Agreement; and
(v) results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties in the
jurisdictions contemplated by the Security Agreement and copies of the
financing statements (or similar documents) disclosed by such search
and evidence reasonably satisfactory to the Administrative Agent that
the Liens indicated by such financing statements (or similar documents)
are permitted by Section 7.2 or have been released.
(i) Insurance. The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 6.10 hereof and
Section 10.8 of the Guarantee Agreement is in effect.
(j) Officer's Certificate. The Administrative Agent shall have received
a certificate, dated the Effective Date and signed by the chief executive
44
officer or the chief financial officer of the Borrower, in form and substance
satisfactory to the Administrative Agent, as follows:
(i) confirming that (A) the performance by each Loan Party of
its obligations under each Loan Document shall not (1) violate any
applicable law, statute, rule or regulation or (2) conflict with, or
result in a default or event of default under, any material agreement
of any Loan Party or any other Subsidiary and (B) after giving effect
to the Transactions occurring on or prior to the Effective Date, none
of the Borrower or any of the Subsidiaries shall have outstanding any
preferred Equity Interests or any Indebtedness, other than (1)
Indebtedness incurred under the Loan Documents and (2) Indebtedness set
forth on Schedule 7.1, and
(ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 7.12, 7.13, 7.14 and 7.15 on a
pro forma basis immediately after giving effect to the Transactions
occurring on the Effective Date.
(k) Borrowing Base Certificate. The Administrative Agent shall have
received a Borrowing Base Certificate, signed by a Financial Officer, in form
and substance satisfactory to the Administrative Agent.
(l) Existing Bank Debt. The Existing Bank Debt shall have been repaid
in full, each KeyBank Line Document shall have been terminated and the
Administrative Agent shall have received evidence thereof, in form and substance
satisfactory to the Administrative Agent.
(m) Environmental Matters; No Litigation. Each Lender shall be
reasonably satisfied (i) with the amount and nature of any environmental and
employee health and safety exposures to which the Parent or any of its
subsidiaries may be subject, or with the plans of the Parent or the Borrower
with respect thereto, (ii) that there shall be no litigation or administrative
proceeding, or regulatory development, that would reasonably be expected to have
a material adverse effect on (A) the business, assets, operations, prospects,
condition (financial or otherwise) or material agreements of the Parent and its
subsidiaries, taken as a whole, (B) the ability of any Loan Party to perform any
of its obligations under any Loan Document or (C) the rights of or benefits
available to any Credit Party under any Loan Document, (iii) with the current
status of, and the terms of any settlement or other resolution of, any
litigation or other proceedings brought against the Parent or any of its
subsidiaries by or on behalf of its subscribers or by any Governmental Authority
relating to its business, or (iv) with the tax position and the contingent tax
and other liabilities of, and with any tax sharing agreements among, the Parent
or any of its subsidiaries, and with the plans of the Parent and the Borrower
with respect thereto
(n) No Material Adverse Change. The Administrative Agent shall not have
received written notice from any Loan Party or any Credit Party that a material
adverse change or material adverse condition in the business, assets,
operations, properties, condition (financial or otherwise), liabilities
(including contingent liabilities), or prospects of the Borrower and the
Subsidiaries, taken as a whole, has occurred since December 31, 2000.
45
The Administrative Agent shall notify the Borrower and the Credit Parties of
each of the Closing Date and the Effective Date, and each such notice shall be
conclusive and binding. The Administrative Agent shall be entitled to assume
that each of the conditions set forth in Sections 5.1(m) and 5.1(n) have been
satisfied unless it shall have received notice expressly to the contrary from a
Credit Party or a Loan Party. Notwithstanding the foregoing, the obligations of
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.2) at or prior to 3:00 p.m., New
York City time, on September 1, 2001 (and, in the event such conditions are not
so satisfied or waived, the Revolving Commitments shall terminate at such time).
Section 5.2 Each Credit Event
The obligation of each Lender to make a Loan on the occasion of any
Borrowing, and of the Issuing Bank to issue, amend, renew or extend a Letter of
Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Loan Parties set forth in
the Loan Documents shall be true and correct on and as of the date of such
Borrowing or the date of such issuance, amendment, renewal or extension, as
applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or such issuance, amendment, renewal or extension, as applicable, no
Default shall have occurred and be continuing.
