EXHIBIT 10.8
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LOAN AGREEMENT
among
CSS INDUSTRIES, INC.,
as Borrower
THE LENDING INSTITUTIONS LISTED HEREIN,
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
PNC CAPITAL MARKETS, INC.,
as Lead Arranger
and
FLEET NATIONAL BANK and
FIRST UNION NATIONAL BANK,
as Co-Documentation Agents
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DATED AS OF APRIL 30, 2001
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Table of Contents
Page
SECTION 1. DEFINITIONS AND INTERPRETATION. ............................ 1
1.1 Terms Defined .............................................. 1
1.2 Accounting Principles. ..................................... 16
SECTION 2. THE LOAN ................................................... 16
2.1 Revolving Line of Credit.................................... 16
2.2 Letters of Credit........................................... 18
2.3 Voluntary Reduction or Increase of Commitment............... 22
2.4 Advances, Conversions, Renewals and Payments................ 24
2.5 Interest ................................................... 27
2.6 Fees........................................................ 29
2.7 Prepayments................................................. 30
2.8 Use of Proceeds ............................................ 31
2.9 Special Provisions Governing LIBOR Based Rate Advances...... 31
2.10 Capital Requirements, Etc .................................. 34
2.11 Mandatory Prepayments/Commitment Reductions................. 35
2.12 Net Payments................................................ 36
2.13 Maturity Date Extension..................................... 38
2.14 Change of Lending Office ................................... 38
2.15 Replacement of a Lender in Certain Circumstances............ 38
SECTION 3. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES................ 38
3.1 Conditions Precedent to Closing ............................ 38
3.2 Closing..................................................... 41
3.3 Conditions Precedent to all Advances........................ 41
3.4 Waiver of Rights............................................ 43
3.5 Delivery of Documents....................................... 43
SECTION 4. REPRESENTATIONS AND WARRANTIES ............................. 43
4.1 Corporate Organization and Validity......................... 43
4.2 Places of Business.......................................... 44
4.3 Pending Litigation.......................................... 44
4.4 Title to Properties ........................................ 44
4.5 Governmental Consent ....................................... 44
4.6 Taxes....................................................... 45
4.7 Financial Statements........................................ 45
4.8 Full Disclosure............................................. 45
4.9 Subsidiaries................................................ 45
4.10 Guarantees, Indebtedness, etc. ............................. 45
4.11 Government Regulations, etc. ............................... 46
4.12 Business Interruptions ..................................... 47
4.13 Names ...................................................... 47
4.14 Other Associations.......................................... 48
4.15 Environmental Matters ...................................... 48
4.16 Regulation O................................................ 50
4.17 Capital Stock............................................... 50
4.18 Solvency.................................................... 50
4.19 Interrelatedness of the Borrower and the Guarantors ........ 51
SECTION 5. AFFIRMATIVE COVENANTS....................................... 51
5.1 Payment of Taxes and Claims ................................ 51
5.2 Maintenance of Properties and Corporate Existence........... 51
5.3 Litigation.................................................. 52
5.4 Taxes....................................................... 52
5.5 Employee Benefit Plans...................................... 52
5.6 Financial and Business Information.......................... 53
5.7 Officers' Certificates ..................................... 55
5.8 Inspection ................................................. 55
5.9 Tax Returns and Reports .................................... 55
5.10 Information to Participants and Assignees................... 56
5.11 Material Adverse Developments .............................. 56
5.12 Additional Parties ......................................... 56
5.13 Performance of Obligations.................................. 56
5.14 Further Assurances ......................................... 57
5.15 Evidence of Intercompany Indebtedness....................... 57
5.16 Evidence of Securitization.................................. 57
SECTION 6. NEGATIVE COVENANTS.......................................... 57
6.1 Mergers..................................................... 57
6.2 Acquisitions................................................ 58
6.3 Liens and Encumbrances...................................... 59
6.4 Transactions With Affiliates or Subsidiaries................ 60
6.5 Guarantees ................................................. 60
6.6 Dividends and Redemptions................................... 61
6.7 Loans and Investments ...................................... 61
6.8 Amendment or Waivers of Certain Documents................... 61
6.9 Sale and Lease-Backs ....................................... 62
6.10 Business Conducted.......................................... 62
6.11 Indebtedness ............................................... 62
6.12 Restrictions on Fundamental Changes; Asset Sales............ 63
6.13 Agreements Regarding Dividends.............................. 63
6.14 Miscellaneous Covenants .................................... 64
SECTION 7. FINANCIAL COVENANTS......................................... 64
7.1 Fixed Charge Coverage Ratio................................. 64
7.2 Minimum Consolidated Net Worth.............................. 64
7.3 Ratio of Consolidated Funded Debt to
Consolidated Capitalization................................. 64
7.4 Ratio of Consolidated EBITDA to Consolidated
Interest Expense............................................ 64
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SECTION 8. DEFAULT .................................................... 64
8.1 Events of Default........................................... 64
8.2 Rights and Remedies on Default ............................. 67
8.3 Nature of Remedies ......................................... 68
8.4 Set-Off .................................................... 68
SECTION 9. THE ADMINISTRATIVE AGENT.................................... 68
9.1 Appointment and Authorization............................... 68
9.2 General Immunity............................................ 69
9.3 Consultation with Counsel................................... 69
9.4 Documents................................................... 69
9.5 Rights as a Lender ......................................... 69
9.6 Responsibility of the Administrative Agent.................. 69
9.7 Collections and Disbursements............................... 70
9.8 Indemnification............................................. 72
9.9 Expenses ................................................... 72
9.10 No Reliance ................................................ 72
9.11 Reporting................................................... 73
9.12 Resignation of the Administrative Agent..................... 73
9.13 Action on Instructions of Lenders .......................... 73
9.14 Several Obligations......................................... 73
9.15 Amendments.................................................. 73
9.16 Notice of Default .......................................... 74
SECTION 10. MISCELLANEOUS............................................... 75
10.1 GOVERNING LAW .............................................. 75
10.2 Integrated Agreement ....................................... 75
10.3 Omission or Delay Not Waiver ............................... 75
10.4 Time........................................................ 75
10.5 Expenses of the Administrative Agent and Lenders............ 75
10.6 Brokerage................................................... 76
10.7 Notices; Lending Offices.................................... 76
10.8 Headings ................................................... 78
10.9 Survival.................................................... 78
10.10 Successors and Assigns ..................................... 78
10.11 Counterparts................................................ 81
10.12 Modification................................................ 81
10.13 Signatories ................................................ 81
10.14 Third Parties............................................... 81
10.15 Indemnification............................................. 81
10.16 Discharge of Taxes, The Borrower's Obligations, Etc......... 82
10.17 Withholding and Other Tax Liabilities....................... 83
10.18 Submission To Jurisdiction; Waivers......................... 83
10.19 Waivers..................................................... 84
10.20 Severability................................................ 85
10.21 Independence of Representations, Warranties and Covenants... 85
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10.22 Obligations Several; Independent Nature of Lenders' Rights.. 85
10.23 Prior Understandings ....................................... 85
10.24 Confidentiality............................................. 85
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is dated as of this 30th day of
April, 2001 by and among CSS INDUSTRIES, INC., a Delaware corporation (the
"Borrower"), the lending institutions listed in Annex I attached hereto and
incorporated herein by reference (each a "Lender" and collectively, the
"Lenders"), and PNC BANK, NATIONAL ASSOCIATION, a national banking association,
as administrative agent for the Lenders (in such capacity, the "Administrative
Agent").
BACKGROUND
A. The Borrower has requested that the Lenders establish financing
arrangements for the Borrower under which the Lenders agree to make loans and
extensions of credit to the Borrower under the terms and provisions set forth
herein.
B. The Lenders are willing, on the terms and provisions set forth
herein, to extend such credit and make such loans to the Borrower. The loans
will be used for working capital, the issuance of letters of credit,
acquisitions and general corporate purposes.
C. The parties desire to define the terms and conditions of their
relationship in writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION.
1.1 Terms Defined. As used in this Agreement, the following
terms have the following respective meanings:
"Accounts": All of the "accounts" (as that term is defined in
the Uniform Commercial Code as in effect from time to time in the Commonwealth
of Pennsylvania) of the Borrower and each of its Subsidiaries, whether now
existing or hereafter arising.
"Accounts Receivable Securitization": The trade receivables
purchase facility between the Borrower and Market Street Funding Corporation on
terms pursuant to which the Borrower and certain of its Subsidiaries will sell
or grant a security interest in its accounts receivable or an undivided interest
therein, provided, that the aggregate Capital (as such term is defined in the
Accounts Receivable Securitization Documents) shall not exceed $100,000,000.
"Accounts Receivable Securitization Documents": The Receivable
Purchase Agreement among the Borrower, the Bankruptcy Remote Subsidiary, Market
Street Funding Corporation and PNC and any other documents executed in
connection with the Accounts Receivable Securitization as modified, amended or
restated from time to time.
"Acquisition Advances": Advances under the Revolving Credit to
fund Permitted Acquisitions excluding the amount of such Advances which are
determined by Administrative Agent, in its reasonable discretion, to be used to
fund the working capital needs of the acquired Person.
"Acquisition Amount": As defined in Section 6.2.
"Adjustment Amount": As of each date of determination hereof,
the sum of (i) 100% of the outstanding portion of the aggregate amount of
Acquisition Advances, if any, made during the immediately preceding twelve (12)
month period plus (ii) 75% of the outstanding portion of the aggregate amount of
Acquisition Advances, if any, made during the twelve month period commencing on
the date which occurred 24 months prior to the determination date and ending one
day before the date which occurred 12 months prior to the determination date
plus (iii) 50% of the outstanding portion of the aggregate amount of Acquisition
Advances, if any, made during the twelve month period commencing on the date
which occurred 36 months prior to the determination date and ending on the date
which occurred one day before the date which occurred 24 months prior to the
determination date plus (iv) 25% of the outstanding portion of the aggregate
amount of Acquisition Advances, if any, made during the twelve month period
commencing on the date which occurred 48 months prior to the determination date
and ending on the date which occurred one day before the date which occurred 36
months prior to the determination date.
"Adjusted LIBO Rate": As applied to a LIBOR Based Rate
Advance, for any LIBOR Interest Period, the rate per annum (rounded upwards, if
necessary to the next 1/100 of 1%) determined pursuant to the following formula:
Adjusted LIBO Rate = LIBO Rate
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(1 - Reserve Percentage)
For purposes hereof, "LIBO Rate", with respect to a LIBOR Interest Period, shall
mean the interest rate per annum determined by the Administrative Agent in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the London interbank offered rate of interest per
annum appearing on Dow Jones Market Service display page 3750 or such other
display page of the Dow Jones Market Service as may replace such page evidencing
quotes by the British Bankers' Association (or appropriate successor or, if the
British Bankers' Association or its successor ceases to provide such quotes, a
comparable replacement determined by the Agent) at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the first day of such LIBOR Interest
Period for an amount comparable to such Advance and having a borrowing date and
a maturity comparable to such LIBOR Interest Period.
The LIBO Rate shall be adjusted with respect to any LIBOR Based Rate Advance in
Dollars outstanding on the effective date of any change in the Reserve
Percentage as of such effective date. The Administrative Agent shall give prompt
notice to the Borrower of the LIBO Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.
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"Advance(s)": Any monies advanced or credit extended to the
Borrower by any Lender under the Revolving Credit, including without limitation,
cash Advances, Swing Line Advances and the issuance by Fronting Lender of
Letters of Credit.
"Affected Lender": As defined in Section 2.15.
"Affiliate": With respect to any Person (the "Specified
Person"), (a) any Person which directly or indirectly controls, or is controlled
by, or is under common control with, the Specified Person, and (b) any director
or officer (or, in the case of a Person which is not a corporation, any
individual having analogous powers) of the Specified Person or of a Person who
is an Affiliate of the Specified Person within the meaning of the preceding
clause (a); provided, however, that no Lender nor any Affiliate of any Lender
shall be deemed to be an Affiliate of the Borrower or any of its Subsidiaries.
For purposes of the preceding sentence, "control" of a Person shall mean (i) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise, and (ii) in any case
shall include direct or indirect ownership (beneficially or of record) of, or
direct or indirect power to vote, 25% or more of the outstanding shares of any
class of capital stock of such Person (or in the case of a Person that is not a
corporation, 25%. or more of any class of equity interest).
"Alternate Base Rate": A rate of interest equal to the greater
of (i) the Prime Rate or (ii) one half of one (0.5%) percent per annum in excess
of the Fed Funds Rate. The calculation and determination of the rates described
in subsections (i) and (ii) above shall be made daily by the Administrative
Agent and such determination shall, absent manifest error, be final, conclusive
and binding upon all parties hereto. Changes in the Alternate Base Rate shall
become effective on the same day as the Administrative Agent changes its Prime
Rate or a change occurs in the Fed Funds Rate, depending upon which rate is
applicable on that day to the Alternate Base Rate.
"Alternate Base Rate Advance": Any Advance on which interest
accrues at the Alternate Base Rate.
"Applicable Available Commitment Fee Percentage": The
Applicable Commitment Fee Percentage determined by reference to the table set
forth on Annex II based upon the Borrower's compliance with the Interest
Coverage Ratio at the levels set forth in such table as such Interest Coverage
Ratio is shown on the Quarterly Compliance Certificate delivered in accordance
with Section 5.7. The Applicable Commitment Fee Percentage shall be applied on:
(a) the first day of the calendar month
immediately following the calendar month in which the Administrative Agent
receives the Quarterly Compliance Certificate delivered in respect of the first
three fiscal quarters in any fiscal year or,
(b) with respect to the Quarterly Compliance
Certificate delivered in respect of the last fiscal quarter in any fiscal year,
the earlier to occur of (i) the first day of the calendar month immediately
following the calendar month in which the Administrative Agent shall have
received from the Borrower such Quarterly Compliance Certificate or (ii) the
first day
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of the calendar month immediately following the calendar month in which the date
45 days after the end of the fiscal year of the Borrower most recently ended
occurs
provided, however, that no such changes shall occur (x) until the Borrower has
delivered its Quarterly Compliance Certificate for the fiscal quarter ending
March 31, 2001 and (y) unless no Default or Event of Default shall have occurred
and be continuing. Upon the occurrence and during the continuance of a Default
or an Event of Default, the Applicable Available Commitment Fee Percentage may,
in the discretion of the Administrative Agent or at the direction of the
Majority Lenders, be increased (and shall automatically be so increased if the
Default or Event of Default is a payment Default) to the margin described as
Level III on Annex II (in addition to institution of the Default Rate, if
applicable) and shall be applied retroactively to the date of the occurrence of
such Default or Event of Default (or in the event of a Default in respect of the
obligation to deliver a Quarterly Compliance Certificate for the last fiscal
quarter in each fiscal year, the first day of the calendar month immediately
following the calendar month in which the date 45 days after the end of the last
fiscal year of the Borrower occurs). The Administrative Agent, Lenders and
Borrower acknowledge that, on the date hereof, the Applicable Available
Commitment Fee Percentage is the margin described as Level I on Annex II, which
Level shall remain applicable at all times through the first day of the calendar
month immediately following the calendar month in which the Administrative Agent
shall have received from the Borrower the Quarterly Compliance Certificate for
the quarter ended March 31, 2001.
"Applicable Base Rate Margin": As set forth in Annex II.
"Applicable LIBO Rate Margin": As set forth in Annex II.
"Applicable Margins": The respective Applicable Base Rate
Margin or Applicable LIBO Rate Margin determined by reference to the table set
forth on Annex II based upon the Borrower's compliance with the Interest
Coverage Ratio at the levels set forth in such table as such Interest Coverage
Ratio is shown on the Quarterly Compliance Certificate delivered in accordance
with Section 5.7. The Applicable Margin shall be applied on:
(a) the first day of the calendar month immediately
following the calendar month in which the Administrative Agent receives the
Quarterly Compliance Certificate delivered in respect of the first three fiscal
quarters in any fiscal year or,
(b) with respect to the Quarterly Compliance
Certificate delivered in respect of the last fiscal quarter in any fiscal year,
the earlier to occur of (i) the first day of the calendar month immediately
following the calendar month in which the Administrative Agent shall have
received from the Borrower such Quarterly Compliance Certificate or (ii) the
first day of the calendar month immediately following the calendar month in
which the date 45 days after the end of the fiscal year of the Borrower most
recently ended occurs
provided, however, that no such changes shall occur (x) until the Borrower has
delivered its Quarterly Compliance Certificate for the fiscal quarter ending
March 31, 2001 and (y) unless no Default or Event of Default shall have occurred
and be continuing. Upon the occurrence and during the continuance of a Default
or an Event of Default, the Applicable Margin may, in the
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discretion of the Administrative Agent or at the direction of the Majority
Lenders, be increased (and shall automatically be so increased if the Default or
Event of Default is a payment default) to the margins described as Level III on
Annex II (in addition to institution of the Default Rate, if applicable) and
shall be applied retroactively to the date of the occurrence of such Default or
Event of Default (or in the event of a Default in respect of the obligation to
deliver a Quarterly Compliance Certificate for the last fiscal quarter in each
fiscal year, the first day of the calendar month immediately following the
calendar month in which the date 45 days after the end of the latest fiscal year
of the Borrower occurs). The Administrative Agent, Lenders and Borrower
acknowledge that, on the date hereof, the Applicable Margin is the margin
described as Level I on Annex II above, which Level shall remain applicable at
all times through the first day of the calendar month immediately following the
calendar month in which the Administrative Agent shall have received from the
Borrower the Quarterly Compliance Certificate for the quarter ended March 31,
2001 (unless a Default or an Event of Default earlier occurs in which case the
Applicable Margin shall be adjusted as set forth above).
"Asset Sale": The sale, transfer or other disposition by the
Borrower to any Person other than a Guarantor or by any Subsidiary of the
Borrower to any Person other than the Borrower or another Guarantor of (a) any
of the existing or future capital stock or partnership interests (other than an
original issue of the stock or partnership interests of a Person where the
issued shares or partnership interests are issued to Borrower or a Guarantor) of
any Subsidiary of the Borrower or (b) any other Property, now owned or hereafter
acquired, of any nature whatsoever in any transaction or series of related
transactions (including any or all assets and business of any division or line
of business and further including intangible assets) of the Borrower or any of
its Subsidiaries, excluding sales, transfers or other dispositions of inventory
or other Property in the ordinary course of business of the Borrower or any of
its Subsidiaries or the trade-in or replacement of assets in the ordinary course
of business of the Borrower or any of its Subsidiaries.
"Authorized Officer": Any executive officer of the Borrower
or the corporate controller of Borrower.
"Available Commitment": $75,000,000, as the same may be
increased or reduced pursuant to Section 2.3.
"Available Commitment Fee": As defined in Section 2.6(a).
"Bankruptcy Remote Subsidiary": Means the wholly-owned
Subsidiary of the Borrower created in connection with an Accounts Receivable
Securitization whose only material creditors are the purchaser or lender related
to such Accounts Receivable Securitization and the Borrower or any Subsidiary of
the Borrower that is the originator and seller or contributor of accounts
receivable to such Subsidiary in connection with an Accounts Receivable
Securitization.
"Borrowing": The making, pursuant to a Notice of Borrowing
and the terms of this Agreement, of a cash Advance to the Borrower from all
of the Lenders on a pro rata basis on
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a given date (or resulting from conversions on a given date) having, in the case
of LIBOR Based Rate Advances, the same LIBOR Interest Periods.