(c) The Administrative Agent shall have received such other
documentation and assurances as shall be reasonably required by it in connection
therewith.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE 6. AFFIRMATIVE COVENANTS
Until the Revolving Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees and other amounts payable
under the Loan Documents shall have been paid in full and all Letters of Credit
have expired and all LC Disbursements have been reimbursed, the Borrower
covenants and agrees with the Credit Parties that:
Section 6.1 Financial Statements and Other Information
The Borrower will furnish, or cause to be furnished, to the Administrative
Agent and each Lender:
(a) within 90 days after the end of each fiscal year, the Parent's Form
10-K containing the Parent's audited consolidated balance sheet and related
statements of income, stockholders' equity and cash flows as of the end of and
46
for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Parent and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, (i) the Parent's Form 10-Q containing the Parent's
consolidated balance sheet and related statements of income, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year and (ii) unaudited
financial information for each of the business lines of the Parent and its
subsidiaries, all certified by a Financial Officer as presenting fairly in all
material respects the financial condition and results of operations of the
Parent and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(c) concurrently with any delivery of financial statements under clause
(a) or (b) above, a Compliance Certificate signed by a Financial Officer (i)
attaching reasonably detailed calculations demonstrating compliance with
Sections 7.12, 7.13, 7.14 and 7.15, (ii) listing the Subsidiary Guarantors as of
the date of such Compliance Certificate, (iii) stating whether any change in
GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 4.4 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such Compliance Certificate, (iv) certifying that (A) neither the
Parent nor any subsidiary thereof is in material default under any lease listed
on Schedule 4.5 or entered into by the Parent or any subsidiary thereof after
the Agreement Date, (B) no payment or rent under any such lease is more than 30
days past due, and (C) that no Default has occurred and is continuing, and (v)
in the case of the Compliance Certificate delivered concurrently with the
delivery of financial statements under clause (a) above, (x) either a
certification that there has been no change to information disclosed in the
schedules to the Security Agreement as most recently supplemented or, if so,
attaching supplements to such schedules and (y) certifying that all Uniform
Commercial Code financing statements or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to Schedule 3.1(a)(v) to the Security Agreement as so
supplemented, and all other actions have been taken, to the extent necessary to
protect and perfect the Security Interest (as defined in the Security Agreement)
for a period of not less than 18 months after the date of such certificate
(except as noted therein with respect to any continuation statements to be filed
within such period);
(d) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
47
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Parent or any subsidiary thereof with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Parent to its shareholders generally, as the case may be; and
(f) within 30 days after the beginning of each fiscal year, annual
consolidated projections for the Parent and its subsidiaries for such fiscal
year and the following two fiscal years, including projected consolidated
statements of income of the Parent and its subsidiaries, all in reasonable
detail acceptable to the Administrative Agent; (ii) promptly upon preparation
thereof, such other projections that the Parent or any subsidiary thereof may
prepare and any revisions that may be made to any projections previously
delivered to the Administrative Agent and the Lenders; and (iii) no later than
30 days after the end of each fiscal quarter in which there has been a material
deviation from any projections provided to the Administrative Agent and the
Lenders, a certificate of a Financial Officer explaining the deviation and the
action, if any, that has been taken or is proposed to be taken with respect
thereto; in each case the foregoing projections shall state all underlying
assumptions;
(g) no later than 15 Business Days after the last Business Day of each
month and at such other times as the Administrative Agent may request, a
Borrowing Base Certificate signed by a Financial Officer, calculated as of the
last day of the preceding month; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the Parent
and its subsidiaries (or any thereof), or compliance with the terms of the Loan
Documents, as any Credit Party may reasonably request.
Section 6.2 Notices of Material Events
The Borrower will furnish to the Administrative Agent and each Lender
prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the Parent
or any Affiliate thereof that, if adversely determined, could in the good faith
opinion of the Borrower reasonably be expected to result in a Material Adverse
Effect;
(c) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
48
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Parent or the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
Section 6.3 Existence; Conduct of Business
The Borrower will, and will cause each of the Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business, provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 7.3.
Section 6.4 Payment and Performance of Obligations
The Borrower will, and will cause each of the Subsidiaries to, pay or
perform its obligations, including Tax liabilities, that, if not paid or
performed, could reasonably be expected to result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (i) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (ii) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (iii) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.
Section 6.5 Maintenance of Properties
The Borrower will, and will cause each of the Subsidiaries to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.
Section 6.6 Books and Records; Inspection Rights
(a) The Borrower will, and will cause each of the Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of the Subsidiaries to,
permit any representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested and all at the
expense of the Borrower.
(b) The Borrower will, and will cause each of the Subsidiaries to,
permit any representatives designated by the Administrative Agent or the
Required Lenders to audit the Collateral on an annual basis, or on a more
frequent basis as the Administrative Agent or Required Lenders may determine in
a commercially reasonable manner, all at the expense of the Borrower.
49
Section 6.7 Compliance with Laws
The Borrower will, and will cause each of the Subsidiaries to, comply
with all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
Section 6.8 Use of Proceeds
The proceeds of the Loans and the Letters of Credit will be used only
as follows: (i) to refinance the Existing Bank Debt and (ii) for general
corporate purposes not inconsistent with the terms hereof. No part of the
proceeds of any Loan or any Letter of Credit will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase,
acquire or carry any Margin Stock or for any purpose that entails a violation of
any of the regulations of the Board, including Regulations T, U and X.
Section 6.9 Information Regarding Collateral
The Borrower will furnish to the Administrative Agent prompt written
notice of any change in (i) the legal name or jurisdiction of incorporation or
formation of any Loan Party or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) the location
of the chief executive office of any Loan Party, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned or held by it or on its behalf or, except as provided in the
applicable Security Documents, any office or facility at which Collateral owned
or held by it or on its behalf with an aggregate book value in excess of $10,000
is located (including the establishment of any such new office or facility),
(iii) the identity or organizational structure of any Loan Party such that a
filed financing statement becomes misleading or (iv) the Federal Taxpayer
Identification Number of any Loan Party. The Borrower agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required in
order for the Administrative Agent to continue at all times following such
change to have a valid, legal and perfected security interest in all the
Collateral. The Borrower also agrees promptly to notify the Administrative Agent
if any material portion of the Collateral is damaged or destroyed.
Section 6.10 Insurance
The Borrower will, and will cause each of the Subsidiaries to,
maintain, with financially sound and reputable insurance companies, (i) adequate
insurance for its insurable properties, all to such extent and against such
risks, including fire, casualty, business interruption and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses operating in the same or similar locations and (ii) such
other insurance as is required pursuant to the terms of any Security Document.
Section 6.11 Casualty and Condemnation
(a) The Borrower will furnish to the Credit Parties prompt written
notice of any casualty or other insured damage to any portion of any property
owned or held by or on behalf of itself or any Subsidiary or the commencement of
50
any action or proceeding for the taking of any such property or any part thereof
or interest therein under power of eminent domain or by condemnation or similar
proceeding.
(b) If any Reduction Event results in Net Proceeds (whether in the form
of insurance proceeds, condemnation award or otherwise), the Administrative
Agent is authorized to collect such Net Proceeds and, if received by the Parent
or any of its subsidiaries, the Borrower shall cause such Net Proceeds to be
paid over to the Administrative Agent, provided that (i) to the extent that the
Parent or any of its subsidiaries intends to use any such Net Proceeds to
repair, restore, reinvest or replace assets of the Borrower or any of the other
Loan Parties as provided in the proviso of the definition of the term "Net
Proceeds", the Administrative Agent shall, subject to the provision of such
proviso, deliver such Net Proceeds to the Borrower, (ii) otherwise, the
Administrative Agent shall, and the Borrower hereby authorizes the
Administrative Agent to, apply such Net Proceeds, to the extent that they are
Net Proceeds, to prepay the Loans in accordance with Section 2.7 and (iii) all
proceeds of business interruption insurance shall be paid over to the Borrower
unless a Default has occurred and is continuing.
(c) All proceeds received by or paid to the Administrative Agent that
do not constitute Net Proceeds shall be paid over to the Borrower, on behalf of
the relevant Loan Parties, unless an Event of Default has occurred and is
continuing.
Section 6.12 Additional Subsidiaries
If any Subsidiary (other than a Subsidiary that is a party to the
Guarantee Agreement and the Security Agreement) is formed or acquired after the
Agreement Date, the Borrower will notify the Credit Parties in writing thereof
not later than the tenth Business Day after the date on which such Subsidiary is
formed or acquired and (i) the Borrower will cause such Subsidiary to (a)
execute and deliver each applicable Guarantee Document (or otherwise become a
party thereto in the manner provided therein) and become a party to each
applicable Security Document in the manner provided therein, in each case not
later than the tenth Business Day after the date on which such Subsidiary is
formed or acquired and (b) promptly take such actions to create and perfect
Liens on such Subsidiary's assets to secure the Obligations as the
Administrative Agent or the Required Lenders shall reasonably request and (ii)
if any Equity Interests issued by any such Subsidiary are owned or held by or on
behalf of the Borrower or any Subsidiary Guarantor or any loans, advances or
other debt is owed or owing by any such Subsidiary to the Borrower or any
Subsidiary Guarantor, the Borrower will cause such Equity Interests and
promissory notes and other instruments evidencing such loans, advances and other
debt to be pledged pursuant to the Security Documents not later than the tenth
Business Day after the date on which such Subsidiary is formed or acquired.
Section 6.13 Further Assurances
(a) The Borrower will, and will cause each Subsidiary Guarantor to,
execute any and all further documents, financing statements, agreements
(including guarantee agreements and security agreements) and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings and other documents), that may be required under any
51
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect (including as a result of
any change in applicable law) the Liens created or intended to be created by the
Security Documents or the validity or priority of any such Lien, all at the
expense of the Borrower. The Borrower also agrees to provide to the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.
(b) The Borrower hereby covenants and agrees that, if at any time on or
after the date hereof any asset or property acquired, owned or held by or on
behalf of the Borrower or any Subsidiary Guarantor that constitutes or would
constitute Collateral is not subject to a perfected Lien of the Administrative
Agent hereunder with the priority required hereby (except as a result of the
Administrative Agent's failure to maintain possession of any instrument, stock
certificate or other similar document delivered to it hereunder or as a result
of such asset or property being used or disposed of in a manner expressly
permitted by any Loan Document), then the Borrower shall, at its own cost and
expense, promptly (i) notify the Administrative Agent thereof and (ii) execute
and deliver or cause the applicable Subsidiary Guarantor to execute and deliver,
any and all agreements, instruments and other documents, and take all further
action (including the filing and recording of financing statements and other
documents), that may be necessary or reasonably requested by the Administrative
Agent to cause such asset or property to become subject to a perfected Lien of
the Administrative Agent hereunder (including, where applicable, perfection by
establishing "sole dominion and control" within the meaning of the common law
and "control" within the meaning of the UCC), with the priority required hereby.
In addition, the Borrower hereby covenants and agrees that each Compliance
Certificate delivered pursuant to Section 6.1(c) of the Credit Agreement after
the date hereof shall contain a certification that the representations and
warranties contained in Section 3.1(a)(v) of the Security Agreement made by it
and each other Loan Party are true and correct as of the date of such
certificate.
(c) If any material assets are acquired by the Borrower or any
Subsidiary Guarantor after the Agreement Date (other than assets constituting
Collateral under the Security Documents that become subject to the Lien of the
Security Documents upon acquisition thereof, and other than assets upon which
the Administrative Agent has a first perfected Lien), the Borrower will notify
the Credit Parties thereof, and, if requested by the Administrative Agent or the
Required Lenders, the Borrower will cause such assets to be subjected to a Lien
securing the Obligations and will take, and cause the Subsidiaries Guarantors to
take, such actions as shall be necessary or reasonably requested by the
Administrative Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section, all at the expense of the Borrower
and the Subsidiary Guarantors.
Section 6.14 Environmental Compliance
The Borrower will, and will cause each Subsidiary to, use and operate
all of its facilities and property in compliance with all Environmental Laws,
keep all necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
52
compliance therewith, and handle all Hazardous Materials in compliance with all
applicable Environmental Laws, except where noncompliance with any of the
foregoing could not reasonably be expected to have a Material Adverse Effect.
Section 6.15 Landlord Consent Agreements
(a) The Borrower shall use its best efforts to obtain, within 90 days
of the date hereof, counterparts of a Landlord Consent Agreement in the form of
Exhibit H or such other form reasonably acceptable to the Administrative Agent,
signed on behalf of each applicable Loan Party and the applicable landlord of
the leased properties disclosed on Schedule 4.5.