"Business Day": A day other than Saturday or Sunday when banks
are generally open for business in Philadelphia, Pennsylvania, provided, that
when used in connection with a LIBOR Based Rate Advance, 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.
"Cash Proceeds": With respect to any Equity Offering, the
aggregate cash payments received by the Borrower and/or any of its Subsidiaries
from such Equity Offering.
"Change of Control": If (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding Jack
Farber and/or any member(s) of his immediately family, and/or any trust under
which Jack Farber and/or any member(s) of his immediate family hold the legal
and equitable interests, is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
voting power of the issued and outstanding voting stock of the Borrower normally
entitled to vote in the election of directors of the Borrower or (b) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors of Borrower (together with any new directors
whose election to the Board of Directors or whose nomination for election by the
stockholders of the Borrower was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.
"Closing": As defined in Section 3.2.
"Closing Date": As defined in Section 3.2.
"Code": As defined in Section 2.12(b).
"Commitment and Acceptance": A Commitment and Acceptance among
a Lender, the Administrative Agent and the Borrower substantially in the form of
Exhibit G, as amended, supplemented or otherwise modified from time to time.
"Consolidated Amortization Expense": For any Person, for any
period, the consolidated amortization expense of such Person for such period,
determined on a consolidated basis for such Person and its consolidated
Subsidiaries.
"Consolidated Capital Expenditures": For any Person, for any
period, the aggregate gross increase during that period in the property, plant
or equipment reflected in the consolidated balance sheet of such Person and its
consolidated Subsidiaries, but excluding expenditures made in connection with
the replacement, substitution or restoration of assets (a) to the extent
financed from insurance proceeds paid on account of the loss of or damage to the
assets being replaced or restored or (b) with awards of compensation arising
from the taking by
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eminent domain or condemnation of the assets being replaced; provided, however,
that "Consolidated Capital Expenditures" shall in any event exclude the purchase
price paid in connection with the acquisition of any other Person (including
through the purchase of all of the capital stock or other ownership interests of
such Person or through merger or consolidation) to the extent allocable to
property, plant and equipment.
"Consolidated Capitalization": For any Person, at any time,
the sum of such Person's (a) Consolidated Funded Debt plus (b) Consolidated Net
Worth, determined on a consolidated basis for such Person and its consolidated
Subsidiaries.
"Consolidated Depreciation Expense": For any Person, for any
period, the consolidated depreciation expense of such Person for such period,
determined on a consolidated basis for such Person and its consolidated
Subsidiaries.
"Consolidated EBITDA": For any Person, for any period, the
difference between (a) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Tax Expense, (iii) Consolidated
Interest Expense, (iv) Consolidated Amortization Expense and (v) Consolidated
Depreciation Expense (with respect to clauses (ii) through (v) of this
definition, to the extent such amounts were deducted in computing Consolidated
Net Income) and (b) the amounts for such period of after-tax net gains on sales
of fixed assets and other after-tax extraordinary gains to the extent included
in Consolidated Net Income, excluding sales in the ordinary course of business
not to exceed $300,000 in the aggregate for any fiscal year, all as determined
on a consolidated basis for such Person and its consolidated Subsidiaries.
"Consolidated Funded Debt": For any Person, on any date,
without duplication, the aggregate outstanding principal amount of (i)
Indebtedness recorded on a balance sheet of such Person prepared in accordance
with GAAP, (ii) the items described in clause (c) of the definition of
"Indebtedness" whether or not recorded on a balance sheet of such Person and
(iii) all Capital (as that term is defined in the Accounts Receivable
Securitization Documents) under the Accounts Receivable Securitization; in each
case of such Person and its consolidated Subsidiaries, all determined on a
consolidated basis after elimination of all intercompany items.
"Consolidated Interest Expense": For any Person, for any
period, the total interest expense of such Person and its consolidated
Subsidiaries, as would be shown on an income statement prepared in accordance
with GAAP, and in any event including interest in respect of the Revolving
Credit and Discount (as that term is defined in the Accounts Receivable
Securitization Documents) payable in respect of the Accounts Receivable
Securitization whether or not such interest is shown on such income statement.
"Consolidated Net Income": For any Person, for any period, the
net income (or loss) of such Person and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined on a consolidated
basis for such Person and its consolidated Subsidiaries; provided, however, that
there shall be excluded (a) the income (or loss) of any other Person (other than
Subsidiaries of such Person) in which any third Person (other than such Person
or any of its Subsidiaries) has a joint interest, except to the extent of the
amount of cash dividends or other cash distributions actually paid to such
Person or any of its Subsidiaries by
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such other Person during such period (subject to clause (c) below), (b) the
income (or loss) of any other Person accrued prior to the date it becomes a
consolidated Subsidiary of such Person or is merged into or consolidated with
such Person or any of its consolidated Subsidiaries or such other Person's
assets are acquired by such Person or any of its consolidated Subsidiaries,
except (with respect to a Subsidiary previously accounted for on the equity
basis of accounting) to the extent of the income (or loss) actually paid to such
Person or any of its Subsidiaries by such other Person relating to such period
in cash, and (c) the income of any consolidated Subsidiary of such Person to the
extent that the declaration or payment of dividends or similar distributions by
that consolidated Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
consolidated Subsidiary, except to the extent of the cash dividends or cash
distributions actually paid to such Person or any of its Subsidiaries by such
other Person during such period; provided, however, that income generated in
connection with a waiver of any of the provisions hereof shall not be included
for any purposes hereof.
"Consolidated Net Worth": As of the date of determination, all
items which in conformity with GAAP would be included under shareholders' equity
on a consolidated balance sheet of the Borrower and its Subsidiaries at such
date.
"Consolidated Rental Payments": For any period, the aggregate
amount of all rents paid or to be incurred under all operating leases of the
Borrower and the Subsidiaries of the Borrower as lessees (net of sublease
income) during such period.
"Consolidated Tax Expense": For any Person, for any period,
the consolidated income tax expense and/or benefit of such Person for such
period, determined on a consolidated basis for such Person and its consolidated
Subsidiaries less any tax expense associated with gains on sales (excluding
sales in the ordinary course of business) of fixed assets and other
extraordinary gains to the extent such gains are included in Consolidated Net
Income.
"Consolidated Total Assets": For any Person, all of the assets
of such Person as would be shown on such Person's balance sheet prepared in
accordance with GAAP, determined on a consolidated basis for such Person and its
consolidated Subsidiaries.
"Default": Any event, act, condition or occurrence, which
with notice, or lapse of time or both, would constitute an Event of Default
hereunder.
"EBITDA": Shall have the meaning ascribed to the term
"Consolidated EBITDA" as set forth herein except the calculation of EBITDA
(including the calculation of each of its components) shall be done on an
unconsolidated basis.
"Employee Benefit Plan": As defined in Section 4.11(c).
"Engagement Letter": As defined in Section 10.23.
"Environmental Authorizations": As defined in Section
4.15(a).
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"Environmental Laws" The common law and all applicable
Federal, state, local and foreign laws or regulations, codes, orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder,
now or hereafter in effect, relating to pollution or protection of the
environment or to health or safety as either relates to any Hazardous Materials,
including, without limitation, laws relating to (a) emissions, discharges,
releases or threatened releases of Hazardous Materials into the environment
(including ambient air, indoor air, surface water, ground water, land surface or
subsurface strata), (b) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport, shipping or handling of
Hazardous Materials, and (c) underground and above-ground storage tanks, and
related piping, and emissions, discharges, releases or threatened releases
therefrom.
"Equity Offering" The sale by the Borrower or any of its
Subsidiaries of any of its capital stock in any public or private transaction,
except (a) any nonredeemable capital stock of the Borrower issued in exchange
for or upon conversion of any Indebtedness of the Borrower or any of its
Subsidiaries, (b) any issuance in connection with the exercise of any stock
options, (c) the issuance of nonredeemable capital stock in connection with a
Permitted Acquisition or (d) any capital stock issued in connection with
employee incentive plans or dividend reinvestment plans.
"ERISA": The Employee Retirement Income Security Act of 1972,
as the same may be amended, from time to time.
"Event of Default": As defined in Section 8.1.
"Exchange Act": The Securities Exchange Act of 1934, as
amended, together with all rules and regulations promulgated in connection
therewith.
"Existing Loan Agreement": That certain Amended and Restated
Loan Agreement dated as of July 21, 1997 among the Borrower, First Union
National Bank (as successor to CoreStates Bank, N.A.), as Administrative Agent,
Merrill Lynch & Co., as Syndication Agent and the lenders party thereto.
"Existing Debt of the Borrower": The Indebtedness of the
Borrower and its Subsidiaries as set forth on Schedule 4.10 attached hereto.
"Expenses": As defined in Section 10.5.
"Fed Funds Rate": On any day, the effective rate of interest
charged by the Federal Reserve Bank of New York for overnight federal funds in
New York as reported by the Federal Reserve Bank in New York for such day.
"Financial Statements": The financial statements of Borrower
previously furnished to the Administrative Agent, as more fully described on
Schedule 1.1 attached hereto and incorporated herein by reference.
"Fixed Charge Coverage Ratio": For any period, the ratio of
(a) the sum of the Borrower's (i) Consolidated EBITDA for such period less (ii)
Consolidated Capital Expenditures
9
for such period plus (iii) Consolidated Rental Payments for such period to (b)
the sum of the (i) current portion of principal on all long-term Indebtedness
(excluding the Revolving Credit), plus (ii) Consolidated Interest Expense
(including interest in respect of the Revolving Credit and discount payable in
respect of the Accounts Receivable Securitization), plus (iii) Consolidated Tax
Expense, plus (iv) Consolidated Rental Payments for such period.
"Fronting Fee": As defined in Section 2.6(b)(ii).
"Fronting Lender": PNC (or an Affiliate of PNC, if
applicable), as the issuer of Letters of Credit under this Agreement.
"GAAP": Generally accepted accounting principles applied in a
manner consistent with the most recent audited financial statements of the
Borrower prepared as of December 31, 2000 and furnished to the Administrative
Agent.
"Governmental Authority": Any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator (to the extent binding on the Borrower or any of its Subsidiaries),
in each case whether foreign or domestic.
"Guarantee(s)" Guarantees substantially in the form of Exhibit
A attached hereto and incorporated herein by reference.
"Guarantors": Each of The Paper Magic Group, Inc., a
Pennsylvania corporation, Berwick Delaware, Inc., a Delaware corporation,
Berwick Industries LLC, a Pennsylvania limited liability company, Cleo Inc, a
Tennessee corporation, Cleo Delaware, Inc., a Delaware corporation, Philadelphia
Industries, Inc., a Delaware corporation, LLM Holdings, Inc., a Delaware
corporation, The Paper Magic Group, Inc., a Delaware corporation, Don Post
Studios, Inc., a Delaware corporation, Paper Magic Group (Hong Kong) Limited, a
Hong Kong limited company and each Person which executes a Guarantee after the
Closing Date.
"Hazardous Materials": Any pollutant, contaminant, hazardous
or toxic substance, hazardous material, hazardous waste, hazardous constituent,
asbestos or asbestos-containing material, petroleum, including crude oil and
any fraction thereof, or other chemicals, substances or materials subject to
regulation under any Environmental Law.
"Hedge Agreement": Any contract or agreement providing for
any rate swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap, currency swap or any other similar transaction entered
into to protect against the risk of fluctuation in interest rates or foreign
exchange rates.
"Indebtedness": With respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) the
deferred purchase price of assets or services which in accordance with GAAP
would be shown as a liability on the balance sheet of such Person, (c) the face
amount of all outstanding letters of credit issued for the account of such
10
Person and, without duplication, all drafts drawn thereunder, (d) all
Indebtedness of a second Person secured by any Lien on any Property owned by
such first Person, whether or not such Indebtedness has been assumed by such
first Person, limited to the fair market value of the Property subject to such
Lien, (e) all capitalized lease obligations of such Person, (f) all obligations
of such Person to pay a specified purchase price for goods or services whether
or not delivered or accepted, i.e., take-or-pay and similar obligations, (g) all
obligations of such Person under interest rate agreements, (h) without
duplication, all contingent obligations of such Person required to be reflected
as a liability on the balance sheet of such Person prepared in accordance with
GAAP, (i) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments required to be reflected as a liability on the
balance sheet of such Person prepared in accordance with GAAP, (j) all
obligations of such Person upon which interest charges are customarily paid, and
(k) current obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock (with redeemable preferred stock
being valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends); provided, however, that
Indebtedness shall not include trade payables, accrued expenses, accrued
dividends, deferred compensation, accrued income taxes, deferred income taxes
and minority interests in Subsidiaries.
"Intercompany Notes": As defined in Section 5.16.
"Interest Rate Determination Date": With respect to a LIBOR
Based Rate Advance, the date which is two (2) Business Days prior to the
commencement of the LIBOR Interest Period for such Borrowing.
"Inventory": All of the "inventory" (as that term is defined
in of the Uniform Commercial Code as in effect from time to time in the
Commonwealth of Pennsylvania) of the Borrower and its Subsidiaries, whether now
existing or hereinafter acquired or created.
"Investments": Investments of any Person shall mean (i) any
direct or indirect purchase or other acquisition of any share of capital stock,
evidence of Indebtedness or other security issued by any other Person, (ii) any
loan, advance (other than advance to employees for travel expenses, drawing
accounts and similar expenditures extended in the ordinary course and consistent
with past practice) or extension of credit (other than accounts receivable
created in the ordinary course) to, or contribution to the capital of any other
Person, including any guarantee or Indebtedness of any other Person and any
joint venture, (iii) any commitment or option to make an investment if, in the
case of an option, the consideration therefor exceeds $1,000,000 and (iv) any
capital contribution to any other Person; and any of the foregoing shall be
considered an Investment whether such investment is acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method. Notwithstanding the foregoing, non-speculative Hedge Agreements
shall not be considered Investments.
"Knowledge ": Whenever used in this Agreement, the actual
knowledge of any executive officer of the Borrower or of the president of any of
the Subsidiaries.
"L/C Commitment": $20,000,000.
11
"L/C Fees": As defined in Section 2.6(b)(i).
"Lender(s)": The lending institutions listed on Annex I
attached hereto and incorporated herein by reference and any assignees thereof
in accordance with Section 10.10 hereof.
"Letter of Credit or Letters of Credit": (a) Standby letter or
letters of credit, and (b) commercial letter or letters of credit, in each case
issued or to be issued by the Fronting Lender for the account of the Borrower
pursuant to Section 2.2 herein.
"LIBOR Based Rate": As defined in Section 2.5(b)(i).
"LIBOR Based Rate Advance": Any Advance on which interest
accrues at the LIBOR Based Rate.
"LIBOR Based Rate Margin": As defined in Section 2.5(b)(i).
"LIBOR Interest Period": As defined in Section 2.5(b)(ii).
"Lien": Other than as expressly excluded in the next sentence,
any interest in Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute or contract, and including, but not limited to, the security
interest or lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt or a lease, consignment or bailment for security purposes. The
term "Lien" shall include without limitation, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property other than
Property which is leased by the Borrower or any of its Subsidiaries or for which
the Borrower or any of its Subsidiaries has an unexercised option to purchase
such Property and other than those which would not materially adversely
interfere with the Borrower's or any of the Borrower's Subsidiary's use of the
Property and would not materially detract from the value of the Property. For
the purposes of this Agreement, the Borrower and each of its Subsidiaries shall
be deemed to be the owner of any Property which it has acquired or holds subject
to a conditional sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes.
"Loan Documents": This Agreement, the Revolving Credit Notes,
the Swing Line Note, the Guarantees and all agreements, instruments and
documents executed and/or delivered in connection herewith or therewith, all as
may be amended, supplemented, replaced, restated or superseded from time to
time.
"Losses": Of any Person, the losses, liabilities, claims
(including those based upon negligence, strict or absolute liability and
liability in tort), damages, expenses, obligations, penalties, actions,
judgments, Liens, penalties, fines, suits, costs or disbursements of any kind or
nature whatsoever (including reasonable fees and expenses of counsel in
connection with any Proceeding commenced or threatened, whether or not such
Person shall be designated a party
12
thereto) at any time (including following the payment of the Obligations and/or
the termination of the Revolving Credit) incurred by, imposed on or asserted
against such Person.
"Majority Lenders": The Lenders holding Pro Rata Percentages
aggregating more than 66? % of the total Revolving Credit.
"Mandatory Loan": As defined in Section 2.4(b)(iii)(B).
"Material Adverse Effect": With respect to the Borrower and
its Subsidiaries, (a) any material adverse effect (both before and after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents) with respect to the business, assets, properties, financial
condition, stockholders' equity, contingent liabilities, prospects, material
agreements or results of operations of the Borrower and its Subsidiaries, taken
as one enterprise on a consolidated basis, or (b) any fact or circumstance that,
singly or in the aggregate with any other fact or circumstance, has a reasonable
likelihood of resulting in or leading to (i) a material adverse effect hereunder
or under any other Loan Document or the inability of the Lenders to enforce in
any material respect their rights purported to be granted hereunder or under any
other Loan Document, or (ii) a material adverse effect on the ability of the
Borrower and its Subsidiaries taken as a whole on a consolidated basis to effect
(including hindering or unduly delaying) the transactions contemplated by this
Agreement and the other Loan Documents on the terms contemplated hereby and
thereby.
"Material Subsidiary": As of the last day of the immediately
preceding fiscal year of the Borrower, any Subsidiary which either (i) owns five
percent (5%) or more of the assets of the Borrower and its consolidated
Subsidiaries or (ii) for the immediately preceding fiscal year had net income
representing 5% or more of the Consolidated Net Income of the Borrower.
"Maturity Date": April 30, 2004 as the same may be
extended pursuant to Section 2.13.
"Moody's": Moody's Investors Service, Inc.
"Net Cash Proceeds from Equity Offerings": With respect to any
Equity Offering, the Cash Proceeds resulting therefrom net of customary and
reasonable expenses of such offering.
"New Lender Joinder": A New Lender Joinder among a proposed
Lender, the Administrative Agent and the Borrower substantially in the form of
Exhibit H, as amended, supplemented or otherwise modified from time to time.
"Notes": The Revolving Credit Notes and the Swing Line Note.
"Notice of Borrowing": As defined in Section 2.4(b)(ii).
"Obligations": All existing and future liabilities and
obligations of every kind or nature at any time owing by the Borrower to any
one or more of the Lenders, the Fronting Lender or to the Administrative Agent,
whether joint or several, related or unrelated, primary or
13
secondary, matured or contingent, due or to become due, and whether principal,
interest, fees or Expenses, including, without limitation, liabilities and
obligations in respect of the Revolving Credit, whether related to cash Advances
or Letters of Credit (whether drawn or undrawn), and under Hedge Agreements to
which any Lender is a party.
"Offered Amount": As defined in Section 2.3(b).
"Over-Limit Amount": As defined in Section 2.3.
"Outstandings": At any time, the sum of the (a) aggregate
amount of all cash Advances outstanding hereunder, and (b) face amount of all
Letters of Credit and all outstanding Reimbursement Obligations.
"Permitted Acquisitions": As defined in Section 6.2.
"Permitted Liens": As defined in Section 6.3.
"Person": An individual, partnership, corporation, limited
liability company, limited liability partnership, trust, unincorporated
association or organization, joint venture or any other entity.
"PNC": PNC Bank, National Association.