(b) If the Borrower or any Subsidiary Guarantor leases any real
property after the Agreement Date (other than leases with respect to which the
applicable Loan Party and lessor thereunder has executed and delivered a
Landlord Consent Agreement), the Borrower will notify the Credit Parties
thereof, and the Borrower will use its reasonable efforts to deliver or cause to
be delivered to the Administrative Agent a Landlord Consent Agreement in the
form of Exhibit H or such other form reasonably acceptable to the Administrative
Agent, signed on behalf of such Loan Party and such lessor.
ARTICLE 7. NEGATIVE COVENANTS
Until the Revolving Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees and other amounts payable
under the Loan Documents shall have been paid in full and all Letters of Credit
have expired and all LC Disbursements have been reimbursed, the Borrower
covenants and agrees with the Credit Parties that:
Section 7.1 Indebtedness; Preferred Equity Interests
(a) The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Indebtedness existing on the Agreement Date and set forth
in Schedule 7.1, but not any extensions, renewals or replacements of
any such Indebtedness;
(iii) Indebtedness of the Borrower or any Subsidiary incurred
to finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof, provided that (A) such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such
construction or improvement and (B) the aggregate principal amount of
Indebtedness permitted by this clause (iii) shall not, without
duplication, together with the
53
Indebtedness permitted under clauses (iv) and (vii) of this Section and
any Indebtedness permitted under clauses (iii), (iv) and (vii) of
Section 11.1(a) of the Guarantee Agreement exceed $5,000,000 in the
aggregate at any time outstanding;
(iv) Indebtedness of any Person that becomes a Subsidiary
after the Agreement Date, provided that (A) such Indebtedness exists at
the time such Person becomes a Subsidiary and is not created in
contemplation of or in connection with such Person becoming a
Subsidiary and (B) the aggregate principal amount of Indebtedness
permitted by this clause (iv) shall not, without duplication, together
with the Indebtedness permitted under clauses (iii) and (vii) of this
Section and any Indebtedness permitted under clauses (iii), (iv) and
(vii) of Section 11.1(a) of the Guarantee Agreement exceed $5,000,000
in the aggregate at any time outstanding;
(v) Indebtedness of the Borrower to any other Loan Party and
of any Subsidiary Guarantor to the Borrower or any other Loan Party;
(vi) Guarantees by the Borrower of Indebtedness of any other
Loan Party and by any Subsidiary Guarantor of Indebtedness of the
Borrower or any other Loan Party; and
(vii) other unsecured Indebtedness of the Borrower and its
Subsidiaries, provided that the aggregate principal amount of
Indebtedness permitted by this clause (vii) shall not, without
duplication, together with the Indebtedness permitted under clauses
(iii) and (iv) of this Section and any Indebtedness permitted under
clauses (iii), (iv) and (vii) of Section 11.1(a) of the Guarantee
Agreement exceed $5,000,000 in the aggregate at any time outstanding.
(b) The Borrower will not, and it will not permit any Subsidiary to,
issue any preferred Equity Interest, other than preferred Equity Interests
issued by any Subsidiary to the Borrower or any Subsidiary Guarantor.
Section 7.2 Liens
The Borrower will not, and will not permit any Subsidiary to, create,
incur, assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any Subsidiary
existing on the Agreement Date and set forth in Schedule 7.2, provided that (i)
such Lien shall not apply to any other property or asset of the Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the Agreement Date and any extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
54
(d) security interests on fixed or capital assets acquired, constructed
or improved by the Borrower or any Subsidiary, provided that (i) such security
interests secure Indebtedness permitted by clause (iii) of Section 7.1, (ii)
such security interests and the Indebtedness secured thereby are incurred prior
to or within 90 days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does not
exceed the cost of acquiring, constructing or improving such fixed or capital
assets and (iv) such security interests shall not apply to any other property or
assets of the Borrower or any Subsidiary; and
(e) security interests existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the Agreement
Date prior to the time such Person becomes a Subsidiary, provided that (i) such
security interests secure Indebtedness permitted by clause (iv) of Section 7.1,
(ii) such security interests are not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary, as
applicable, (iii) such security interests shall not apply to any other property
or assets of the Borrower or any Subsidiary and (iv) such security interests
shall secure only the Indebtedness that they secure on the date of such
acquisition or the date such Person becomes a Subsidiary, as applicable, and any
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof.
Section 7.3 Fundamental Changes
(a) The Borrower will not, and will not permit any Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or substantially all of
its assets, or all or substantially all of the Equity Interests (or all or
substantially all of the Equity Interests within the meaning of clause (a) of
such defined term) issued by any of the Subsidiaries (in each case, whether now
owned or hereafter acquired), or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto, no Default shall or
would have occurred and be continuing:
(i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving entity, and any
Subsidiary may merge into any Subsidiary Guarantor in a transaction in
which such Subsidiary Guarantor is the surviving entity;
(ii) any Subsidiary may merge with any Person in a transaction
that is not permitted by clause (i) of this Section 7.3(a), provided
that such merger is permitted by Sections 7.4 or 7.5, as applicable;
(iii) any Subsidiary may sell, transfer, lease or otherwise
dispose of all or substantially all of its assets to the Borrower or to
any Subsidiary Guarantor;
(iv) the Borrower or any Subsidiary may sell, transfer, lease
or otherwise dispose of its assets in a transaction that is not
permitted by clause (iii) of this Section
55
7.3(a), provided that such sale, transfer, lease or other disposition
is also permitted by Section 7.5; and
(v) any Subsidiary (other than a Subsidiary Guarantor) may
liquidate or dissolve if the Borrower determines in good faith that
such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders.