"Prime Rate": That rate so designated by the Administrative
Agent from time to time as its prime rate of interest, which is not necessarily
the lowest or best rate of interest charged by the Administrative Agent.
"Proposed New Lender": As defined in Section 2.3(b).
"Pro Rata Percentages": As defined in Section 2.1(a)(i).
"Pro Rata Shares": As defined in Section 2.1(a)(i).
"Proceeding": Any claim, action, judgment, suit, hearing,
governmental investigation, arbitration (to the extent binding on the Borrower
or any of its Subsidiaries) or proceeding, including by or before any
Governmental Authority.
"Property": Any existing or future interest of the Borrower
or any of its Subsidiaries (other than the Bankruptcy Remote Subsidiary) in any
existing or future property or asset of any kind or nature, whether real,
personal or mixed, or tangible or intangible, now owned or hereafter acquired or
created (including without limitation the capital stock of any Subsidiary).
"Quarterly Compliance Certificate": As defined in Section 5.8.
"Real Property": All right, title and interest of the
Borrower or any of its Subsidiaries (including any leasehold estate) in and to
any parcel of real property owned, leased or operated by the Borrower or any of
its Subsidiaries together with, in each case, all
14
improvements and appurtenant fixtures, equipment, personal property, easements
and other property and rights incidental to the ownership, lease or operation
thereof.
"Reduced Level": As defined in Section 2.11(d).
"Regular Advances": Advances other than Swing Line Advances.
"Regulation D": Regulation D of the Board of Governors of the
Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
"Regulations": As defined in Section 2.12(b).
"Reimbursement Obligations": As defined in Section 2.2(c).
"Requested Increase": As defined in Section 2.3(b).
"Reserve": For any day, that reserve (expressed as a decimal)
which is in effect (whether or not actually incurred) with respect to a Lender
(or any Affiliate of such Lender if applicable pursuant to Section 2.9(e)) on
such day, as prescribed by the Board of Governors of the Federal Reserve System
(or any successor or any other banking authority to which a Lender (or any
Affiliate of such Lender if applicable pursuant to Section 2.9(e)) is subject
including any board or governmental or administrative agency of the United
States or any other jurisdiction to which a Lender (or any Affiliate of such
Lender if applicable pursuant to Section 2.9(e)) is subject), for determining
the maximum reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for Eurocurrency Liabilities as
defined in Regulation D.
"Reserve Percentage": For a Lender (or any Affiliate of such
Lender if applicable pursuant to Section 2.9(e)) on any day, that percentage
(expressed as a decimal) which is in effect on such day, prescribed by the Board
of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender (or any Affiliate of such Lender if
applicable pursuant to Section 2.9(e)) is subject, including any board or
governmental or administrative agency of the United States or any other
jurisdiction to which a Lender (or any Affiliate of such Lender if applicable
pursuant to Section 2.9(e)) is subject), for determining the maximum reserve
requirement (including without limitation any basic, supplemental, marginal or
emergency reserves) for (a) deposits of United States dollars or (b)
Eurocurrency Liabilities as defined in Regulation D, in each case applicable to
a LIBOR Based Rate Advance(s) subject to an Adjusted LIBO Rate. The Adjusted
LIBO Rate shall be adjusted automatically on and as of the effective day of any
change in the Reserve Percentage.
"Revolving Credit": As defined in Section 2.1.
"Revolving Credit Notes": As defined in Section 2.1(c)(i).
"S&P": Standard & Poor's Corporation.
15
"Securities Act": The Securities Act of 1933, as amended,
together with all rules and regulations promulgated in connection therewith.
"Subsidiary": With respect to any Person at any time, (a) any
corporation more than fifty (50%) percent of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty
(50%) percent of whose voting stock is legally and beneficially owned by such
Person; (b) any trust of which a majority of the beneficial interest is at such
time owned directly or indirectly, beneficially or of record, by such Person or
one or more Subsidiaries of such Person; and (c) any partnership, joint venture
or other entity of which ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at such time owned directly or indirectly, beneficially or of
record, by, or which is otherwise controlled directly, indirectly or through one
or more intermediaries by, such Person or one or more Subsidiaries of such
Person.
"Swing Line Advances": Advances under the Swing Line
Commitment made by the Swing Line Lender to the Borrower pursuant to Section
2.1(b).
"Swing Line Commitment": The amount set forth opposite the
Swing Line Lender's name on Annex I attached hereto directly below the column
entitled "Swing Line Commitment", as the same may be reduced from time to time
pursuant to Section 8.
"Swing Line Lender": PNC, in its capacity as such, and its
permitted successors and assigns in such capacity.
"Swing Line Note": As defined in Section 2.1(c)(ii).
"Taxes": As defined in Section 2.12(a)
"Transferee": As defined in Section 10.10(d).
"Withholding Certificate": As defined in Section 2.12(b).
1.2 Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, this shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
SECTION 2. THE LOAN.
2.1 Revolving Line of Credit. Subject to the terms and
conditions of this Agreement, the Lenders hereby establish for the benefit of
the Borrower a revolving line of credit (collectively, the "Revolving Credit")
which shall include Advances extended by the Lenders to or for the benefit of
the Borrower from time to time hereunder, in aggregate principal amount at any
time outstanding, not to exceed the then Available Commitment in effect from
time to time.
16
(a) (i) Each Lender agrees severally to make Regular Advances
to the Borrower as a part of the Revolving Credit, subject to the terms of this
Agreement, up to the lesser of the amounts (the "Pro Rata Shares") or
percentages (the "Pro Rata Percentages") of the Revolving Credit opposite its
name on Annex I attached hereto and incorporated herein by reference.
(ii) Regular Advances under the Revolving Credit (A)
shall be made at any time and from time to time on and after the Closing Date
and prior to the Maturity Date, (B) may be made as Alternate Base Rate Advances
or, at the Borrower's option and subject to the terms hereof, as LIBOR Based
Rate Advances or, at the Borrower's option and subject to the terms hereof, as
Letters of Credit; provided that all Advances made by all of the Lenders
pursuant to the same Borrowing shall, unless otherwise specifically provided
herein, consist entirely of Advances of the same type, (C) may be repaid and
reborrowed in accordance with the provisions hereof, (D) shall not, when
aggregated with a Lender's Pro Rata Percentage of other Advances then
outstanding, exceed for such Lender, at any time outstanding, the Pro Rata Share
of such Lender, at such time and (E) shall not be made if, at the time the
requested Advance is to be made, the aggregate Outstandings, after giving effect
to the Advance requested by the relevant Notice of Borrowing, would exceed the
Available Commitment in effect at such time.
(b) (i) The Swing Line Lender may, in its sole and absolute
discretion, make Swing Line Advances to the Borrower as a part of the Revolving
Credit, subject to the terms of this Agreement, up to the Swing Line Commitment.
(ii) Swing Line Advances under the Revolving Credit (A)
shall be made at any time and from time to time on and after the Closing Date
and prior to the Maturity Date, (B) shall be made only in cash and as Alternate
Base Rate Advances and shall not be entitled to be converted into LIBOR Based
Rate Advances so long as they remain Swing Line Advances, (C) shall be repaid on
the earlier of (x) the Maturity Date or (y) the seventh day after the date such
Swing Line Advance was made and may be reborrowed in accordance with the
provisions hereof, (D) shall not be made if the aggregate principal amount of
Swing Line Advances and the Swing Line Lender's Pro Rata Percentage of all other
Advances then outstanding, after giving effect to the Swing Line Advance
requested by the relevant Notice of Borrowing, would exceed the Swing Line
Lender's Pro Rata Share and (E) shall not be made if the aggregate principal
amount of Swing Line Advances and all other Advances then outstanding, after
giving effect to the Swing Line Advance requested by the relevant Notice of
Borrowing, would exceed the Available Commitment in effect at such time. In no
event shall the aggregate principal amount of Swing Line Advances outstanding at
any time exceed the Swing Line Commitment.
(c) (i) At Closing, the Borrower shall execute and deliver its
promissory note to each Lender in the principal amount of such Lender's Pro Rata
Share, each in the form attached hereto as Exhibit B-1 (as amended, replaced,
restated or superseded from time to time, collectively the "Revolving Credit
Notes") to evidence its unconditional obligation to repay each Lender for all
Advances made under the Revolving Credit, with interest as herein and therein
provided. Each Advance under the Revolving Credit shall be deemed evidenced by
the
17
Revolving Credit Notes, which are deemed incorporated herein by reference and
made a part hereof.
(ii) At Closing, the Borrower shall execute and deliver
its promissory note to the Swing Line Lender in the principal amount of the
Swing Line Commitment, in the form attached hereto as Exhibit B-2 (as amended,
replaced, restated or superseded from time to time, the "Swing Line Note") to
evidence its unconditional obligation to repay the Swing Line Lender for all
Swing Line Advances made under the Revolving Credit, with interest as herein and
therein provided. Each Swing Line Advance under the Revolving Credit shall be
deemed evidenced by the Swing Line Note, which is deemed incorporated herein by
reference and made a part hereof.
(d) The term of the Revolving Credit shall expire on the
Maturity Date unless earlier terminated in accordance with the terms hereof. On
such date, unless having been sooner accelerated by the Administrative Agent
pursuant to the terms hereof, the Revolving Credit shall be terminated and all
of the Obligations shall be due and payable in full, and as of which date, no
further Advances shall be available from the Lenders.
2.2 Letters of Credit.
(a) As part of the Revolving Credit and subject to its
terms and conditions and the customary terms, conditions and procedures of the
Fronting Lender, the Fronting Lender, shall, at the request of the
Administrative Agent and on behalf of and for the benefit of the Lenders, make
available to the Borrower (either for its own account or, at the Borrower's
request, as a co-applicant with any of the Guarantors, each of which is
authorized to request the issuance of a Letter of Credit) Letters of Credit
which shall not exceed, in the aggregate at any one time outstanding, the L/C
Commitment. All Letters of Credit issued under the Revolving Credit shall reduce
dollar for dollar the amount available to be borrowed by the Borrower under the
Available Commitment. No standby Letter of Credit shall be issued with an expiry
date later than the earlier of: (i) one (1) year from the date of issuance and
(ii) the Maturity Date. No commercial Letter of Credit shall be issued with an
expiry date later than the earlier of: (i) one hundred twenty (120) days from
the date of issuance and (ii) the Maturity Date. The Borrower shall, and shall
cause any Guarantor with which it is a co-applicant as to any Letter of Credit
to, execute and deliver to the Fronting Lender all letter of credit agreements
and other documents, instruments and agreements customarily required by the
Fronting Lender for such purposes. All such documents, instruments and
agreements shall be in form and substance satisfactory to the Fronting Lender.
(b) Immediately upon the issuance of any Letter of
Credit, the Fronting Lender is deemed to have granted to each Lender, and each
Lender is hereby deemed to have irrevocably acquired, an individual
participating interest (without recourse or warranty), in accordance with each
Lender's respective Pro Rata Percentage, in all of the Fronting Lender's rights
and liabilities with respect to such Letter of Credit. Each Lender shall be
directly, irrevocably and unconditionally obligated to the Fronting Lender,
according to its Pro Rata Percentage, to reimburse the Fronting Lender for any
draws made at any time without regard to the occurrence of a Default or Event of
Default (including without limitation, following the
18
commencement of any bankruptcy, reorganization, receivership, liquidation or
dissolution proceeding with respect to the Borrower) under any Letter of Credit
outstanding under the L/C Commitment not immediately reimbursed by the Borrower.
(c) In the event of any request for drawing under any Letter
of Credit by the beneficiary thereof, the Fronting Lender shall promptly notify
the Borrower and the Borrower shall immediately reimburse the Fronting Lender on
the day when such drawing is honored, by either a cash payment by the Borrower,
or in the absence of such payment by the Borrower, by the Lenders automatically
making, or having been deemed to have made, (without further request or approval
of the Borrower) a cash Advance under the Revolving Credit on such date which
shall accrue interest at the Alternate Base Rate. All Advances which constitute
a reimbursement for a draw under a Letter of Credit shall be shared by the
Lenders in accordance with their respective Pro Rata Percentages. If, for any
reason, proceeds of Advances are not received by the Fronting Lender on the date
a drawing under a Letter of Credit is honored in an amount equal to the amount
of such drawing, the Borrower shall reimburse the Fronting Lender, on the
Business Day immediately following the date of such drawing, in an amount in
same day funds equal to the excess of the amount of such drawing over the amount
of such proceeds, if any, that are so received, plus accrued interest on such
amount at the Alternate Base Rate. The Borrower's reimbursement obligation for
draws under Letters of Credit along with its obligation to pay L/C Fees and
Fronting Fees shall herein be referred to collectively as the Borrower's
"Reimbursement Obligations". All of the Borrower's Reimbursement Obligations
hereunder with respect to Letters of Credit shall apply unconditionally and
absolutely to, and shall be joint and several with respect to, Letters of Credit
issued hereunder on behalf of the Borrower as a co-applicant with any of the
Guarantors as if such Letters of Credit had been issued for the account of the
Borrower alone and the term "Reimbursement Obligations" as used throughout this
Agreement and the other Loan Documents shall be deemed to include the Borrower's
Reimbursement Obligations and its obligation to pay L/C Fees and Fronting Fees
with respect to all such Letters of Credit.
(d) (i) In the event that the Borrower shall fail to reimburse
the Fronting Lender as provided in Section 2.2(c) in an amount equal to the
amount of the drawing honored by the Fronting Lender under a Letter of Credit,
the Fronting Lender shall promptly notify each Lender of the unreimbursed amount
of such drawing and of such Lender's participation therein based on such
Lender's Pro Rata Percentage. Each Lender shall make available to the Fronting
Lender an amount equal to its respective participation in same day funds, at the
office of the Fronting Lender specified in such notice, not later than 1:00 p.m.
(Philadelphia time) on the Business Day after the date notified by the Fronting
Lender. In the event that any Lender fails to make available to such Fronting
Lender the amount of such Lender's participation based on such Lender's Pro Rata
Percentage in such Letter of Credit, as provided in this Section 2.2(d), the
Fronting Lender shall be entitled to recover such amount on demand from such
Lender together with interest at the overnight Fed Funds Rate for the first
three (3) days and at the Alternate Base Rate for each day thereafter. The
Fronting Lender shall distribute to each other Lender which has paid all amounts
payable by it under this Section 2.2(d) with respect to any Letter of Credit,
such other Lender's share, based on such Lender's Pro Rata Percentage, of all
payments received by the Fronting Lender from the Borrower in reimbursement of
drawings honored by the Fronting Lender under such Letter of Credit, when
19
such payments are received. Nothing in this Section 2.2(d) shall be deemed to
relieve any Lender from its obligation to pay all amounts payable by it under
this Section 2.2(d) with respect to any Letter of Credit issued by the Fronting
Lender or to prejudice any rights that the Borrower or any other Lender may have
against a Lender as a result of any default by such Lender hereunder and no
Lender shall be responsible for the failure of any other Lender to pay its
respective participation, based on its Pro Rata Percentage, payable under this
Section 2.2(d).
(ii) In connection with the failure of any Lender to make
available to the Fronting Lender the amount of such Lender's participation in
any Letter of Credit, such Lender hereby agrees to protect, indemnify, and save
the Fronting Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including, without
limitation, reasonable attorneys' fees, allocated costs of internal counsel and
the costs (including judgments) in connection with any related litigation) which
the Fronting Lender may incur or be subject to as a consequence, direct or
indirect, of the failure of such Lender to make available its participation in
such Letter of Credit.
Notwithstanding anything to the contrary contained in this
Section 2.2(d), each Lender providing its participation in any Letter of Credit
shall have no obligation to indemnify the Fronting Lender in respect of any
liability incurred by the Fronting Lender arising solely out of the gross
negligence or willful misconduct of the Fronting Lender.
(e) The obligation of the Borrower to reimburse the Fronting
Lender for drawings made under the Letters of Credit and the obligations of the
Lenders to the Fronting Lender under Section 2.2(d) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
(ii) the existence of any claim, setoff, defense or other
right that the Borrower or any Affiliate of the Borrower or any other Person may
have at any time against a beneficiary or any transferee of any Letter of Credit
(or any Persons for whom any such beneficiary or transferee may be acting), the
Fronting Lender, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction;
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent
or invalid in any respect or any statement therein being untrue or inaccurate in
any respect;
(iv) payment by the Fronting Lender under any Letter of
Credit against presentation of a demand, draft or certificate or other document
that does not comply with the terms of such Letter of Credit unless the Fronting
Lender shall have acted in the absence of good faith or with willful misconduct
or gross negligence in issuing such payment; or
20
(v) the fact that a Default or Event of Default shall
have occurred and be continuing.
(f) If by reason of (i) any change after the Closing Date in
applicable law, regulation, rule, decree or regulatory requirement or any change
in the interpretation or application by any judicial or regulatory authority of
any law, regulation, rule, decree or regulatory requirement or (ii) compliance
by the Fronting Lender or any Lender with any direction, reasonable request or
requirement (whether or not having the force of law) of any governmental or
monetary authority including, without limitation, Regulation D:
(A) the Fronting Lender or any Lender shall be subject to
any tax or other levy or charge of any nature or to any variation thereof
(except for changes in the rate of any tax on the net income of the Fronting
Lender or any Lender or its applicable lending office) or to any penalty with
respect to the maintenance or fulfillment of its obligations under this Section
2.2, whether directly or by such being imposed on or suffered by the Fronting
Lender or any Lender;
(B) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Letter of Credit
issued by the Fronting Lender or participations therein purchased by any Lender;
or
(C) there shall be imposed on the Fronting Lender or any
Lender any other condition regarding this Section 2.2, any Letter of Credit or
any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Fronting Lender or any Lender of issuing, creating, making or maintaining
any Letter of Credit or of purchasing or maintaining any participation therein,
or to reduce the amount receivable in respect thereof by the Fronting Lender or
any Lender, then and in any such case the Fronting Lender or such Lender shall,
within 90 days after the additional cost is incurred or the amount received is
reduced, notify the Borrower and the Borrower shall pay on demand such amounts
as may be necessary to compensate the Fronting Lender or such Lender on an
after-tax basis for such additional cost or reduced receipt, together with
interest on such amount from the date demanded until payment in full thereof at
a rate per annum equal at all times to the Alternate Base Rate. A certificate
signed by an officer of the Lender as to the amount of such increased cost or
reduced receipt showing in reasonable detail the basis for the calculation
thereof, submitted to the Borrower and the Administrative Agent by the Fronting
Lender or any Lender, as the case may be, shall, except for manifest error, be
final, conclusive and binding for all purposes.
(g) In addition to amounts payable as elsewhere provided
in this Section 2.2, without duplication, the Borrower hereby agrees to protect,
indemnify, pay and save the Fronting Lender harmless from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and reasonable allocated costs of internal
counsel) which the Fronting Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of the Letters of Credit or (ii) the
failure of the Fronting Lender to honor a drawing under any Letter of Credit as
a result of any act or omission,
21
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority (all such acts or omissions herein called
"Government Acts").
As between the Borrower and the Fronting Lender, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by the Fronting Lender by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing, the
Fronting Lender shall not be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted by
any party in connection with the application for and issuance of such Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they are in cipher, unless any of the
foregoing are caused by the Fronting Lender's gross negligence or willful
misconduct; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof, unless
caused by the Fronting Lender's gross negligence or willful misconduct; (vii)
for the misapplication by the beneficiary of any such Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of the Fronting Lender,
including, without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of any of the Fronting Lender's rights or
powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Fronting Lender in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not create any
liability on the part of the Fronting Lender to the Borrower.
Notwithstanding anything to the contrary contained in this
Section 2.2(g), the Borrower shall have no obligation to indemnify the Fronting
Lender in respect of any liability incurred by the Fronting Lender arising
solely out of the gross negligence or willful misconduct of the Fronting Lender.
2.3 Voluntary Reduction or Increase of Commitment.
(a) The Borrower may, at any time, without premium or
penalty, permanently reduce the Available Commitment then available. The
exercise of the foregoing option shall be evidenced by the Borrower giving the
Administrative Agent written notice of the Borrower's election to do so (as
evidenced for the purposes of this Section by a written acknowledgment of
receipt executed by such officer of the Administrative Agent as the
Administrative Agent may designate to the Borrower in writing) of such reduction
request. Such notice shall be irrevocable and shall specify the extent to which
the reduction should be applied to the Available Commitment, the date upon which
such reduction shall be effective (which
22
effective date shall be a Business Day and shall be no less than 5 days after
receipt of such notice by the Administrative Agent) and the amount thereof,
which shall be in integral multiples of $1,000,000. In the event of such a
reduction in the Available Commitment, Advances in an aggregate outstanding
principal amount that is in excess of the Available Commitment, as so reduced
(the "Over-Limit Amount"), shall be simultaneously paid on the effective date of
such reduction, with interest accrued on the amount so paid or prepaid to the
date of such reduction. On the effective date of such reduction, the Borrower
shall cash collateralize Letters of Credit, on terms satisfactory to the
Administrative Agent, in the amount, if any, by which the Over-Limit Amount
exceeds the amount of non-Letter of Credit Advances then outstanding and shall
execute such documents, instruments and agreements as the Administrative Agent
shall deem necessary to perfect a security interest in such cash collateral. A
reduction in the Available Commitment shall reduce each Lender's Pro Rata Share
in accordance with its respective Pro Rata Percentage.
(b) The Borrower may at any time and from time to time,
subject to clause (d) of this Section 2.3, request an increase in the Available
Commitment of the Lenders by sending a written notice thereof to the
Administrative Agent. Such notice shall specify the total amount of the increase
requested by the Borrower (the "Requested Increase"), which amount shall be at
least $10,000,000 and not exceed $25,000,000. The Administrative Agent shall
notify each Lender of the Requested Increase upon receipt of the Borrowers
notice thereof. Each Lender shall respond in writing to the Borrower (with a
copy simultaneously sent to the Administrative Agent), within thirty (30) days
of receipt of notice from the Administrative Agent of a Requested Increase (or
such shorter period as the Administrative Agent and the Borrower shall agree),
stating the maximum amount, if any, by which such Lender is willing to increase
its Pro Rata Share (the "Offered Amount"). If the total of the Offered Amount
for all of the Lenders is greater that the Requested Increase, the Requested
Increase shall be allocated among the offering Lenders as the Borrower and the
Administrative Agent shall agree or, absent any such agreement, pro rata based
on each Lender's then existing Pro Rata Percentage. Any Lender that increases
its Pro Rata Share shall execute and deliver a Commitment and Acceptance. If the
total of the Offered Amount for all the Lenders is equal to or less than the
Requested Increase, (x) unless the Borrower and Administrative Agent shall
otherwise agree, each Lender's Pro Rata Share shall increase by its Offered
Amount and (y) the Borrower may offer the difference, if any, between the
Requested Increase and the amount of the increase in the Pro Rata Shares
pursuant to clause (x) above to one or more new lenders reasonably acceptable to
the Administrative Agent (each, a "Proposed New Lender"). If the Borrower
requests that a Proposed New Lender join this Agreement and provide Advances
hereunder, the Borrower shall, at least seven (7) days prior to the date (or
such other period as the Administrative Agent and the Borrower shall agree) on
which the Proposed New Lender proposes to join the Agreement, notify the
Administrative Agent of the name of the Proposed New Lender and the amount of
its proposed Pro Rata Share and deliver a duly completed New Lender Joinder with
respect to such Proposed New Lender. Upon the consent of the Administrative
Agent to a Proposed New Lender joining this Agreement, which consent shall not
be unreasonably withheld, such Proposed New Lender shall join this Agreement
pursuant to the provisions of Section 10.10(e), including that its minimum Pro
Rata Share be $5,000,000 or such lesser amount as the Administrative Agent shall
agree. The Borrower may make multiple requests for Requested Increases during
the period from the
23
Closing Date to the Maturity Date provided, that the Available Commitment shall
not be increased pursuant to such requests by more than $25,000,000 in the
aggregate.
(c) Following any increase in the Available Commitment
pursuant to clause (b) of this Section 2.3, the Administrative Agent shall send
to the Lenders and the Borrower a revised Annex I setting forth the new Pro Rata
Shares and Pro Rata Percentages of the Lenders. Such revised Annex I shall
replace the existing Annex I if no Lender objects thereto within 10 days of its
receipt thereof.
(d) Notwithstanding anything to the contrary in this
Section 2.3, (i) the Borrower may not request an increase in the Available
Commitment if at the time of such request a Default or Event of Default shall
exist and (ii) no increase in the Available Commitment (including by way of
addition of a Proposed New Lender) shall become effective if on the date that
such increase would become effective, a Default or Event of Default shall exist.
2.4 Advances, Conversions, Renewals and Payments.
(a) (i) Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Revolving Credit,
the Available Commitment Fee, the L/C Fees, all other charges, Expenses and any
other Obligations of the Borrower hereunder, shall be made to the Administrative
Agent at its main Philadelphia banking office, 1600 Market Street, Philadelphia,
Pennsylvania (or such other office as may be designated by the Administrative
Agent to the Borrower in writing), in immediately available funds in lawful
money of the United States of America. The Administrative Agent shall have the
unconditional right and discretion to charge the Borrower's operating account
with the Administrative Agent (or any Subsidiary's operating account with the
Administrative Agent, if so directed by the Borrower or if an Event of Default
has occurred hereunder) for all of the Borrower's Obligations as they become due
from time to time under this Agreement, including without limitation, interest,
principal, fees and reimbursement of Expenses.
(ii) So long as no Event of Default is outstanding,
Borrower shall have the option to designate whether payments (including
prepayments) shall be applied to Acquisition Advances or to other Advances. If
no such designation is made or if an Event of Default is outstanding, such
application shall be made by the Administrative Agent.
(b) (i) Advances (except Letters of Credit) which may be
made by the Lenders from time to time under the Revolving Credit shall be made
available by crediting such proceeds to the Borrower's operating account with
the Administrative Agent or to such other Persons or accounts as may be
specified by the Borrower to the Administrative Agent in writing.
(ii) All Regular Advances (except Letters of Credit)
requested by the Borrower must be in the minimum amount of (A) $2,000,000
(unless the Swing Line Lender shall refuse to, or is unable, to make a Swing
Line Advance for a lesser amount in which case such minimum amount shall be
$500,000) and integral multiples of $100,000 in excess of such amount for
Alternate Base Rate Advances (unless otherwise agreed by the Administrative
Agent in its sole and absolute discretion) and (B) $5,000,000 and integral
multiples of $100,000
24
in excess of such amount for LIBOR Based Rate Advances. All Swing Line Advances
must be in the minimum amount of $50,000 and in integral multiples of $10,000.
All Advances must be requested:
(A) For all Alternate Base Rate Advances (other than Swing
Line Advances) by eleven o'clock (11:00) A.M., Philadelphia time, on the date
such Advance is to be made;
(B) For all Swing Line Advances by two o'clock (2:00) P.M.,
Philadelphia time, on the date such Swing Line Advance is to be made; and
(C) For all LIBOR Based Rate Advances or any Letter of Credit,
by ten o'clock (10:00) A.M., Philadelphia time, at least three (3) Business Days
before such Advance is to be made.
All requests for an Advance are to be made by telephone immediately confirmed in
writing by letter, facsimile or telex in the form attached hereto as Exhibit C
and made a part hereof ("Notice of Borrowing") which form is to be executed by
an Authorized Officer of the Borrower. Such request may be sent by telecopy or
facsimile transmission provided that receipt of such request shall not be
effective unless confirmed via telephone by the Administrative Agent. Once made,
Advance requests are irrevocable. Each request must indicate the amount of such
Advance, the date of such Advance, and whether or not the requested Advance is a
LIBOR Based Rate Advance or an Alternate Base Rate Advance or a conversion or
renewal of an existing Advance, and in the case of a LIBOR Based Rate Advance,
must specify the applicable LIBOR Interest Period. Upon receiving a request for
an Advance in accordance with this subparagraph (ii) on the date of such
request, the Administrative Agent shall promptly notify all Lenders of the
request.
(iii) (A) Each Lender shall advance its applicable Pro
Rata Percentage of a requested Regular Advance (and in the case of a Swing Line
Advance, the Swing Line Lender shall advance the amount of the requested Swing
Line Advance) to the Administrative Agent by remitting federal funds immediately
available to the Administrative Agent pursuant to the Administrative Agent's
instructions prior to three o'clock (3:00) p.m. Philadelphia time on the date of
the Advance. Subject to the satisfaction of the terms and conditions hereof and
receipt by the Administrative Agent of all required funds from the other
Lenders, the Administrative Agent shall make the requested Advance available to
the Borrower by crediting such amount to such account as the Borrower has
advised the Administrative Agent as soon as is reasonably practicable thereafter
on the day the requested Advance is to be made.
(B) (1) The Swing Line Lender shall, so long as and
to the extent that amounts are available to be borrowed under the Available
Commitment (whether or not any conditions precedent thereto can be or are met)
and to the extent any Swing Line Advances are not repaid by the Borrower with
its own funds, require each other Lender, and each other Lender hereby agrees,
subject to this Section 2.4(b)(iii)(B), on such date (which shall be a Business
Day) as designated by the Swing Line Lender in writing to the Borrower and the
other Lenders, to make a Regular Advance, which shall be an Alternate Base Rate
Advance, in
25
an amount equal to such Lender's Pro Rata Percentage of the amount of the Swing
Line Advances specified in such notice (each a "Mandatory Loan"). If Alternate
Base Rate Advances are made by the Lenders other than the Swing Line Lender
under the immediately preceding sentence, each such Lender shall make the amount
of its Regular Advance available to the Administrative Agent, in same day funds,
at the Administrative Agent's office, not later than 2:00 p.m. (Philadelphia
time) on the Business Day next succeeding the date such notice is given. The
conversion of Swing Line Advances to Regular Advances will not require the
Borrower to comply with the conditions set forth in Section 3 hereof or the
notice requirements of Section 2.4(b) hereof or require any other action on the
part of the Borrower. The proceeds of such Regular Advances shall be
immediately delivered to the Swing Line Lender (and not to the Borrower) and
applied to repay the outstanding Swing Line Advances. On the day such Regular
Advances are made, the Swing Line Lender's Swing Line Advances shall be deemed
to be paid with the proceeds of a Regular Advance made by the Lenders and such
portion of the Swing Line Advances deemed to be so paid shall no longer be
outstanding as Swing Line Advances, shall no longer be due under the Swing Line
Note and shall be due under the respective Revolving Credit Notes issued to the
Lenders to the extent of each Lender's Pro Rata Share. If any portion of any
such amount paid to the Swing Line Lender should be recovered by or on behalf of
the Borrower from the Swing Line Lender in bankruptcy, by assignment for the
benefit of creditors or otherwise, the loss of the amount so recovered shall be
ratably shared among all of the Lenders in the manner contemplated by Section
9.7 hereof. Each Lender's obligation to make the Regular Advances referred to in
this paragraph shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, the Borrower or any other Person for any reason whatsoever; (ii)
the occurrence or continuance of a Default or an Event of Default; (iii) the
occurrence of any Material Adverse Effect with respect to the Borrower; (iv) any
breach of this Agreement or any of the other Loan Documents by the Borrower or
any of its Subsidiaries or any other Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
(2) In the event that any Mandatory Loan cannot
for any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the Bankruptcy
Code with respect to the Borrower), then each Lender hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Loan would otherwise have
occurred, but adjusted for any principal payments received by the Swing Line
Lender relating to the Swing Line Advance from the Borrower on or after such
date and prior to such purchase) from the Swing Line Lender, such participations
in the outstanding Swing Line Ad vances as shall be necessary to cause such
Lenders to share in such Swing Line Advances ratably based upon their respective
Pro Rata Percentages; provided, however, that (x) all interest payable on the
Swing Line Advances shall be for the account of the Swing Line Lender until the
date as of which the respective participation required to be purchased is paid
and, to the extent attributable to the purchased participation, shall be payable
to the participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing Lender
shall be required to pay the Swing Line Lender interest on the principal amount
of the participation purchased for each day from and including the day in which
the Mandatory Loan would otherwise have occurred to but excluding the date of
payment for such participation, at a rate per
26
annum equal to (I) the overnight Fed Funds Rate for the first three (3) days and
(II) at the Alternate Base Rate for each day thereafter.
(3) A copy of each notice given by the Swing
Line Lender to the Lenders pursuant to Section 2.4(b)(iii)(B)(1) shall be
promptly delivered by the Swing Line Lender to the Administrative Agent and the
Borrower. Upon the making of a Regular Advance by a Lender pursuant to this
Section 2.4(b)(iii)(B), the amount so funded shall become due under such
Lender's Revolving Credit Note and shall no longer be owed under the Swing Line
Note.
(C) Neither the Administrative Agent nor any other Lender
shall be obligated, for any reason whatsoever, to advance the share of any other
Lender (including, any Lender's share of funding obligations with respect to
Letters of Credit). If such corresponding amount is not made available to the
Administrative Agent by such Lender on the date the Advance is made and the
Administrative Agent elects (at its sole and absolute discretion, without any
obligation to do so) to make such Lender's share of the Advance available to the
Borrower, the Administrative Agent shall be entitled to recover such amount on
demand from such Lender, or from the Borrower, together with interest thereon in
respect of each day during the period commencing on the date such amount was
made available to the Borrower and ending on (but excluding) the date the
Administrative Agent recovers such amount, at a rate per annum equal to the Fed
Funds Rate, for each such day (or, if such day is not a Business Day, for the
next preceding Business Day). The Administrative Agent shall also be entitled to
recover any and all losses and damages (including without limitation, reasonable
attorneys' fees and costs) from any Lender failing to so advance upon demand of
the Administrative Agent. The Administrative Agent may set off the obligations
of a Lender under this paragraph against any distributions or payments of the
Obligations which the Administrative Agent would otherwise make available to
such Lender. To the extent any Lender fails to provide its respective Pro Rata
Percentage of any requested Advance, such Lender's Pro Rata Percentage of all
payments of the Obligations shall decrease to reflect the actual percentage
which its actual outstanding Advances bears to the total outstanding Advances of
all Lenders.
2.5 Interest. The unpaid principal balance of the Revolving
Credit shall bear interest, subject to the terms hereof, on one of the two bases
selected by the Borrower from among the borrowing options set forth below, it
being understood that subject to the provisions hereof, the Borrower may select
different options to apply simultaneously to different parts of the outstanding
Revolving Credit.
(a) Alternate Base Rate Option. Interest on the
outstanding Alternate Base Rate Advances under the Revolving Credit will accrue
at the rate equal to the sum of (A) the Alternate Base Rate plus (B) the
Applicable Base Rate Margin. Interest on all Alternate Base Rate Advances shall
be payable quarterly, in arrears, on the first day of each calendar quarter
beginning on the first day of the first full calendar quarter after the date
hereof.
27
(b) LIBO Rate Option.
(i) Interest on the outstanding LIBOR Based Rate
Advances under the Revolving Credit shall accrue at the rate (the "LIBOR Based
Rate") equal to the sum of (A) the Adjusted LIBO Rate as determined by the
Administrative Agent on the Interest Rate Determination Date plus (B) the
Applicable LIBO Rate Margin
(ii) Those portions of the Revolving Credit
subject to this option shall be selected and outstanding for either a one (1)
month, two (2) month, three (3) month, or six (6) month period from the date
such LIBOR Based Rate Advance is made or renewed or an Advance is converted to a
LIBOR Based Rate Advance ("LIBOR Interest Period") and must be repaid in full on
the last day of such applicable period with all accrued and unpaid interest
thereon. Interest shall also be due and payable, for LIBOR Based Rate Advances
having a LIBOR Interest Period of three (3) months or greater, on each date
occurring at three-month intervals after the first day of such LIBOR Based Rate
Advance Period. No LIBOR Interest Period may end after the Maturity Date.
Subject to all of the terms and conditions applicable to a request for a new
Advance which the Borrower desires to select as a LIBOR Based Rate Advance, the
Borrower may convert any Advance to a LIBOR Based Rate Advance or extend a LIBOR
Based Rate Advance as of the last day of the LIBOR Interest Period to a new
LIBOR Based Rate Advance.
(iii) No more than seven (7) portions
(tranches) of principal of LIBOR Based Rate Advances may be outstanding at any
one time.
(iv) The initial LIBOR Interest Period for
any Borrowing of LIBOR Based Rate Advances shall commence on the date of such
Borrowing (including the date of any conversion from a Borrowing of an Alternate
Base Rate Advance) and each LIBOR Interest Period occurring thereafter
(including continuations thereof) in respect of such Borrowing shall commence on
the date on which the next preceding LIBOR Interest Period expires.
(v) If any LIBOR Interest Period relating to
a Borrowing of LIBOR Based Rate Advances begins on a date for which there is no
numerically corresponding date in the calendar month in which such LIBOR
Interest Period ends, such LIBOR Interest Period shall end on the last Business
Day of such calendar month.
(vi) If any LIBOR Interest Period would
otherwise expire on a day which is not a Business Day, such LIBOR Interest
Period shall expire on the next succeeding Business Day; provided that if any
LIBOR Interest Period in respect of a LIBOR Based Rate Advance would otherwise
expire on a day which is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such LIBOR Interest Period
shall expire on the next preceding Business Day.
(c) Calculation of Interest. Interest shall be
calculated on the basis of A 360 day year (or a year of 365 or 366 days, as the
case may be, in the case of all Advances based on the Prime Rate) and charged on
the actual days elapsed.
28
(d) Failure to Specify Rate. All Advances for which
an interest rate option is not specifically designated by the Borrower, pursuant
to the terms hereof, or not requested in conformity with the terms hereof, shall
be Alternate Base Rate Advances.
(e) Default Rate. After the occurrence and during the
continuance of an Event of Default hereunder, the per annum effective rate of
interest on all Advances may, in the discretion of the Administrative Agent or
at the direction of the Majority Lenders, be increased (and shall be
automatically so increased if the Event of Default is a payment default) by two
(2%) percentage points and may be applied retroactively to the date of the
occurrence of such Event of Default. Upon an acceleration of the obligations by
the Administrative Agent and/or the Lenders hereunder, the Administrative Agent
may (and shall, at the direction of the Majority Lenders), automatically and
without prior notice to the Borrower, convert each LIBOR Based Rate Advance to
an Alternate Base Rate Advance. The Administrative Agent will subsequently give
notice to the Borrower of such conversion.
(f) Continuation of Interest Charges. All rates of
interest charged on Advances under the Revolving Credit shall, until such
Advances are paid, continue to accrue at the applicable contract rate provided
in this Agreement and be paid even after the occurrence of any Default or Event
of Default, or after maturity, acceleration, recovery of judgment, bankruptcy,
insolvency proceedings of any kind or the happening of any event or occurrence
similar or dissimilar.