(b) The Borrower will not, and will not permit any of the Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Borrower and the Subsidiaries on the Agreement Date and
businesses which are now directly related thereto.
Section 7.4 Investments, Loans, Advances, Guarantees and Acquisitions
The Borrower will not, and will not permit any of the Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, make or permit to exist any Guarantees of any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions (including pursuant to any merger)) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the Agreement Date and set forth in
Schedules 4.12 and 7.4;
(c) investments made by the Borrower in the Equity Interests of any
Subsidiary Guarantor and made by any Subsidiary Guarantor in the Equity
Interests of any other Subsidiary Guarantor;
(d) loans or advances made by the Borrower to any other Loan Party and
made by any Subsidiary to the Borrower or any other Loan Party, provided that
any such loans and advances made by a Loan Party shall be evidenced by a
promissory note which shall be pledged pursuant to the Security Agreement;
(e) acquisitions made by the Borrower from any Subsidiary Guarantor and
made by any Subsidiary Guarantor from the Borrower or any other Subsidiary
Guarantor; and
(f) Guarantees permitted by Section 7.1; and
(g) if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing other investments, loans,
advances, Guarantees and acquisitions, provided that the sum of (i) the
aggregate consideration paid by the Borrower or any Subsidiary in connection
with all such acquisitions, (ii) the aggregate amount of all such investments,
loans and advances outstanding and (iii) the amount of obligations and
liabilities outstanding in the aggregate that is Guaranteed pursuant to all such
Guarantees, shall not, together with all amounts utilized under Section 11.4(g)
of the Guarantee Agreement, exceed $2,500,000 at any time.
56
Section 7.5 Asset Sales
The Borrower will not, and will not permit any of the Subsidiaries to,
sell, transfer, lease or otherwise dispose (including pursuant to a merger) of
any asset, including any Equity Interest, nor will the Borrower permit any of
the Subsidiaries to issue any additional Equity Interests except:
(a) sales, transfers, leases and other dispositions of inventory, used
or surplus equipment and Permitted Investments, in each case in the ordinary
course of business;
(b) sales, transfers, leases and other dispositions made by the
Borrower to any other Loan Party and made by any Subsidiary Guarantor to the
Borrower or any other Loan Party;
(c) other sales, transfers, leases and dispositions of assets provided
that the aggregate amount of sales, transfers, leases and dispositions permitted
by this clause (c) and Section 11.5(c) of the Guarantee Agreement shall not
exceed $2,500,000 in the aggregate at any time outstanding; and
(d) issuances of Equity Interests by any Subsidiary Guarantor to the
Borrower or any other Loan Party.
Section 7.6 Sale and Lease-Back Transactions
The Borrower will not, and will not permit any of the Subsidiaries to,
enter into any arrangement, directly or indirectly, with any Person whereby it
shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that it intends to use for substantially the
same purpose or purposes as the property being sold or transferred.
Section 7.7 Hedging Agreements
The Borrower will not, and will not permit any of the Subsidiaries to,
enter into any Hedging Agreement, other than Hedging Agreements entered into in
the ordinary course of business to hedge or mitigate risks to which the Borrower
or any Subsidiary is exposed in the conduct of its business or the management of
its liabilities.
Section 7.8 Restricted Payments
The Borrower will not, and will not permit any of the Subsidiaries to,
declare or make, or agree to pay for or make, directly or indirectly, any
Restricted Payment, except that (i) the Borrower may declare and pay dividends
with respect to its Equity Interests payable solely in perpetual common Equity
Interests, and (ii) the Borrower or any Subsidiary may declare and pay dividends
with respect to its Equity Interests to the Borrower or any other Loan Party.
57
Section 7.9 Transactions with Affiliates
The Borrower will not, and will not permit any of the Subsidiaries to,
sell, transfer, lease or otherwise dispose (including pursuant to a merger) any
property or assets to, or purchase, lease or otherwise acquire (including
pursuant to a merger) any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates, except in the ordinary course of
business at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an arms-length basis from
unrelated third parties, provided that this Section shall not apply to any
transaction that is permitted under Section 7.1, 7.3, 7.4, 7.5 or 7.8, or
Section 11.1, 11.3, 11.4, 11.5 or 11.8 of the Guarantee Agreement, between or
among the Loan Parties and not involving any other Affiliate.
Section 7.10 Restrictive Agreements
The Borrower will not, and will not permit any of the Subsidiaries to,
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement binding on the Borrower or any Subsidiary that prohibits,
restricts or imposes any condition upon (i) the ability of the Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets (unless such agreement or arrangement does not prohibit, restrict or
impose any condition upon the ability of any Loan Party to create, incur or
permit to exist any Lien in favor of the Secured Parties created under the Loan
Documents) or (ii) the ability of any Subsidiary to pay dividends or other
distributions with respect to any of its Equity Interests or to make or repay
loans or advances to the Borrower or any other Subsidiary or to Guarantee
Indebtedness of the Borrower or any other Subsidiary, provided that (a) the
foregoing shall not apply to restrictions and conditions imposed by law or by
the Loan Documents, (b) the foregoing shall not apply to restrictions and
conditions existing on the Agreement Date identified on Schedule 7.10 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (c) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided that such restrictions
and conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (d) clause (i) of this Section shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted hereby if such restrictions or conditions apply only to
the property or assets securing such Indebtedness and (e) clause (i) of this
Section shall not apply to customary provisions in leases restricting the
assignment thereof.
Section 7.11 Organizational Documents
The Borrower will not, and will not permit any Subsidiary to, amend,
modify or waive any of its rights under its certificate of incorporation,
by-laws or other organizational documents, other than immaterial amendments,
modifications or waivers that would not reasonably be expected to adversely
affect the Credit Parties, provided that the Borrower shall deliver or cause to
be delivered to the Administrative Agent and each Lender a copy of each such
amendment, modification or waiver promptly after the execution and delivery
thereof).