(g) Applicable Interest Limitations. In no
contingency or event whatsoever shall the aggregate of all amounts deemed
interest hereunder and charged or collected pursuant to the terms of this
Agreement exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that such court determines the Lenders have charged or received
interest hereunder in excess of the highest applicable rate, the Lenders shall
apply and set off such excess interest received by the Lenders against other
Obligations due or to become due and such rate shall automatically be reduced to
the maximum rate permitted by such law.
2.6 Fees.
(a) So long as the Revolving Credit is outstanding
and has not been terminated, the Borrower shall unconditionally pay to the
Administrative Agent, for the ratable benefit of the Lenders, a non-refundable
fee (the "Available Commitment Fee") at a rate per annum equal to the Applicable
Available Commitment Fee Percentage from time to time in effect on the average
daily unused amount of the Available Commitment (giving effect to any reductions
or increases therein) of such Lender during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Maturity Date or any
date on which the Available Commitment of such Lender shall be terminated). All
Available Commitment Fees shall be computed and paid on a quarterly basis in
arrears on the first day of each fiscal quarter, beginning in the first fiscal
quarter after the Closing Date, in each case for the actual number of days
elapsed over a year of 360 days. The Available Commitment Fee due to each Lender
shall commence to accrue on the date hereof, and shall cease to accrue on the
Maturity Date and the termination of the Available Commitment of such Lender as
provided herein. Solely for the
29
purposes of calculating the distributive share of the Available Commitment Fee
to be remitted to each Lender, the daily unused Available Commitment shall be
determined (the "Fee Determination") as if no Swing Line Advances were
outstanding during such period and the share of such fee owing to the Swing Line
Lender shall be reduced to the extent necessary for each Lender (other than the
Swing Line Lender) to receive its share of such fee based on such Fee
Determination.
(b) (i) The Borrower shall pay to the Administrative
Agent, for the ratable benefit of the Lenders, non-refundable letter of credit
fees equal to (A) one quarter of one (.25%) percent of the face amount of each
commercial letter of credit, which shall be paid upon negotiation of the letter
of credit and (B), for each day, the Applicable LIBO Rate Margin multiplied by
the aggregate undrawn face amount of the outstanding standby letters of credit
(collectively, the "L/C Fees") which shall be computed and paid on a quarterly
basis, in arrears, on the first day of each calendar quarter, beginning in the
first calendar quarter after the Closing Date, in each case for the actual
number of days elapsed over a 360 day year.
(ii) In addition to the foregoing, the Borrower
shall pay to the Fronting Lender, for its own account, (A) a fee (the "Fronting
Fee") equal to one eighth of one (1/8%) percent per annum of the aggregate face
amount of the outstanding Letters of Credit which shall be computed and paid on
a quarterly basis, in arrears, on the first day of each calendar quarter,
beginning in the first calendar quarter after the Closing Date, in each case for
the actual number of days elapsed over a 360 day year, and (B) customary
issuance, amendment, extension, cancellation and administration fees and charges
for each Letter of Credit, due and payable upon demand of the Fronting Lender.
2.7 Prepayments.
(a) The Borrower shall have the right at any time and
at its option from time to time to prepay the Advances in whole or in part
without premium or penalty, subject to reimbursement of the Lender's
re-deployment costs of prepayments of LIBOR Based Rate Advances in accordance
with Section 2.9. Whenever the Borrower desires to prepay any part of the
Advances, it shall provide a prepayment notice to the Administrative Agent by
eleven o'clock (11:00) A.M., Philadelphia time, at least one (1) Business Day
prior to the date of prepayment of any LIBOR Based Rate Advances and no later
than two o'clock (2:00) P.M., Philadelphia time, on the date of prepayment of
any Alternate Base Rate Advances, setting forth (i) the date, which shall be a
Business Day, on which the proposed prepayment is to be made; (ii) a statement
indicating the application of the prepayment between the Regular Advances and
the Swing Line Advances and (iii) the total principal amount of such prepayment,
the amount of which shall not be less than $1,000,000 in the case of Regular
Advances and $10,000 in the case of Swing Line Advances.
(b) All prepayment notices shall be irrevocable. The
principal amount of the Advances for which a prepayment notice is given,
together with interest on such principal amount except with respect to Alternate
Base Rate Advances, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be made.
Unless the Borrower indicates otherwise in the prepayment notice, prepayments
shall be
30
applied, first, to reduce Alternate Base Rate Advances and, second, to reduce
LIBOR Based Rate Advances. Any prepayment hereunder shall be subject to the
Borrower's obligation to indemnify the Lenders under Section 10.15.
2.8 Use of Proceeds. The proceeds of the Lenders' Advances
shall be used by the Borrower solely: (i) to provide Letters of Credit to be
used by the Borrower solely in the ordinary course of its business and (ii) for
working capital needs and general corporate purposes, including the funding of
Permitted Acquisitions, permitted dividends and permitted stock repurchases, not
otherwise prohibited under this Agreement.
2.9 Special Provisions Governing LIBOR Based Rate Advances.
Notwithstanding other provisions of this Agreement, the following provisions
shall govern with respect to LIBOR Based Rate Advances as to the matters
covered:
(a) On the Interest Rate Determination Date the
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties hereto) the interest
rate which shall apply to the LIBOR Based Rate Advances for which an interest
rate is then being determined for the applicable LIBOR Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing or
by facsimile) to the Borrower and to each Lender.
(b) In the event that (x) in the case of clause (i)
below, the Administrative Agent or (y) in the case of clause (ii) or (iii)
below, any Lender, shall have determined (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties hereto):
(i) at any time that a LIBO Rate is to be
determined by the Administrative Agent that, by reason of any changes arising on
or after the Closing Date affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Adjusted LIBO Rate;
(ii) at any time that such Lender shall incur
increased costs or reductions in the amounts received or receivable hereunder
with respect to any Lender on its obligation to make LIBOR Based Rate Advances
(which increase in cost or reduction in receivables shall be calculated in
accordance with such Lender's reasonable averaging and attribution methods)
because of (x) any change since the Closing Date (including changes proposed or
published prior to the Closing Date but not reflected in the pricing of the
Advances) in any applicable law or governmental (or quasi-governmental or other
body or entity accorded the status of a rule or regulation making authority)
rule, regulation, guideline or order, whether or not having the force of law, or
in the interpretation or administration thereof and including the introduction
of any new law or governmental rule, regulation, guideline or order, such as,
for example, but not limited to: (A) a change in the basis of taxation of
payments to any Lender of the principal of or interest on the Revolving Credit
Notes or any other amounts payable hereunder (except for changes in the rate of
tax on, or determined by reference to, the net income or profits of such Lender)
or (B) a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the computation
of the
31
LIBO Rate and/or (y) other circumstances since the date of this Agreement
affecting such Lender or the interbank Eurodollar market or the position of such
Lender in such market; or
(iii) at any time that the making or continuance
of any LIBOR Based Rate Advance has become unlawful by compliance by such Lender
in good faith with any applicable law or governmental (or quasi-governmental or
other body or entity accorded the status of a rule or regulation making
authority) rule, regulation, guideline or order (or would conflict with any such
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful), or has
become impracticable as a result of a contingency occurring after the Closing
Date which materially and adversely affects the interbank eurodollar market;
then, and in any such event, the Administrative Agent in the case of clause (i)
above or such Lender in the case of clause (ii) or (iii) above shall on such
date give notice (by telephone confirmed in writing or by facsimile) to the
Borrower of the Advance(s) affected and, in the case of clause (ii) or (iii) to
the Administrative Agent, of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, LIBOR Based Rate Advances shall no longer be
available until such time as the Administrative Agent notifies the Borrower and
the Lenders that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing given by the
Borrower with respect to the borrowing of or conversion into (including
continuance of) LIBOR Based Rate Advances which have not yet been incurred shall
be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its reasonable discretion
shall determine) as shall be required to compensate such Lender on an after-tax
basis for such increased costs or reductions in amounts receivable hereunder (a
written certificate signed by an officer of such Lender as to the additional
amounts owed to such Lender, showing in reasonable detail the basis for the
calculation thereof, submitted to the Borrower by such Lender shall, absent
manifest error, be final, conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 2.9(c) as promptly as possible and, in any event,
within the time period required under Section 2.9(c) or, if earlier, the time
period required by law. All demands for payment hereunder shall be given no more
than ninety (90) days after the occurrence of the change in law or other event
giving rise to such demand; provided however, that failure to deliver notice on
a timely basis shall not constitute a waiver of any Lender's right to receive
payment for any costs relating to the 90-day period preceding the date of demand
and any costs incurred after the giving of such notice.
(c) At any time that any LIBOR Based Rate Advance is
affected by the circumstances described in Section 2.9(b)(ii) or (iii), the
Borrower may (and in the case of a LIBOR Based Rate Advance affected pursuant to
Section 2.9(b)(iii) shall) either (i) if a Notice of Borrowing has been given
with respect to the affected LIBOR Based Rate Advance, cancel said Notice of
Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing or by facsimile) thereof on the same date that the Borrower
was notified by a Lender pursuant to Section 2.9(b)(ii) or (iii), or (ii) if the
affected LIBOR Based Rate Advance is then
32
outstanding, upon at least three (3) Business Days' notice to the Administrative
Agent, require the affected Lender to convert each such LIBOR Based Rate Advance
into an Alternate Base Rate Advance or prepay such LIBOR Based Rate Advance on
the last day of the current LIBOR Interest Period therefor unless earlier
payment is required by law; provided that if more than one Lender is affected at
any time, then all affected Lenders must be treated the same pursuant to this
Section 2.9(c); and provided, further, that the Borrower shall compensate any
such affected Lenders as set forth in Section 2.9(f).
(d) Anything herein to the contrary notwithstanding,
if, on any Interest Rate Determination Date, no LIBO Rate is available by reason
of any changes arising on or after the Closing Date affecting the interbank
Eurodollar market or adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of LIBO
Rate, the Administrative Agent shall give the Borrower and each Lender prompt
notice thereof and the Advances requested to be made as LIBOR Based Rate
Advances shall, subject to the applicable notice requirements, be made as
Alternate Base Rate Advances.
(e) Each Lender agrees that, as promptly as
practicable after it has actual knowledge of the occurrence of any event or the
existence of a condition that would cause it to be an affected Lender under
Section 2.9(b)(ii) or (iii), it will, to the extent not inconsistent with such
Lender's internal policies, use reasonable efforts to make, fund or maintain the
affected LIBOR Based Rate Advances of such Lender through another lending office
of such Lender if as a result thereof the additional moneys which would
otherwise be required to be paid in respect of such Advances pursuant to Section
2.9(b)(ii) would be materially reduced or the illegality or other adverse
circumstances which would otherwise require prepayment of such Advances pursuant
to Section 2.9(b)(iii) would cease to exist, and if, as determined by such
Lender, in its reasonable discretion, the making, funding or maintaining of such
Advances through such other lending office would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to promptly pay all
reasonable out-of-pocket expenses incurred by any Lender in utilizing another
lending office of such Lender pursuant to this Section 2.9(e).
(f) The Borrower shall compensate each Lender, upon
written request by that Lender, for all reasonable losses, expenses and
liabilities (including, without limitation, such factors as any interest paid by
that Lender to lenders of funds borrowed by it to make or carry its LIBOR Based
Rate Advances and any loss sustained by the Lender in connection with
re-deployment of such funds (based upon the difference between the amount earned
in connection with the re-deployment of such funds and the amount payable by the
Borrower if such funds had been borrowed or remained outstanding, but not for
loss of profit)) which that Lender may sustain with respect to the Borrower's
LIBOR Based Rate Advances: (i) if for any reason attributable to the Borrower, a
Borrowing of any LIBOR Based Rate Advance does not occur on a date specified
therefor in a Notice of Borrowing or a telephonic request for borrowing or
conversion, or a successive LIBOR Interest Period does not commence after notice
therefor is given or is deemed to have been given pursuant to Section 2.4(b)
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to clause
(x) of the last paragraph of Section 2.9(b)); or (ii) if any prepayment or
repayment (in accordance with Section 2.7 or this Section 2.9, by acceleration
or otherwise) or conversion of any of such Lender's LIBOR Based Rate Advances
occurs on a date which is not the last day of the LIBOR Interest Period
applicable to
33
that advance; or (iii) if any prepayment or repayment of any such Lender's LIBOR
Based Rate Advances is not made on any date specified in a notice of prepayment
or repayment given by the Borrower; or (iv) as a consequence of (x) any other
failure by the Borrower to repayment such Lender's LIBOR Based Rate Advances
when required by the terms of this Agreement or (y) any election made pursuant
to Section 2.9(c). Compensation owing under this Section 2.9(f) shall be equal
to the amount of interest which would have accrued on the amount of principal
prepaid or repaid or converted or not borrowed for the period from the date of
such prepayment or repayment or conversion or failure to borrow to the last day
of the then current LIBOR Interest Period for the relevant LIBOR Based Rate
Advance (or, in the case of a failure to borrow, the LIBOR Interest Period for
such LIBOR Based Rate Advance which would have commenced on the date of such
failure to borrow) at the applicable rate of interest for such LIBOR Based Rate
Advance provided for herein minus any amount such Lender, in good faith and in
its sole discretion (absent manifest error), determines is realizable upon the
re-deployment of such funds. A certificate signed by an officer of the Lender as
to the amount of such losses, expenses and liabilities, showing in reasonable
detail the calculation thereof and submitted to the Borrower by such Lender
shall, absent manifest error, be final, conclusive and binding of all purposes.
(g) Any Lender may make, carry or transfer LIBOR
Based Rate Advances at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender; provided that any increased costs
associated therewith shall be borne by such Lender except as provided in Section
2.9(e) above.
(h) During the continuance of a Default or an Event
of Default, the Borrower may not elect to have an Advance made or maintained as,
or converted into, a LIBOR Based Rate Advance after the expiration of any LIBOR
Interest Period then in effective for that Advance.
(i) Calculation of all amounts payable to the Lender
under this Section 2.9 in respect of LIBOR Based Rate Advances shall be made as
though the Lender had actually funded its relevant LIBOR Based Rate Advance
through the purchase of a Eurodollar deposit bearing interest at the LIBO Rate
applicable to such LIBOR Based Rate Advance of such Eurodollar deposit from an
offshore office of the applicable Lender to a domestic office of such Lender in
the United States of America; provided, however, that the Lenders may fund each
of their LIBOR Based Rate Advances in any manner they deem fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this Section 2.9.
2.10 Capital Requirements, Etc. If the adoption or
effectiveness after the Closing Date of any applicable law or governmental (or
quasi-governmental or other body or entity accorded the status of a rule or
regulation making authority) rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
or such Lender's direct or indirect parent with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency (including in each case any such
change proposed or published prior to the date hereof but not reflected in the
pricing of the Advances), has or would have the effect of reducing the rate of
return on such
34
Lender's or such Lender's parent's capital or assets as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
Lender's parent could have achieved but for such adoption, effectiveness or
change or as a consequence of an increase in the amount of capital required to
be maintained by such Lender (including in each case, without limitation, with
respect to any Lender's commitment hereunder or any Advance), then from time to
time, within fifteen (15) days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate, on an after-tax basis, such Lender or such
Lender's parent, as the case may be, for such reduction. Each Lender, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 2.10, will give prompt written notice thereof to the Borrower,
which notice shall set forth in reasonable detail the basis of the calculation
of such additional amounts, although any delay in giving any notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.10.
2.11 Mandatory Prepayments/Commitment Reductions.
(a) (i) The Borrower shall immediately prepay the
outstanding principal amount of the Advances (exclusive of undrawn Letters of
Credit) in accordance with Section 2.3 on any date on which the Outstandings
exceed the Available Commitment in effect at such time, in the amount of such
excess.
(ii) The Borrower shall immediately prepay to the
Swing Line Lender the outstanding principal amount of the Swing Line Advances on
any date on which the aggregate outstanding principal amount of such Swing Line
Advances exceed the Swing Line Commitment in effect at such time, in the amount
of such excess.
(b) Immediately upon funds being made available to
the Borrower constituting Net Cash Proceeds from Equity Offerings, an amount
equal to 50% of such Net Cash Proceeds from Equity Offerings shall be applied
to, and shall constitute a prepayment of, the Advances as provided in Section
2.11(d).
(c) During the first calendar quarter of each
calendar year during the term hereof the Borrower shall cause the aggregate
outstanding principal balance of Advances (exclusive of undrawn Letters of
Credit) under the Revolving Credit and any outstanding Capital (as that term is
defined in the Accounts Receivable Securitization Documents) under the Accounts
Receivable Securitization to be less than an amount equal to $35,000,000 plus
the applicable Adjustment Amount for a consecutive thirty (30) day period in
such first calendar quarter (the "Reduced Level"). If, as of March 1 of each
year the Borrower has not completed its compliance with this covenant for such
year, the Borrower shall, on such date, reduce outstanding Advances (exclusive
of undrawn Letters of Credit) to the applicable Reduced Level or (if at or
below such Reduced Level on such date) maintain the outstanding advances
(exclusive of undrawn Letters of Credit) at or below the applicable Reduced
Level for a sufficient number of days to complete its compliance with this
covenant for such year.
35
(d) With respect to each prepayment of Advances
required by Section 2.11(a), (b), (c) or (d) other than Alternate Base Rate
Advances, the Borrower shall give the Administrative Agent one (1) Business
Day's notice and may designate the types of Advances and the specific Borrowing
or Borrowings which are to be prepaid. In the absence of a designation by the
Borrower, the Administrative Agent shall make such designation in its sole
discretion. All prepayments shall include payment of accrued interest on the
principal amount so prepaid, shall be applied to the payment of interest,
Expenses, fees and charges before application to principal and shall include
amounts payable, if any, under Section 2.9(f). On the effective date of any such
prepayment, the Borrower shall cash collateralize Letters of Credit, on terms
and conditions satisfactory to the Administrative Agent, in the amount, if any,
by which the amount of such prepayment exceeds the outstanding cash Advances and
shall execute such documents, instruments and agreements as the Administrative
Agent shall deem necessary to perfect a security interest in such cash
collateral.
(e) The amount required to be applied in accordance
with Sections 2.11(b) shall permanently reduce the Available Commitment on a
dollar-for-dollar basis. A reduction in the Available Commitment shall reduce
each Lender's Pro Rata Share in accordance with its respective Pro Rata
Percentage.
2.12 Net Payments. (a) Except as otherwise required by law,
all payments made by the Borrower to any Lender or the Administrative Agent
under this Agreement and/or any Loan Document shall be made free and clear of,
and without reduction for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding income, bank shares and franchise taxes
imposed by any jurisdiction in which such Lender's principal or lending office
is located or in which such Lender is engaged in a trade or business or any
political subdivision or taxing authority thereof or therein (such non-excluded
taxes being called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender under this Agreement
and/or any Loan Document, the Borrower shall timely remit such Taxes to the
Governmental Authority imposing the same and the amounts so payable to such
Lender shall be increased to the extent necessary to yield to such Lender (after
payment of all Taxes) interest or any such other amounts payable at the rates or
in the amounts specified in this Agreement and/or any Loan Document. Whenever
any Tax is payable by the Borrower, as promptly as possible thereafter, the
Borrower shall send to the Administrative Agent, for its own account or the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. Without
prejudice to the foregoing, if any Lender or the Administrative Agent is
required to make any payment on account of Taxes, the Borrower will, upon
notification by the Lender or the Administrative Agent, promptly indemnify such
Person against such Taxes. Notwithstanding the foregoing provisions of this
Section 2.12(a), the Borrower will have no obligation to indemnify any Lender or
the Administrative Agent, in respect of any Taxes that would not have been
payable had (i) such Lender, assignee of such Lender or participant of a Lender
(or each interestholder in such Lender, assignee or participant, where such
Lender, assignee or participant is a pass-through entity for purposes of the
U.S. withholding tax rules) provided to each of the Borrower and the
Administrative Agent, the applicable Withholding Certificate. For purposes of
this Section 2.12, the term "Taxes" includes interest, penalties and
36
expenses payable or incurred in connection therewith. The Lender shall submit a
certification or otherwise provide written notice to the Borrower within a
reasonable period of time after becoming aware of any Taxes for which it is
entitled to payments of additional amounts under this Section 2.12(a). All
demands for payment hereunder shall be given no more than 90 days after the
occurrence of the event giving rise to such demand; provided however, that
failure to deliver notice on a timely basis shall not constitute a waiver of any
Lender's right to receive payment for any costs relating to the 90-day period
preceding the date of demand and any costs incurred after the giving of such
notice.
(b) Each Lender or assignee or participant of a
Lender that is not incorporated under the laws of the United States of America
or a state thereof (and, upon the written request of the Administrative Agent,
each other Lender or assignee or participant of a Lender) agrees that it will
deliver to each of the Borrower and the Administrative Agent two (2) duly
completed appropriate valid Withholding Certificates (as defined under Section
1.1441-1(c)(16) of the Income Tax Regulations (the "Regulations") certifying its
status (i.e., U.S. or foreign person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Internal Revenue Code of 1986 (as
amended, the "Code"). The term "Withholding Certificate" means a Form W-9; a
form W-8BEN; a form W-8ECI; a form W-8IMY and the related statements and
certifications as required under Section 1.1441-1(e)(3) of the Regulations; a
statement described in Section 1.871-14(c)(2) of the Regulations; or any other
certificates under the Code or Regulations that certify or establish the status
of a payee or beneficial owner as a U.S. or foreign person. Each Lender,
assignee or participant required to deliver to the Borrower and the
Administrative Agent a valid Withholding Certificate pursuant to the preceding
sentence shall deliver such valid Withholding Certificate as follows: (A) each
Lender which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first date
on which any interest or fees are payable by the Borrower hereunder for the
account of such Lender; (B) each assignee or participant shall deliver such
valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless the Administrative
Agent in its sole discretion shall permit such assignee or participant to
deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by the
Administrative Agent). Each Lender, assignee or participant which so delivers a
valid Withholding Certificate further undertakes to deliver to each of the
Borrower and the Administrative Agent two (2) additional copies of such
Withholding Certificate so delivered by it, and such amendments thereto or
extensions or renewals thereof as may reasonably requested by the Borrower or
Administrative Agent. Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of, or exemption from, U.S. withholding tax,
the Administrative Agent shall be entitled to withhold United States federal
income taxes at the full 30% withholding rate if in its reasonable judgment it
is required to do so under the due diligence imposed upon a withholding agent
under Section 1.1441-7(b) of the Regulations. Further, the Administrative Agent
is indemnified under Section 1.1441-6(b) of the Regulations against any claims
and demands of any Lender or assignee or participant of a Lender for the amount
of any tax it deducts or withholds in accordance with regulations under Section
1441 of the Code.
37
2.13 Maturity Date Extension. Not more than 120 days nor less
than 60 days prior to each anniversary hereof the Borrower may request in
writing that the then effective Maturity Date be extended for an additional year
and the Lenders shall use their best efforts to respond to such request within
30 days of receipt thereof. The then effective Maturity Date shall be extended
as requested, but only if (i) no Default or Event of Default shall have occurred
and be continuing on the effective date of such extension and (ii) all of the
Lenders consent to such extension.
2.14 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Sections 2.10 or
2.12 that affects fewer than all the Lenders, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Advances affected by
such event with the object of avoiding the consequences of such event; provided,
that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending offices to suffer no economic, legal,
regulatory or other disadvantage, and provided, further, that, nothing in this
Section shall affect or delay the required performance of any of the
obligations of the Borrower or the rights of any Lender pursuant to Sections
2.10 or 2.12.
2.15 Replacement of a Lender in Certain Circumstances. If an
event occurs giving rise to the operation of Section 2.10 or 2.12, and the event
affects fewer than all the Lenders, (each, an "Affected Lender"), the Borrower
may (a) request one or more of the other Lenders to acquire and assume all or
part of such Affected Lender's Pro Rata Share or (b) replace such Affected
Lender by designating another lender or financial institution that is willing to
acquire the Affected Lender's Pro Rata Share; provided, that (i) such
replacement does not conflict with any applicable law or governmental rule or
regulation, (ii) no Default or Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) the replacement lender or
financial institution shall purchase, at par, the Pro Rata Share, accrued
interest and other amounts owing to such Affected Lender on a pro rata basis as
of the date of replacement, (iv) the Borrower shall be liable to such Affected
Lender under Section 2.9 if any LIBOR Based Rate Advances owing to such Affected
Lender shall be prepaid (or purchased) other than on the last day of the LIBOR
Interest Period relating thereto and shall pay any such amounts to such Affected
Lender on the date of such replacement, (v) the replacement lender or financial
institution, if not already a Lender, shall be satisfactory to the
Administrative Agent, (vi) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.10 (provided that
the Borrower or replacement Lender shall be obligated to pay the assignment fee
according to Section 10.10(b)(i)(D)) and (vii) the Borrower shall pay all
additional amounts (if any) required pursuant to Sections 2.10 or 2.12, as the
case may be, to the extent such additional amounts are incurred on or prior to
the consummation of such replacement.
SECTION 3. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES.
3.1 Conditions Precedent to Closing. Closing under this
Agreement is subject to the following conditions precedent (all documents,
instruments and agreements to be in form and substance satisfactory to the
Administrative Agent and the Administrative Agent's counsel):
38
(a) Resolutions, Opinions, and Other Documents.
The Borrower shall have delivered to the Administrative Agent the following:
(i) this Agreement, the Revolving Credit Notes,
and the Swing Line Note all properly executed;
(ii) each of the other Loan Documents to be
executed by the Borrower or by any other Person pursuant to the terms hereof;
(iii) Guarantees properly executed by each of the
Guarantors;
(iv) certified copies of (A) resolutions of the
Borrower's board of directors authorizing the execution of this Agreement, the
Revolving Credit Notes, the Swing Line Note to be issued hereunder and each of
the other Loan Documents, and (B) the Borrower's Articles or Certificate of
Incorporation or Formation and By-laws or Operating Agreement;
(v) certified copies of (A) resolutions of each
Guarantor's board of directors authorizing the execution of the Guarantees and
(B) each Guarantor's Articles or Certificate of Incorporation and By-laws;
(vi) an incumbency certificate for the Borrower
identifying the parties executing this Agreement, the Revolving Credit Notes,
the Swing Line Note and the other Loan Documents with specimen signatures;
(vii) an incumbency certificate for each
Guarantor identifying the parties executing the Guarantees, with specimen
signatures;
(viii) a written opinion of the Borrower's and
Guarantors' counsel addressed to the Administrative Agent and the Lenders;
(ix) certification by the chief financial officer
or vice president of finance of the Borrower that there has not occurred any
material adverse change in the business, assets, operations, properties,
financial condition, contingent liabilities, prospects or material agreements of
the Borrower and its subsidiaries taken as a whole, since December 31, 2000 as
reflected on the applicable Financial Statements of the Borrower delivered to
the Administrative Agent;
(x) payment of all fees set forth in the Fee
Letter due on the Closing Date and Expenses associated with the Revolving
Credit;
(xi) Uniform Commercial Code, judgment, federal
and state tax lien searches against the Borrower and each of the Guarantors at
the Borrower's sole cost and expense, showing that the Property of the Borrower
and each Guarantor is not subject to any Liens except for Permitted Liens, and
certificates of good standing showing the Borrower and each of the Guarantors to
be in good standing in each jurisdiction in which it is qualified to do
business;
39
(xii) evidence that the Existing Loan Agreement
is terminated and all Indebtedness thereunder shall have been repaid in full,
all collateral (if any) pledged to secure such Indebtedness shall be released
and executed termination statements to Uniform Commercial Code financing
statements shall either have been filed or be provided to the Administrative
Agent; and
(xiii) copies of all other documents,
instruments, agreements, opinions and certificates as the Administrative Agent
may reasonably request.
(b) Absence of Certain Events. As of the Closing
Date, (i) no Default or Event of Default hereunder shall have occurred and be
continuing and (ii) there shall not have occurred any event or condition having
a Material Adverse Effect with respect to the Borrower since December 31, 2000,
as reflected on the applicable Financial Statements delivered to the
Administrative Agent.
(c) Warranties and Representations at Closing.
The warranties and representations contained in Section 4 as well as any other
Section of this Agreement shall be true and correct in all material respects on
the Closing Date with the same effect as though made on and as of that date. The
Borrower shall not have taken any action or permitted any condition to exist
which would have been prohibited by any Section hereof. All warranties and
representations contained in this Agreement, unless expressly stated to the
contrary, are deemed to have been made to the Administrative Agent and Lenders
immediately following completion of Closing hereunder.
(d) Compliance with this Agreement. The Borrower
shall have performed and complied with all agreements, covenants and conditions
contained herein which are required to be performed or complied with by the
Borrower before or at the Closing Date, including, without limitation, the
provisions of Sections 5, 6 and 7 hereof.
(e) Officers' Certificate. The Administrative Agent
shall receive a certificate dated the Closing Date and signed by the chief
financial officer or vice president of finance of the Borrower certifying that
all of the conditions precedent to the Borrowings to occur on the Closing Date
have been fulfilled.
(f) Indebtedness; Liens, etc. (i) The Borrower and
each of the Guarantors shall have received all necessary consents or waivers or
shall have amended, supplemented or otherwise modified, repaid, redeemed or
defeased its outstanding Indebtedness in a manner and on terms satisfactory to
the Administrative Agent such that there exists no default or potential default
(including, without limitation, as a result of the consummation of the
transactions contemplated by any Borrowing hereunder) with respect to such
Indebtedness or under any note, evidence of indebtedness, mortgage, deed of
trust, security document or other agreement relating to such Indebtedness and
such indentures, notes, evidences of indebtedness, mortgages, deeds of trust or
other agreements relating to such Indebtedness shall not contain any restriction
on the ability of the Borrower or any of the Guarantors to enter into this
Agreement, the Guarantees or the other Loan Documents to which it is entering or
the granting of any Lien in favor of the Lenders, nor do such agreements,
documents or instruments contain any provision
40
giving rise to the creation of any Lien in favor of any Person as a result of
any Borrowing hereunder.
(ii) The Administrative Agent and the Lenders
shall be satisfied, in their reasonable discretion, with all Indebtedness of the
Borrower and each of the Guarantors, outstanding on the Closing Date and not
reflected on the Financial Statements.
(g) Consents, etc. All material consents of any
Governmental Authority and third-party consents (including, without limitation,
all material approvals and consents required in connection with any
Environmental Law or other environmental statutes, rules or regulations), if
any, in connection with the transactions contemplated by this Agreement and the
other Loan Documents (including any consents and approvals that are necessary
for the Borrower to borrow and for each of the Guarantors to perform its
obligations hereunder and to perform in a full and timely manner all of its
obligations under the other Loan Documents) and otherwise referred to herein or
therein to be completed on or before the Closing Date, shall have been obtained
and delivered to the Administrative Agent, and shall remain in effect and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes, in the judgment of
the Administrative Agent or the Majority Lenders, materially adverse conditions
upon the consummation of the transactions contemplated by this Agreement. There
shall not exist any judgment, order, injunction or other restraint issued or
filed with respect to the making of the Advances hereunder.
(h) Environmental Review. At or prior to the Closing
Date, there shall have been delivered to the Administrative Agent all
environmental reports, investigations, studies, audits, assessments or reviews
in the possession of the Borrower or any Subsidiary, as set forth in Schedule
"3.1(h)" attached hereto and made a part hereof, in relation to the current
business or operations of the Borrower or any Subsidiary or any Real Property,
Property or facilities now owned, operated, leased or controlled by the Borrower
or any of the Subsidiaries which contain information pertaining to any event(s)
or conditions) which have, or to the best of the Borrower's present Knowledge
are reasonably likely to cause, a Material Adverse Effect.
(i) Compliance with Laws. The Borrower and each of
its Subsidiaries shall be in compliance with all applicable statutes,
regulations and ordinances of the United States of America and each other
country and jurisdiction, and of each state, city, town, municipality, country,
and each agency thereof (including, without any limitation, ERISA laws,
Environmental Laws and margin regulations), a violation of which would cause a
Material Adverse Effect.
3.2 Closing. Subject to the conditions of this Section 3, the
Revolving Credit shall be made available on such date (the "Closing Date") and
at such time as may be mutually agreeable to the parties contemporaneously with
the execution hereof ("Closing") at the offices of the Borrower's counsel,
Morgan, Lewis & Bockius LLP, in Philadelphia, Pennsylvania.
3.3 Conditions Precedent to all Advances. The obligation of
Lenders to make Advances hereunder is subject, at the time of making each such
Advance, to the satisfaction of
41
the following conditions precedent (all documents, instruments and agreements to
be in form and substance satisfactory to the Administrative Agent and the
Administrative Agent's counsel):
(a) Agreements Effective. This Agreement, the
Revolving Credit Notes, the Swing Line Note and each of the other Loan Documents
shall be effective;
(b) Notice of Borrowing. With respect to any Advance,
the Administrative Agent shall have received, in accordance with the provisions
of Section 2.4 hereof, prior to the making of any such Advance, an originally
executed Notice of Borrowing signed by an Authorized Officer, in writing,
delivered to the Administrative Agent (the furnishing by the Borrower of each
such Notice of Borrowing shall be deemed to constitute a representation and
warranty of the Borrower to the effect that the other conditions set forth in
this Section 3 are satisfied in all material respects as of the date of delivery
and will be satisfied on the date such Advances are made).
(c) No Default; Representations and Warranties. At
the time of the making of each Advance and also after giving effect thereto, (i)
there shall exist no Default or Event of Default and (ii) all representations
and warranties contained herein and in the other Loan Documents in effect at
such time (as amended or modified from time to time, including by the delivery
of amendments or supplements (in form, scope and substance satisfactory to the
Administrative Agent and the Majority Lenders) to the schedules and exhibits to
this Agreement and/or the other Loan Documents) shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of such date, unless such representation and
warranty expressly indicates that it is being made as of any other specific
date, in which case, on and as of such other date.
(d) Material Adverse Change, etc. (i) No event or
condition shall have occurred or become known or would result from any Borrowing
on the date of any such Borrowing and the use of the proceeds therefrom that has
resulted or would result, singly or in the aggregate, in a Material Adverse
Effect.
(ii) There shall not exist any judgment, order,
injunction or other restraint issued or filed prohibiting, limiting or otherwise
adversely affecting the making of any Advances hereunder.
(e) Fees. The Borrower shall have paid to the
Administrative Agent, the Lenders and the Fronting Lender, all fees payable to
the Administrative Agent, the Lenders and/or the Fronting Lender to the extent
due hereunder and all costs and Expenses (including legal fees and expenses)
payable to the Administrative Agent, the Lenders and/or the Fronting Lender
hereunder.
(f) Litigation. There shall be no Proceeding pending
or, to the best of Borrower's Knowledge, threatened with respect to the Borrower
or any of its Subsidiaries or any Property of any such Person that, in the
reasonable judgment of the Administrative Agent, would, singly or in the
aggregate, have a Material Adverse Effect. No injunction or other restraining
order to be issued shall be pending or noticed with respect to any Proceeding
seeking to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief
42
as a result of, this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.
(g) Margin Rules. Neither the making of any Advance
nor the use of the proceeds therefrom will violate the provisions of Regulation
T, U or X or any other regulation of the Board of Governors of the Federal
Reserve System or the provisions of Section 7 of the Exchange Act.
The acceptance of the proceeds of each Borrowing of
Advances shall constitute a representation and warranty by the Borrower to each
of the Lenders that all of the applicable conditions specified in Section 3 and
in any other provision of this Agreement or any of the other Loan Documents have
been satisfied or waived.
3.4 Waiver of Rights. By completing the Closing hereunder or
by making Advances hereunder, the Administrative Agent does not thereby waive a
breach of any warranty or representation made by the Borrower hereunder or in
any agreement, document, or instrument delivered to the Administrative Agent or
otherwise referred to herein, and all of the Administrative Agent's claims and
rights resulting from any breach or misrepresentation by the Borrower are
specifically reserved by the Administrative Agent.
3.5 Delivery of Documents. All of the certificates and other
agreements, documents, instruments and papers referred to in this Section 3,
unless otherwise specified, shall be delivered to the Administrative Agent at
its office (or such other location as may be specified by the Administrative
Agent) for the account of each of the Lenders and in sufficient counterparts for
each of the Lenders (and the Administrative Agent shall furnish such
counterparts to the Lenders).
SECTION 4. REPRESENTATIONS AND WARRANTIES.
To induce the Lenders to make the Advances under the Revolving
Credit to the Borrower, the Borrower warrants and represents to the
Administrative Agent and the Lenders that:
4.1 Corporate Organization and Validity.
(a) The Borrower and its domestic Subsidiaries are
corporations duly organized and validly existing under the laws of their
respective states (or countries or other jurisdictions, as applicable) of
incorporation, are duly qualified, are validly existing and in good standing and
have lawful power and authority to engage in the business each conducts in each
state and each foreign country where the nature and extent of their businesses
require qualification, except when the failure to so qualify would not have a
Material Adverse Effect.
(b) The making and performance of this Agreement and
the other Loan Documents does not violate any law, government rule or
regulation, court or administrative order or other such order having the effect
of law, or the charter, minutes or bylaw provisions of the Borrower or any of
the Guarantors or violate or result in a default (immediately or with the
passage of time) under any contract, agreement or instrument to which any such
Person is a
43
party, or by which any such Person or its Property is bound. Neither the
Borrower nor any of the Guarantors is in violation of any term of any agreement
or instrument to which any such Person is a party or by which it or its Property
may be bound or of its charter, minutes or its bylaws, which violation has had a
Material Adverse Effect.
(c) The Borrower and each of the Guarantors has all
requisite corporate power and authority to enter into and perform under this
Agreement and each of the Loan Documents (as applicable) and to incur the
obligations herein provided for, and has taken all proper and necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents (as applicable).
(d) This Agreement, the Revolving Credit Notes, the
Swing Line Note, the Guarantees and all of the other Loan Documents, when
delivered, will be valid and binding upon the Borrower and the Guarantors (as
applicable) and enforceable in accordance with their respective terms.
4.2 Places of Business. As of the Closing Date, the only
places of business of the Borrower and the Guarantors and the places where each
keeps and intends to keep its Property and records concerning its Property, are
at the addresses listed in Schedule 4.2 attached hereto and made part hereof.
4.3 Pending Litigation. There are no judgments or judicial or
administrative orders against or binding upon the Borrower or any of its
Subsidiaries, proceedings or investigations (civil or criminal) pending, or to
the knowledge of the Borrower threatened, against or affecting the Borrower or
any of its Subsidiaries in any court or before any governmental authority or
arbitration board or tribunal which would cause a Material Adverse Effect,
except as shown in Schedule 4.3 attached hereto and made part hereof. Neither
the Borrower nor any of its Subsidiaries is in default with respect to any order
of any court, Governmental Authority, regulatory agency or arbitration board or
tribunal which would cause a Material Adverse Effect.