58
Section 7.12 Fixed Charge Coverage Ratio
The Borrower will not permit the Fixed Charge Coverage Ratio as of the
end of any fiscal quarter to be less than 1.35:1.00.
Section 7.13 Leverage Ratio
The Borrower will not permit the Leverage Ratio at any time to be
greater than 4.00:1.00.
Section 7.14 Capitalization Ratio
The Borrower will not permit the Capitalization Ratio as of the end of
any fiscal quarter to be greater than 55%.
Section 7.15 Capital Expenditures
The Borrower will not permit Capital Expenditures made or obligated to
be made by the Parent and its subsidiaries on a consolidated basis in respect of
fiscal year set forth below to be greater than the amount set forth below with
respect to each such fiscal year:
===============================
Fiscal Year Amount
-------------------------------
2001 $15,000,000
-------------------------------
2002 $15,000,000
-------------------------------
2003 $16,500,000
-------------------------------
2004 $17,500,000
===============================
ARTICLE 8. EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or on any
reimbursement obligation in respect of any LC Disbursement or any fee,
commission or any other amount (other than an amount referred to in clause (a)
of this Article) payable under any Loan Document, when and as the same shall
become due and payable, and such failure shall continue unremedied for a period
of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of any Loan Party in or in connection with any Loan Document or any amendment or
59
modification hereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification hereof or waiver
thereunder, shall prove to have been incorrect in any material respect when made
or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 6.2, 6.3, 6.8, 6.10, 6.12, 6.13,
6.15 or in Article 7, or any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in the Guarantee Documents, Security
Documents or the Affiliate Subordination Agreement, in each case to the extent
it or he is a party thereto;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document to which it is a party
(other than those specified in clause (a), (b) or (d) of this Article), and such
failure shall continue unremedied for a period of 30 days after such Loan Party
shall have obtained knowledge thereof;
(f) any Loan Party shall fail to make any payment (whether of principal
or interest and regardless of amount) in respect of any Material Obligations,
when and as the same shall become due and payable (after giving effect to any
applicable grace period);
(g) any event or condition occurs that results in any Material
Obligations becoming due prior to their scheduled maturity or payment date, or
that enables or permits (with or without the giving of notice, the lapse of time
or both) the holder or holders of any Material Obligations or any trustee or
agent on its or their behalf to cause any Material Obligations to become due
prior to their scheduled maturity or payment date or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to their scheduled maturity
or payment date (in each case after giving effect to any applicable cure
period), provided that this clause (g) shall not apply to secured Indebtedness
that becomes due solely as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Parent or any of its subsidiaries, or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Parent or any of its subsidiaries or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 45 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(i) the Parent or any of its subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent or any of its subsidiaries or for
a substantial part of its assets, (iv) file an answer admitting the material
60
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Parent or any of its subsidiaries shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against the Borrower or any
Subsidiary or any combination thereof (which shall not be fully covered by
insurance without taking into account any applicable deductibles) and the same
shall remain undischarged or unbonded for a period of 45 consecutive days during
which execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of the Borrower
or any Subsidiary to enforce any such judgment;
(l) any Loan Document shall cease, for any reason, to be in full force
and effect, or any Loan Party shall so assert in writing or shall disavow any of
its obligations thereunder;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required by the applicable
Security Document, except (i) as a result of the sale or other disposition of
the applicable Collateral in a transaction permitted under the Loan Documents or
(ii) as a result of the Administrative Agent's failure to maintain possession of
any stock certificates, promissory notes or other instruments delivered to it
under the Security Agreement or any foreclosure, distraint, sale or similar
proceedings have been commenced with respect to any Collateral;
(n) a Change in Control shall occur; or
(o) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and the Subsidiaries in an aggregate amount exceeding (i) $2,000,000 in any year
or (ii) $2,000,000 for all periods;
then, and in every such event (other than an event described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Borrower, take either or both of the following actions
(whether before or after the Effective Date), at the same or different times:
(i) terminate the Revolving Commitments and thereupon the Revolving Commitments
shall terminate immediately and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of each Loan Party accrued under the Loan Documents, shall become
due and payable immediately, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
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Borrower; and in case of any event described in clause (h) or (i) of this
Article, the Revolving Commitments shall automatically terminate (whether before
or after the Effective Date) and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of
each Loan Party accrued under the Loan Documents, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
ARTICLE 9. THE ADMINISTRATIVE AGENT
Each Credit Party hereby irrevocably appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof, together with such actions and powers as are reasonably
incidental thereto.
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (i) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (ii) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Credit Parties as shall be necessary
under the circumstances as provided in Section 10.2), and (iii) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower, any of the Subsidiaries or any other Loan Party that
is communicated to or obtained by the Person serving as Administrative Agent or
any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Credit Parties as shall be necessary under the circumstances as provided in
Section 10.2) or in the absence of its own gross negligence or willful
misconduct. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Credit Party (and, promptly after its
receipt of any such notice, it shall give each Credit Party and the Borrower
notice thereof), and the Administrative Agent shall not be responsible for or
have any duty to ascertain or inquire into (a) any statement, warranty or
representation made in or in connection with any Loan Document, (b) the contents
of any certificate, report or other document delivered thereunder or in
connection therewith, (c) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth therein, (d) the validity,
enforceability, effectiveness or genuineness thereof or any other agreement,
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instrument or other document or (e) the satisfaction of any condition set forth
in Article 5 or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Loan Parties), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent, provided that no such delegation shall
serve as a release of the Administrative Agent or waiver by the Borrower of any
rights hereunder. The Administrative Agent and any such sub-agent may perform
any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Credit Parties and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Credit Parties, appoint
a successor Administrative Agent which shall be a bank or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 10.3 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Credit Party acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Credit Party or any of their
Affiliates and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement. Each Credit Party also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Credit Party or any
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of their Affiliates and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon any Loan Document, any related agreement
or any document furnished thereunder.