4.4 Title to Properties. The Borrower and each of its domestic
Subsidiaries has good and marketable title in fee simple (or its equivalent
under applicable law) to all the Property it respectively purports to own, free
from Liens and free from the claims of any other Person, except for those Liens
set forth on Schedule 4.4 attached hereto and made part hereof and for other
Permitted Liens.
4.5 Governmental Consent. Neither the nature of the Borrower
or any of its Subsidiaries' respective businesses or Property, nor any
relationship between such entities and any other Person, nor any circumstance
affecting any such entities in connection with the issuance or delivery of this
Agreement, the Revolving Credit Notes, the Swing Line Note, the Guarantees or
the other Loan Documents is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of any such party in conjunction with the
execution and delivery of this Agreement or the issuance or delivery of the
Revolving Credit Notes, the Swing Line Note, the Guarantees, or the other Loan
Documents, other than such of the foregoing as have been obtained or made.
44
4.6 Taxes. All tax returns required to be filed (except for
those tax returns which, if not filed, would not have a Material Adverse Effect)
by the Borrower and each of its Subsidiaries in any jurisdiction, have in fact
been filed or extensions have been obtained, and all taxes, assessments, fees
and other governmental charges upon any such Person, or upon any of such
Person's respective Property, income or franchises, which are due and payable,
have been paid, except for those taxes being contested in good faith with due
diligence by appropriate proceedings for which appropriate reserves have been
maintained pursuant to GAAP and except for those taxes which, if not paid, would
not cause a Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries is aware of any proposed additional tax assessment or tax to be
assessed against or applicable to such Person (except for those tax assessments
which would not cause a Material Adverse Effect).
4.7 Financial Statements. The Financial Statements (complete
copies of which have been delivered to the Administrative Agent for distribution
to the Lenders), were prepared in accordance with GAAP (excluding footnotes for
unaudited statements) are complete in all material respects and present fairly
the financial position of the Borrower and its Subsidiaries as of such dates and
the results of their operations for such periods provided, however, that interim
financial statements are subject to normal year end audit adjustments. The
fiscal year for the Borrower and each of its Subsidiaries ends on March 31.
4.8 Full Disclosure. Neither the Financial Statements nor any
written statement furnished by, or on behalf of, the Borrower to the
Administrative Agent and/or Lenders in connection with the Revolving Credit
contained in any Financial Statements or documents, instruments, agreements or
certificates relating to the Borrower and its Subsidiaries contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact known to
the Borrower which the Borrower has not disclosed to the Administrative Agent in
writing, which would cause a Material Adverse Effect. The projections and pro
forma financial information contained in any materials provided by the Borrower
to the Administrative Agent or any Lender are based upon good faith estimates
and assumptions believed by the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.
4.9 Subsidiaries. Other than the parties listed on Schedule
4.9, attached hereto, the Borrower has, as of the Closing Date, no actively
operating Subsidiaries. The jurisdiction of incorporation of each of such
Subsidiaries is also set forth on Schedule 4.9.
4.10 Guarantees, Indebtedness, etc.
(a) As of the Closing Date, neither the Borrower nor
any of the Guarantors owns or holds equity (excepting the stock of its
Subsidiaries) or long term debt investments in, has any outstanding advances to,
or serves as guarantor, surety or accommodation maker for the obligations of, or
has any outstanding borrowings from any Person, which, in the case of any such
equity, investment, advance, guarantee or borrowing,
45
involves the expenditure of money or incurrence of an obligation, as the case
may be, of at least $1,000,000 except as described in Schedule 4.10, attached
hereto and made part hereof.
(b) Neither the Borrower nor any of its Subsidiaries
is a party to any contract or agreement, or subject to any charter or other
corporate restriction, which would cause a Material Adverse Effect.
(c) Except as otherwise specifically provided in this
Agreement, neither the Borrower nor any of its Subsidiaries has agreed or
consented to cause or permit any of its Property, whether now owned or hereafter
acquired, to be subject in the future (upon the happening of a contingency or
otherwise) to a Lien not permitted by this Agreement.
4.11 Government Regulations, etc.
(a) Assuming each of the Lenders is acquiring its
Note or Notes hereunder and its interests hereunder for its own account, for
investment and not with a view toward distribution, nor with the assets of any
Employee Benefit Plan subject to Part 4, Title I of ERISA, the use of the
proceeds of, and the Borrower's issuance of the Revolving Credit Notes and the
Swing Line Note, will not directly or indirectly violate or result in a
violation of the Securities Act of 1933 or the Securities Exchange Act of 1934,
as amended, or any regulations issued pursuant thereto, including, without
limitation, Regulations U, T and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. The Borrower does not own or intend to
carry or purchase any "margin security" within the meaning of said Regulations,
except in conformity with said Regulations.
(b) The Borrower and each of the Guarantors has
obtained all licenses, permits, franchises or other governmental authorizations
necessary for the ownership of its Property and for the conduct of its business,
except for those which, if not obtained, would not cause a Material Adverse
Effect.
(c) Assuming none of the Lenders is acquiring its
Note or Notes hereunder or its interests hereunder with the assets of any
employee benefit plan subject to Part 4, Title I of ERISA, as of the date
hereof, no employee benefit plan, as defined in Section 3(2) of ERISA, (other
than a multi-employer plan described in Section 3(37) of ERISA) ("Employee
Benefit Plan") maintained by the Borrower or any of its Subsidiaries, or under
which any such Person could have any liability under ERISA or the Internal
Revenue Code (i) has failed to meet the minimum funding standards established in
Section 302 of ERISA for which such Person continues to be liable, (ii) except
as set forth on Schedule 4.11(c), has failed to comply, in any material respect,
with any applicable requirement of ERISA and of the Internal Revenue Code,
including all applicable rulings and regulations thereunder for which it
continues to be responsible, or (iii) has, to its knowledge, engaged in or been
involved in a Prohibited Transaction (as defined in ERISA or the Internal
Revenue Code) under ERISA or the Internal Revenue Code, except to the extent
that a failure to comply with the foregoing would not present a reasonable
likelihood of having a Material Adverse Effect. Except set forth on Schedule
4.11(c) attached hereto and made a part hereof, no Employee Benefit Plan
maintained by the Borrower or any of its Subsidiaries has been terminated within
the one (1) year period prior to
46
the date hereof. Neither the Borrower nor any of its Subsidiaries has assumed,
or received notice of a claim asserted against such Person, withdrawal liability
(as defined in the Multi-employer Pension Plan Amendments Act of 1980, as
amended) with respect to any multi-employer pension plan in which it
participates. Other than as shown on Schedule 4.11(c), neither the Borrower nor
any of its Subsidiaries is a member of any Controlled Group (as defined in
Sections 414(b),(c),(m) and (o) of the Internal Revenue Code and Section
4001(a)(14) of ERISA). The Borrower and each of its Subsidiaries has timely made
all contributions when due with respect to any multi-employer pension plan in
which it participates and no event has occurred triggering a claim against such
Person for withdrawal liability with respect to any multi-employer pension plan
in which such Person participates.
(d) Neither the Borrower nor any of the Guarantors is
in violation of any applicable statute, regulation or ordinance of the United
States of America or any other country or jurisdiction, or of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency
thereof, (including without limitation, Environmental Laws and regulations), a
violation of which would cause a Material Adverse Effect.
(e) The Borrower and all of the Guarantors are
current with all reports and all documents required to be filed with any state
or federal securities commission or similar agency, if any, and are in full
compliance in all material respects with all applicable rules and regulations of
such commissions.
(f) Neither the Borrower nor any of the Guarantors
are, or will be after giving effect to the transactions contemplated hereby,
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or to any federal or state statute or regulation limiting its
ability to incur indebtedness for money borrowed or guarantee such indebtedness
as contemplated by this Agreement or any other Loan Document.
(g) Neither the Borrower, nor any of its Subsidiaries
is, or will be after giving effect to the transactions contemplated hereby, an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
4.12 Business Interruptions. Within five (5) years prior to
the date hereof, neither the business, Property or operations of the Borrower or
any of the Guarantors have been materially and adversely affected in any way by
any casualty, strike, lockout, combination of workers, order of the United
States of America, or any state or local government, or any political
subdivision or agency thereof, directed against such Persons. To the best of the
Borrower's Knowledge, as of the Closing Date, except as set forth on Schedule
4.12 attached hereto and made part hereof, there are no pending or threatened
labor disputes, strikes, lockouts or similar occurrences or grievances affecting
the businesses being operated by the Borrower or any of the Guarantors which are
reasonably expected to have or result in a Material Adverse Effect.
4.13 Names.
(a) Within five (5) years prior to the Closing Date,
neither the Borrower nor any of the Guarantors has conducted business under or
used any other name
47
(whether corporate or assumed) except for the names shown on Schedule 4.13(a),
attached hereto and made part hereof. As of the Closing Date, the Borrower and
its domestic Subsidiaries are, respectively, the sole owners of each of their
names listed on such Schedule 4.13(a) and any and all business done and all
invoices issued in such trade names are the applicable party's sales, business
and invoices. As of the Closing Date, each trade name of the Borrower and the
Guarantors represents a division or trading style of such entities and not a
separate corporate subsidiary, affiliated, or independent entity.
(b) As of the Closing Date, all federally registered
trademarks, patents or copyrights of the Borrower and the Guarantors are listed
on Schedule 4.13(b) attached hereto and made part hereof. Schedule 4.13(b) shall
also list all agreements for the license to use third party-owned trademarks,
patents and copyrights. The Borrower and/or the Guarantor, and to the best of
Borrower's knowledge, each third party identified on such Schedule 4.13(b) is
the sole owner of such Property except to the extent any other Person has or
claims rights in such Property as also described on such Schedule 4.13(b). To
the best of the Borrower's Knowledge, neither the Borrower nor any of the
Guarantors are in violation in any material respect of any intellectual property
rights of any other Person with respect to such Property.
4.14 Other Associations. As of the Closing Date, neither the
Borrower nor any of the Guarantors is engaged in any joint venture or
partnership with any other Person except as described on Schedule 4.14 attached
hereto and made part hereof.
4.15 Environmental Matters. Except as disclosed on Schedule
14.15 attached hereto and made part hereof, or as would not have, singly or in
the aggregate, a Material Adverse Effect:
(a) The Borrower and each of its Subsidiaries has
obtained all permits, licenses and other authorizations (collectively
"Environmental Authorizations") that are required with respect to the use,
ownership and operation of their business, Real Property and other Property
under any Environmental Law and each such Environmental Authorization is in full
force and effect.
(b) The Borrower and each of its Subsidiaries is in
compliance with all terms and conditions of the Environmental Authorizations
specified in Section 4.15(a) above, and is also in compliance with, and not
subject to liability under, any Environmental Law applicable to it and its
respective businesses, operations, Real Property and other Property.
(c) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, written notice or demand letter or request for information pending
or, to the knowledge of the Borrower, are any such actions or any investigations
threatened against the Borrower or any of its Subsidiaries under any
Environmental Law.
(d) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or current plans which
could reasonably be expected to materially interfere with or prevent compliance
by the Borrower or any of its Subsidiaries with any Environmental Law, or which
could reasonably be expected to give rise to any liability
48
under any Environmental Law, including, without limitation, liability under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), or similar applicable state, local or foreign laws for
response or corrective action, or which could reasonably be expected to form the
basis of any suit, proceeding, hearing, notice of violation, or notice of
potential liability or responsibility, based on or primarily related to the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport, shipping or handling, or the arrangement for treatment or
disposal or the emission, discharge, release or threatened release into the
environment, of any Hazardous Materials.
(e) Neither the Borrower nor any of its Subsidiaries
has received written notice that it has been identified as a potentially
responsible party or any request for information under CERCLA or any comparable
state law, nor has any such Person received any written notification that any
Hazardous Materials that it or any of its respective predecessors in interest
has used, generated, stored, treated, handled, transported or disposed of, or
arranged for transport or treatment of, or arranged for disposal or treatment
of, has been found at any site at which any Governmental Authority or private
party is conducting or plans to conduct an investigation or other action
pursuant to any Environmental Law.
(f) There have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping into the
environment) of Hazardous Materials by the Borrower or any of its Subsidiaries
or to the Borrower's knowledge after due inquiry, any of their respective
predecessors in interest, at, on, upon, under, into or from any of the Real
Properties. To the knowledge of the Borrower, there have been no such releases
at, on, upon, under, from or into any real property in the vicinity of any of
the Real Properties that, through soil, air, surface water or groundwater
migration or contamination, has become located on, in or under such Real
Properties.
(g) There is no friable asbestos or friable
asbestos-containing material in, on, or at any of the Real Properties or any
facility or equipment owned or operated by the Borrower or any of its
Subsidiaries.
(h) No Real Property of the Borrower or any of its
Subsidiaries is (i) listed or proposed for listing on the National Priorities
List under CERCLA or (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA,
or on any comparable list published by any Governmental Authority.
(i) No regulated underground storage tanks or related
piping are located at, under or on the Real Property, or, to the best of the
Borrower's Knowledge, located in the vicinity of such Real Property.
(j) Except as listed on Schedule 3.1(h) attached
hereto, no environmental reports, investigations, studies, audits, assessments
or reviews in the possession of the Borrower or any Subsidiary with respect to
the current business or operations of the Borrower or any Subsidiary or any Real
Property or other Property or facility now owned,
49
operated, leased or controlled by the Borrower or any Subsidiary contain
information pertaining to any event(s) or conditions) which have or, to the best
of the Borrower's present Knowledge, are reasonably likely to cause a Material
Adverse Effect. No environmental reports, investigations, studies, audits,
assessments or reviews in the possession of the Borrower or any Subsidiary with
respect to the current or prior business or Property of the Borrower or any
Subsidiary or any Real Property or other Property or facility now, or to the
best of Borrower's Knowledge, previously owned, leased, operated or controlled
by the Borrower or any Subsidiary, contain information pertaining to events or
conditions which would be, or otherwise are, reasonably likely to have or cause
a Material Adverse Effect.
(k) No Lien has been recorded under any Environmental
Law with respect to any facility, inventory, Real Property or other Property
presently owned, operated, leased or controlled by the Borrower or any of its
Subsidiaries.
4.16 Regulation O. No director, executive officer or principal
shareholder of the Borrower is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms "director" (when
used with reference to a Lender), "executive officer" and "principal
shareholder" have the respective meanings assigned thereto in Regulation O
issued by the Board of Governors of the Federal Reserve System.
4.17 Capital Stock. The authorized and outstanding capital
stock of the Borrower and each of the Guarantors is, as of the Closing Date, as
set forth on Schedule 4.17 attached hereto and made part hereof. All of the
capital stock of each such Person has been duly and validly authorized and, to
the extent outstanding, is issued and is fully paid and non-assessable and has
been sold and delivered to the holders thereof in compliance with, or under
valid exemption from, all federal and state laws and the rules and regulations
of all regulatory bodies thereof governing the sale and delivery of securities.
As of the Closing Date hereof, except for the rights and obligations set forth
in Schedule 4.17, there are no subscriptions, warrants, options, calls,
commitments, rights or agreements by which the Borrower or any of the Guarantors
or any of their respective shareholders are bound relating to the issuance,
transfer, voting or redemption of shares of its capital stock or any pre-emptive
rights held by any Person with respect to the shares of capital stock of such
parties. As of the Closing Date hereof, neither the Borrower nor any of the
Guarantors has issued any securities that remain outstanding that are
convertible into or exchangeable for shares of its capital stock or any options,
warrants or other rights to acquire such shares or securities convertible into
or exchangeable for such shares except as shown on Schedule 4.17.
4.18 Solvency. After giving effect to the creation of the
Revolving Credit and the transactions described herein and therein, the Borrower
and its Subsidiaries, on a consolidated basis, are solvent, are able to pay
their respective debts as they become due and have capital sufficient to carry
on their respective business and all businesses in which any such Persons are
about to engage, and now own Property having a value both at fair valuation and
at present fair salable value greater than the amount required to pay such
entity's debts. After giving effect to the creation of the Revolving Credit and
the transactions described herein and therein, the Borrower and its
Subsidiaries, on a consolidated basis, will not be rendered insolvent by the
execution and delivery of this Agreement or any of the other agreements,
documents or
50
instruments executed in connection with this Agreement (including, without
limitation, the Guarantees) or by the transactions contemplated hereunder or
thereunder.
4.19 Interrelatedness of the Borrower and the Guarantors. The
business operations of the Borrower and the Guarantors are related and have a
common business purpose. To permit their uninterrupted and continuous
operations, such companies now require and will from time to time hereafter
require funds for general business purposes. The proceeds of Advances under the
Revolving Credit will directly or indirectly benefit the Borrower and each of
the Guarantors severally and jointly, regardless of which entity requests or
receives part or all of the proceeds of such Advances from the Borrower.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower covenants that until all of the Borrower's
Obligations to the Lenders and the Administrative Agent hereunder are paid and
satisfied in full and the Revolving Credit has been terminated (it being
understood that the Borrower shall cause each of its Subsidiaries (or, as the
case may be, the Guarantors) to observe and comply in a timely manner with each
provision of the covenants in this Section 5 to the extent applicable to such
Subsidiary (or, as the case may be, such Guarantor)):
5.1 Payment of Taxes and Claims. The Borrower shall, and shall
cause each of its Subsidiaries to, pay, before they become delinquent,
(a) all taxes, assessments and governmental charges
or levies imposed upon it or upon any such party's Property, and
(b) all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, which, if unpaid,
would result in the imposition of a Lien upon its Property; provided, however,
that the Borrower and its Subsidiaries shall not be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability or validity
thereof shall at the time be contested in good faith and by appropriate
proceedings by such party, and if such party shall have set aside on its books
adequate reserves in respect thereof, if so required in accordance with GAAP;
which deferment of payment is permissible so long as no Lien has been entered
and such party's title to, and its right to use, its Property are not materially
adversely affected thereby.
5.2 Maintenance of Properties and Corporate Existence.
(a) Property. The Borrower shall, and shall cause
each of the Guarantors to, maintain its Property in good condition (normal wear
and tear and fire and other insured casualty excepted) and make all necessary
renewals, replacements, additions, betterments and improvements thereto and will
pay and discharge when due the cost of repairs and maintenance to its Property,
and will pay all rentals when due for all real estate leased by such parties.
(b) Property Insurance. The Borrower shall, and shall
cause each of the Guarantors to, maintain and deliver to the Administrative
Agent, upon the Administrative
51
Agent's request, evidence of business interruption insurance and insurance on
all insurable tangible Property against fire, flood, casualty and such other
hazards as may be reasonably acceptable to the Administrative Agent in such
amounts, with such deductibles and with such insurers as are customary for
companies in the same or similar business located in the same or similar area.
(c) General and Products Liability Insurance. The
Borrower shall, and shall cause each of the Guarantors to, maintain general
liability and products liability insurance in such amounts as is customary for
companies in the same or similar businesses located in the same or similar area
and shall deliver to the Administrative Agent upon the Administrative Agent's
request, evidence of such insurance.
(d) Financial Records. The Borrower shall, and shall
cause each of the Guarantors to, keep in all material respects current and
accurate books of records and accounts in which full and correct entries will be
made of all of its business transactions, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP. The Borrower and each of the Guarantors shall not change their
respective fiscal year end dates without the prior written consent of the
Administrative Agent.