ARTICLE 10. MISCELLANEOUS
Section 10.1 Notices
Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
facsimile, as follows:
(a) if to the Borrower, to it at 500 University Court, Blackwood, New
Jersey 08012, Attention: Leslie Gordon, Chief Financial Officer (Telephone No.
(856) 228-6700 ext. 109), Facsimile No. (856) 228-0080);
(b) if to the Administrative Agent or KeyBank as Issuing Bank, to it at
711 Westchester Avenue, White Plains, New York 10604, Attention of: Brendan
Sachtjen (Telephone No. (914) 681-8301 Facsimile No. (914) 681-8350); and
(c) if to any other Credit Party, to it at its address (or facsimile
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions hereof shall be deemed to have been given on the date of receipt.
Section 10.2 Waivers; Amendments
(a) No failure or delay by any Credit Party in exercising any right or
power under any Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Credit Parties under the Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of any Loan Document or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
the issuance, amendment, extension or renewal of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether any Credit Party may
have had notice or knowledge of such Default at the time.
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(b) Neither any Loan Document nor any provision thereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders, provided that no
such agreement shall (i) increase any Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
any reimbursement obligation with respect to a LC Disbursement, or reduce the
rate of any interest (other than under Section 3.1(b)), or reduce any fees,
payable under the Loan Documents, without the written consent of each Credit
Party affected thereby, (iii) postpone the date of payment at stated maturity of
any Loan or the date of payment of any reimbursement obligation with respect to
an LC Disbursement, any interest or any fees payable under the Loan Documents,
or reduce the amount of, waive or excuse any such payment, or postpone the
stated termination or expiration of the Revolving Commitments or the LC
Commitments without the written consent of each Credit Party affected thereby,
(iv) change any provision hereof in a manner that would alter the pro rata
sharing of payments required by Section 2.10(b) or the pro rata reduction of
Revolving Commitments required by Section 2.5(d), without the written consent of
each Credit Party affected thereby, (v) change any of the provisions of this
Section or the definition of the term "Required Lenders" or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender, (vi) release the Parent
or any Subsidiary Guarantor from its Guarantee under the Guarantee Documents
(except as expressly provided in the Security Documents), or limit its liability
in respect of such Guarantee, without the written consent of each Lender, or
(vii) release all or substantially all of the Collateral from the Liens of the
Loan Documents (except as expressly provided in the Security Agreement or in
connection with a transaction permitted by Section 7.3), without the consent of
each Lender, and provided, further, that no such agreement shall amend, modify
or otherwise affect the rights or duties of the Administrative Agent, the
Issuing Bank or the Swingline Lender hereunder without the prior written consent
of the Administrative Agent, the Issuing Bank or the Swingline Lender, as
applicable.
Section 10.3 Expenses; Indemnity; Damage Waiver
(a) The Borrower shall pay (i) all reasonable out-of-pocket costs and
expenses incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of any Loan Document or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated thereby shall be consummated), (ii) all reasonable
out-of-pocket costs and expenses incurred by the Issuing Bank in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder, (iii) all reasonable expenses of any collateral
audit and (iv) all reasonable out-of-pocket costs and expenses incurred by any
Credit Party, including the reasonable fees, charges and disbursements of any
counsel for any Credit Party and any expert witness fees, in connection with the
enforcement or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such reasonable out-of-pocket
costs and expenses incurred during any workout, restructuring or negotiations in
respect of such Loans or Letters of Credit.
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(b) The Borrower shall indemnify each Credit Party and each Related
Party thereof (each such Person being called an "Indemnitee") against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including the reasonable fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any agreement or instrument
contemplated thereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated thereby, (ii) any Loan or Letter of
Credit or the use of the proceeds thereof including any refusal of the Issuing
Bank to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower or
any of the Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of the Subsidiaries or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto, provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as applicable, an amount equal to the
product of such unpaid amount multiplied by a fraction, the numerator of which
is such Lender's Total Credit Exposure and the denominator of which is the
aggregate Total Credit Exposure of all Lenders (in each case determined as of
the time that the applicable unreimbursed expense or indemnity payment is sought
or, in the event that no Lender shall have any Total Credit Exposure at such
time, as of the last time at which any Lender had a Total Credit Exposure),
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as applicable, was incurred by or asserted against
the Administrative Agent or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct and actual damages) arising out of, in connection with, or as a result
of, any Loan Document or any agreement, instrument or other document
contemplated thereby, the Transactions or any Loan or any Letter of Credit or
the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly but in
no event later than ten days after written demand therefor.
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Section 10.4 Successors and Assigns
(a) The provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Credit Party (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void). Nothing herein, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of each Credit Party)
any legal or equitable right, remedy or claim under or by reason of any Loan
Document.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations hereunder (including all or a portion of its
Revolving Commitment or obligations in respect of its LC Exposure or Swingline
Exposure, and the Loans at the time owing to it), provided that (i) except in
the case of an assignment to a Lender or an Affiliate or an Approved Fund of a
Lender, each of the Borrower and the Administrative Agent (and, in the case of
an assignment of all or any portion of a Revolving Commitment or obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Bank and/or the
Swingline Lender, as the case may be) must give its prior written consent to
such assignment (which consent shall not be unreasonably withheld), (ii) except
in the case of an assignment to a Lender or an Affiliate or an Approved Fund of
a Lender or an assignment of the entire remaining amount of the assigning
Lender's Revolving Commitment, the amount of the Revolving Commitment, of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless the Borrower and
the Administrative Agent otherwise consent, (iii) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance together with, unless otherwise agreed by the Administrative Agent, a
processing and recordation fee of $3,500, and (iv) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire, and provided further, that any consent of the Borrower otherwise
required under this paragraph shall not be required if a Default has occurred
and is continuing. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance, the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under the Loan Documents, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under the Loan
Documents (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under the Loan Documents, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.5, 3.6, 3.7 and 10.3). Any assignment or transfer by a
Lender of rights or obligations under the Loan Documents that does not comply
with this paragraph shall be treated for purposes of the Loan Documents as a
sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
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(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in Cleveland, Ohio, a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
presumptively correct absent clearly demonstrable error, and the Borrower and
each Credit Party may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes hereof,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Credit Party, at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes hereof unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or any Credit
Party, sell participations to one or more banks or other entities (each such
bank or other entity being called a "Participant") in all or a portion of such
Lender's rights and obligations under the Loan Documents (including all or a
portion of its Revolving Commitment LC Exposure, Swingline Exposure and
outstanding Revolving Loans, owing to it), provided that (i) such Lender's
obligations under the Loan Documents shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Loan Parties and the Credit Parties shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of any Loan
Documents, provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 10.2(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 3.5
and 3.6 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 10.8
as though it were a Lender, provided that such Participant agrees to be subject
to Section 2.10(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 3.5 or 3.7 than the Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower's prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 3.7 unless the Borrower is notified
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of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 3.7(e) as though it were a
Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under the Loan Documents to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest, provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations under the
Loan Documents or substitute any such pledgee or assignee for such Lender as a
party hereto.
Section 10.5 Survival
All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant hereto or to any other Loan Document
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of any Loan Document and the making of
any Loans and the issuance of any Letter of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that any Credit Party may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any LC Disbursement or any fee or any
other amount payable under the Loan Documents is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 3.5, 3.6, 3.7 and 10.3, 10.9, 10.10
and Article 9 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans and the LC Disbursements, the expiration or termination of the Letters of
Credit and the termination of the Commitments or the termination hereof or any
provision hereof, provided that the provisions of such Sections shall be of no
further force or effect after the 6th anniversary of the later to occur of (i)
the date of the termination of the obligations of the Lenders hereunder, and
(ii) the indefeasible payment of all of the Obligations.
Section 10.6 Counterparts; Integration; Effectiveness
This Credit Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
contract. This Credit Agreement and any separate letter agreements with respect
to fees payable to any Credit Party or the syndication of the credit facilities
established hereunder constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 5.1, this Credit Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto (the "Closing Date"), and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
hereof by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
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Section 10.7 Severability
In the event any one or more of the provisions contained herein should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby (it being understood that the invalidity of
a particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
Section 10.8 Right of Setoff
If an Event of Default shall have occurred and be continuing, each of
the Lenders and their respective Affiliates is hereby authorized at any time and
from time to time, to the fullest extent permitted by applicable law, to setoff
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by it to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing hereunder held by it,
irrespective of whether or not it shall have made any demand hereunder and
although such obligations may be unmatured. The rights of each the Lenders and
their respective Affiliates under this Section are in addition to other rights
and remedies (including other rights of setoff) that it may have.
Section 10.9 Governing Law; Jurisdiction; Consent to Service of Process
(a) This Credit Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Credit Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that, to the extent permitted by
applicable law, all claims in respect of any such action or proceeding may be
heard and determined in such New York State court or, to the extent permitted by
applicable law, in such Federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing herein shall affect any right that the Administrative
Agent or any other Credit Party may otherwise have to bring any action or
proceeding relating hereto or to the other Loan Documents against the Borrower,
or any of its property, in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Credit Agreement or the other Loan Documents
in any court referred to in paragraph (b) of this Section.
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Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party hereto irrevocably consents to service of process in the
manner provided for notices in Section 10.1. Nothing herein will affect the
right of any party hereto to serve process in any other manner permitted by law.
Section 10.10 WAIVER OF JURY TRIAL
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS CREDIT AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 10.11 Headings
Article and Section headings and the Table of Contents used herein are
for convenience of reference only, are not part hereof and shall not affect the
construction of, or be taken into consideration in interpreting, this Credit
Agreement.
Section 10.12 Interest Rate Limitation
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts that are treated as interest on such Loan under applicable law
(collectively the "charges"), shall exceed the maximum lawful rate (the "maximum
rate") that may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all of the charges
payable in respect thereof, shall be limited to the maximum rate and, to the
extent lawful, the interest and the charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated, and the interest and the charges payable to such
Lender in respect of other Loans or periods shall be increased (but not above
the maximum rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender.
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A.C. MOORE INCORPORATED
CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
A.C. MOORE INCORPORATED
By: /s/ Leslie H. Gordon
--------------------------
Name: Leslie H. Gordon
Title: Chief Financial Officer
A.C. MOORE INCORPORATED
CREDIT AGREEMENT
KEYBANK NATIONAL ASSOCIATION,
individually, as Issuing Bank, as Swingline
Lender and as Administrative Agent
By: /s/ Brendan Sachtjen
--------------------------
Name: Brendan Sachtjen
Title: Senior Vice President
ii
A.C. MOORE INCORPORATED
CREDIT AGREEMENT
FIRST UNION NATIONAL BANK
By: /s/ Dante Bucci
--------------------------
Name: Dante Bucci
Title: Senior Vice President
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