(e) Corporate Existence and Rights. Except for
mergers, consolidations and liquidations permitted under this Agreement, the
Borrower shall, and shall cause each of the Guarantors to, do (or cause to be
done) all things necessary to preserve and keep in full force and effect its
existence, good standing, rights and franchises unless Borrower's failure to do
so would not have a Material Adverse Effect.
(f) Compliance with Law. The Borrower shall, and
shall cause each of the Guarantors to, comply with all laws, ordinances,
governmental rules and regulations to which it is subject, and will obtain all
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its Property or to the conduct of its businesses, a violation
of which or failure to obtain would have a Material Adverse Effect.
5.3 Litigation. The Borrower shall, and shall cause each of
its Subsidiaries to, give immediate notice to the Administrative Agent of any
litigation or governmental investigation affecting the Borrower or any of its
Subsidiaries except for litigation with potential liability to any such party of
less than $5,000,000 or litigation which is fully covered by insurance
(exclusive of a deductible not to exceed $5,000,000).
5.4 Taxes. Subject to Sections 2.12 and 10.17, the Borrower
shall, and shall cause each of the Guarantors to, pay all taxes (other than bank
shares taxes and taxes based upon or measured by any Lender's income or revenues
or any personal property tax), if any, in connection with the issuance of the
Revolving Credit Notes, the Swing Line Note and the Guarantees (as applicable).
The obligations of each such party hereunder shall survive the payment of such
party's Obligations hereunder and the termination of this Agreement.
5.5 Employee Benefit Plans. The Borrower shall, and shall
cause each of its Subsidiaries to, (a) fund all of its Employee Benefit Plans in
a manner that will satisfy the minimum funding standards of Section 302 of ERISA
(unless failure to do the same would not
52
have a Material Adverse Effect) and will promptly satisfy any accumulated
funding deficiency that arises under Section 302 of ERISA, (b) furnish the
Administrative Agent, promptly after the filing of the same, with copies of all
reports (with all attachments thereto) required, by statute, regulation,
administrative consent or order or similar written understanding, to be filed
with the United States Department of Labor, the Pension Benefit Guaranty
Corporation ("PBGC") or the Internal Revenue Service ("IRS") with respect to all
Employee Benefit Plan(s) to the extent such reports contain information
pertaining to events or conditions which would be, or otherwise are, reasonably
likely to have a Material Adverse Effect, or reports which any such party, or
any member of a Controlled Group of which the Borrower or any of its
Subsidiaries has knowledge (with respect to any assertions of termination
liability under Title IV of ERISA or, withdrawal liability, as defined in
ERISA), may receive from the United States Department of Labor, the IRS or the
PBGC, with respect to any such Employee Benefit Plan(s), and (c) promptly advise
the Administrative Agent of the occurrence of any Reportable Event (as defined
in Section 4043 of ERISA) which requires the giving of notice to the PBGC or any
Prohibited Transaction, of which the Borrower or any of its Subsidiaries has
knowledge, with respect to any such Employee Benefit Plan(s) and the action
which such party proposes to take with respect thereto. The Borrower and each of
its Subsidiaries will make all contributions when due with respect to any
multi-employer pension plan in which it participates and will promptly advise
the Administrative Agent (i) upon its receipt of notice of the assertion against
such party of a claim for withdrawal liability, (ii) upon the Borrower's
knowledge of the occurrence of any event which would trigger the assertion of a
claim for withdrawal liability against the Borrower or any of its Subsidiaries,
or (iii) upon the Borrower's knowledge of the occurrence of any event which, to
the best of the Borrower's Knowledge, would, after the date hereof, place the
Borrower or any of its Subsidiaries in a Controlled Group (other than as shown
on Schedule 4.11(c) hereto) as a result of which any member (including such
party) thereof may be subject to a claim for withdrawal liability, whether
liquidated or contingent.
5.6 Financial and Business Information. The Borrower shall
deliver to the Administrative Agent and to each of the Lenders the following:
(a) Financial Statements and Covenant Reports. Such
data, reports, statements and information, financial or otherwise, as the
Administrative Agent may reasonably request (except for information for which an
attorney/client privilege has been reasonably claimed or asserted by the
Borrower) with sufficient copies for all Lenders, including, without limitation:
(i) within forty-five (45) days after the end of
each of the first three quarterly accounting periods in each fiscal year of the
Borrower as at the end of such quarter setting forth in comparative form the
corresponding figures for the corresponding periods of the previous fiscal year,
(A) on a consolidated and consolidating basis for the Borrower and its
Subsidiaries (x) a balance sheet and (y) a statement of income, and, (B) on a
consolidated basis for the Borrower and its Subsidiaries a cash flow statement
in reasonable detail and certified by the chief financial officer or vice
president of finance of the Borrower to have been prepared in accordance with
GAAP (without footnotes);
53
(ii) within ninety (90) days after the end of
each fiscal year of the Borrower as at the end of such fiscal year, setting
forth in each case in comparative form the corresponding figures as at the end
of the previous fiscal year (A) on a consolidated and consolidating basis for
the Borrower and its Subsidiaries, (x) a balance sheet and (y) a statement of
income and, (B) on a consolidated basis, for the Borrower and its Subsidiaries a
cash flow statement and a retained earnings statement all in reasonable detail,
audited and certified without qualifications, except those which are acceptable
to the Administrative Agent, (as to the consolidated statements) by independent
public accountants of recognized standing, selected by the Borrower and
satisfactory to the Administrative Agent, to have been prepared in accordance
with GAAP, and such independent public accountants shall also certify without
qualifications except those which are acceptable to the Administrative Agent
that in making the examinations necessary to their certification mentioned above
they have reviewed the terms of this Agreement and the accounts and conditions
of the Borrower during the accounting period covered by the certificate and that
such review did not disclose the existence of any condition or event which
constitutes an Event of Default (or if such conditions or events existed,
describing them); and
(iii) within sixty (60) days of March 31 of each
year an internally prepared budget of projected expenses and revenues for such
fiscal year.
(b) Notice of Event of Default. Promptly upon
becoming aware of the existence of any condition or event which constitutes a
Default or an Event of Default under this Agreement, a written notice specifying
the nature and period of existence thereof and what action the Borrower is
taking (and proposes to take) with respect thereto;
(c) Notice of Claimed Default. Immediately upon
receipt by the Borrower or any of its Subsidiaries of a notice of default, oral
or written, given to such party by any creditor for borrowed money or holding
Indebtedness of such party which has an outstanding principal balance in excess
of $1,000,000, a copy of such notice (or a written explanation, if given orally)
along with an explanation of what action the Borrower is taking (and proposes to
take) with respect thereto;
(d) Securities and Other Reports. If and as long as
the Borrower or any Subsidiary of the Borrower is a publicly traded company,
promptly upon its becoming available, one copy of each financial statement,
report, notice or proxy statement sent by such party to stockholders generally,
and a copy of each regular or periodic report, and any registration statement,
or prospectus or any other document, in respect thereof filed by such party with
any securities exchange or with all federal or state securities and exchange
commissions or any successor agency. In addition to the foregoing, the Borrower
shall, promptly upon its becoming available, deliver to the Administrative Agent
one copy of each regular or periodic report and any registration statement or
prospectus and any other document filed by the Borrower or any of its
Subsidiaries with any securities exchange or with all federal or state
securities and exchange commissions or any successor agency.
54
5.7 Officers' Certificates. Along with the set of financial
statements delivered to the Administrative Agent at the end of each calendar
quarter and fiscal year pursuant to Section 5.7(a) hereof, the Borrower shall
deliver to the Administrative Agent a certificate (in the form of Exhibit E
attached hereto and made a part hereof) (the "Quarterly Compliance Certificate")
from the chief financial officer or vice president of finance of the Borrower
(and as to certificates accompanying the annual statements of the Borrower, also
certified by the Borrower's independent certified public accountant) in form and
substance satisfactory to the Administrative Agent setting forth, to the best of
such officer's knowledge after due investigation:
(a) Covenant Compliance. The information (including
detailed calculations) required in order to establish whether the Borrower is in
compliance with the requirements of Sections 5, 6 and 7, as of the end of the
period covered by the financial statements then being furnished (and any
exhibits appended thereto) under Section 5.6; and
(b) Event of Default. That the signer has reviewed
the relevant terms of this Agreement and has made (or caused to be made under
his supervision) a review of the transactions and conditions of the Borrower
from the beginning of the accounting period covered by the income statements
being delivered therewith to the date of the certificate, and that such review
has not disclosed the existence during such period of any condition or event
which constitutes a Default or an Event of Default or if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action the Borrower has taken or proposes to take with respect thereto.
5.8 Inspection. So long as the Borrower is indebted to the
Lenders, and subject in all events to the provisions of Section 10.24 hereof,
the Borrower and each of the Guarantors will, on not less than twenty-four (24)
hours prior notice, permit any of the Administrative Agent's officers or other
representatives (at its own expense, prior to the occurrence of an Event of
Default) to visit and inspect during business hours any of the locations of the
Borrower and each of the Guarantors, to examine and audit all of such parties'
books of account, records, reports and other papers (to the extent not subject
to an attorney-client privilege), to make copies and extracts therefrom and to
discuss such parties, affairs, finances and accounts with its officers,
employees and independent certified public accountants. Representatives of each
Lender may accompany the Administrative Agent during each such inspection and
visit. Representatives of any Lender may visit with executive officers of the
Borrower as they may mutually agree.
5.9 Tax Returns and Reports. Subject to Section 10.24, at the
Administrative Agent's request from time to time, the Borrower and each of the
Guarantors shall immediately furnish the Administrative Agent with copies of the
annual federal and state income tax returns of each such party for such years
such parties have not been audited and may be subject to audit. The Lenders and
the Administrative Agent shall not disclose any such returns or other written
financial information to any third party (except as permitted in Section 5.11)
without the prior written consent of the Borrower, or unless required by law or
so compelled by order of a court of competent jurisdiction. The Borrower further
agrees that if requested by the Administrative Agent, it shall immediately
furnish the Administrative Agent with copies of all reports filed with
55
any Governmental Authority or agency, board or commission and shall supply such
information with respect to each of the Guarantors which becomes a publicly
traded company.
5.10 Information to Participants and Assignees. Subject to
Section 10.24 hereof, the Administrative Agent and each Lender may divulge to
any actual or prospective participant, assignee or co-lender it may obtain with
respect to the Revolving Credit, or any portion thereof, all information, and
furnish to such Person copies of reports, financial statements, certificates,
and documents obtained under any provision of this Agreement or any of the other
Loan Documents. The Administrative Agent and the Lenders shall not divulge the
contents of any written financial information to any other Person other than as
set forth above without the prior written consent of the Borrower, or unless
required by law or so compelled by an order of a court of competent
jurisdiction.
5.11 Material Adverse Developments. The Borrower agrees that
immediately upon becoming aware of any development or other information outside
the ordinary course of business (excluding matters of a general economic,
financial or political nature) which materially and adversely affects its, or
any of its Subsidiaries' Property, businesses, prospects, or financial
condition, in all cases taken as a whole on a consolidated basis, or such
parties, ability to perform under this Agreement or any of the other Loan
Documents (as applicable), it shall give to the Administrative Agent telephonic
or telegraphic notice specifying the nature of such development or information
and such anticipated effect. In addition, such verbal communication shall be
confirmed by written notice thereof to the Administrative Agent on the same day
such verbal communication is made.
5.12 Additional Parties. In the event that any Person other
than the Bankruptcy Remote Subsidiary or any Person which is already a Guarantor
becomes a Material Subsidiary of the Borrower after the Closing Date (each such
Material Subsidiary referred to herein as an "Additional Party" and collectively
as the "Additional Parties"), then, promptly after such Person becomes a
Material Subsidiary of the Borrower (but in any event prior to any
capitalization (other than de minimis capitalization) of, or contribution of
assets to, such Material Subsidiary by the Borrower), the Borrower shall cause
such Material Subsidiary to execute and deliver all such agreements, guarantees,
suretyship agreements, documents and certificates (including any amendments to
the Loan Documents) and do such other acts and things as the Administrative
Agent may reasonably request in order to have such Subsidiary guarantee and act
as surety for the Obligations and effect fully the purposes of this Agreement
and the other Loan Documents and to provide for payment of the obligations in
accordance with the terms of this Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, in such event, such Additional
Party shall execute and deliver to the Administrative Agent a Guarantee (upon
the execution of which, such Additional Party shall become a Guarantor for all
of the Obligations and for all purposes hereunder and under the other Loan
Documents).
5.13 Performance of Obligations. The Borrower shall, and shall
cause each of the Guarantors to, perform in all material respects all of its
obligations under the terms of each mortgage, indenture, security agreement,
other debt instrument and any material contract by which it is bound or to which
it is a party, except where such nonperformance would not, singly or in the
aggregate, have a Material Adverse Effect.
56
5.14 Further Assurances. At any time and from time to time
upon the reasonable request of the Administrative Agent, the Borrower shall, and
shall cause each of the Guarantors to, execute and deliver such further
documents, instruments and agreements, and do such other acts and things as the
Administrative Agent may reasonably request, in order to effect fully the
purposes of this Agreement and the other Loan Documents and to provide for
payment of the Obligations in accordance with the terms of this Agreement and
the other Loan Documents.
5.15 Evidence of Intercompany Indebtedness. All Indebtedness
owing at any time and from time to time from the Borrower to any of its
Subsidiaries or any of the Borrower's Subsidiaries to the Borrower, or to any
other such Subsidiary (except for intercompany balances of the type disclosed in
Item 1 of Schedule 4.10 due to or from, and among any of, the Borrower and/or
the Guarantors) shall be evidenced by a master promissory note or notes (the
"Intercompany Notes"), in form and substance satisfactory to the Administrative
Agent. All Intercompany Notes, in the case of any such existing Indebtedness,
shall have been executed, or shall contemporaneously herewith be executed by the
applicable obligor(s). True and correct copies of all Intercompany Notes
(including all amendments, replacements and additions executed from time to
time) shall be delivered to the Administrative Agent promptly upon execution
thereof accompanied by a certificate executed by an Authorized Officer of the
Borrower to the effect that such copies are true and correct copies of the
original instruments and that all such intercompany Indebtedness is then
evidenced by such Intercompany Notes.
5.16 Evidence of Securitization. The Borrower shall within 30
days of the Closing Date deliver to the Administrative Agent true and correct
copies of the Accounts Receivable Securitization Documents and evidence of the
closing of the Accounts Receivable Securitization in form and substance
reasonably satisfactory to the Administrative Agent.
SECTION 6. NEGATIVE COVENANTS.
The Borrower covenants that until all of the Borrower's
obligations hereunder to the Lenders are paid and satisfied in full and the
Revolving Credit has been terminated that (it being understood that the Borrower
shall cause each of its Subsidiaries (or, as the case may be, the Guarantors) to
observe and comply in a timely manner with each provision of the covenants in
this Section 6 to the extent applicable to such Subsidiary (or, as the case may
be, such Guarantor)):
6.1 Mergers. The Borrower shall not, nor shall it cause or
permit any of the Guarantors to, merge or consolidate or otherwise combine with
or into any other Person other than the merger of a Subsidiary of Borrower into
a Guarantor (or into another Person which thereby becomes a Guarantor to the
extent such merger is consummated contemporaneously with and as part of a
transaction permitted under Section 6.2 below) or into the Borrower, or commence
a dissolution or liquidation other than a liquidation or dissolution of a
Guarantor pursuant to which all Property thereof is directly and promptly
transferred into the Borrower or another Guarantor.
57
6.2 Acquisitions. The Borrower shall not, nor shall it cause
or permit any of the Guarantors to, acquire all or a material portion of the
stock, securities or other Property of any nature (other than inventory or
supplies purchased in the ordinary course of business of the purchaser) of any
Person in any transaction or in any series of related transactions or enter into
any sale and leaseback transaction, provided, however, that the Borrower and the
Guarantors may consummate any such transaction (a "Permitted Acquisition") only
if: (i) no Default or Event of Default hereunder has occurred and is outstanding
or would otherwise be caused by, or would exist after giving effect to, the
consummation of such acquisition; (ii) the aggregate consideration (exclusive of
the working capital needs of the acquired entity) for all such acquisitions in a
given year shall not exceed an amount (the "Acquisition Amount") equal to thirty
(30%) percent of the prior fiscal year-end Consolidated Net Worth (disregarding
the three-month stub period ended March 31, 2001), with a carryover only into
the following year commencing with a carryover from the fiscal year ended March
31, 2002 to the fiscal year ended March 31, 2003, of fifty (50%) percent of the
previous year's unused Acquisition Amount, exclusive of any carryover amount
from a previous year, (for purposes of calculating the amount to be carried into
any other year, the amount of acquisitions in any year shall first be counted
against the Acquisition Amount (exclusive of any carryover amount from the
previous year)) provided, however, that the Borrower shall be entitled to a
carryover amount to the fiscal year ended March 31, 2002 of $32,921,000; (iii)
the aggregate consideration in all acquisitions following the Closing Date until
termination of the Revolving Credit shall not exceed forty (40%) percent of the
Consolidated Net Worth as of the end of the year immediately preceding the year
of determination; (iv) the acquiring Person must acquire, in the case of a stock
acquisition, at least 80% of the issued and outstanding capital stock of the
Person being acquired (provided, however, that if the acquiring Person acquires
less than 100% of the issued and outstanding capital stock of the acquired
Person, the owners of the unacquired shares must be bound by a shareholders
agreement reasonably satisfactory to the Administrative Agent which shall
include, at a minimum, "drag along" rights in respect of such minority shares);
(v) the Borrower and the Guarantors shall not assume any new contingent
liabilities which would cause, or be reasonably likely to cause, a Material
Adverse Effect; (vi) the business of the acquired entity shall be generally
similar to the lines of business of the Borrower and the Guarantors; (vii) any
Person acquired by the Borrower (and becoming a Material Subsidiary of the
Borrower) shall unconditionally guarantee and become surety for all of the
Borrower's Obligations on terms and conditions satisfactory to the
Administrative Agent; (viii) the Administrative Agent shall have received a
satisfactory certificate (substantially in the form of Exhibit E attached hereto
and made part hereof) prepared and signed by the chief financial officer or vice
president of finance of the Borrower showing the cost of acquiring the
applicable Person exclusive of amounts attributable to the working capital
requirements of such Person and (after taking into effect the proposed
acquisition) pro forma covenant compliance with the financial covenants set
forth in Section 7 herein immediately following the applicable acquisition and
projected compliance with such covenants for no fewer than the next four (4)
succeeding fiscal quarters of the Borrower, setting forth in reasonable detail
the calculations used in presenting such costs and projections and with such
supporting information as may be reasonably requested by the Administrative
Agent; and (ix) the Administrative Agent shall have received a satisfactory
officer's certificate from an Authorized Officer of the Borrower to the effect
that the conditions set forth in clauses (i) through (viii) have been satisfied
as of the date of the acquisition.
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6.3 Liens and Encumbrances. (a) The Borrower shall not, nor
shall it cause or permit any of the Guarantors to: (i) execute a negative pledge
agreement with any Person covering any of its Property, or (ii) create or cause
or authorize or agree or consent to cause or permit, assume or suffer to exist
or remain in effect (upon the happening of a contingency or otherwise), its
Property, whether now owned or hereafter acquired, to be subject to a Lien or be
subject to any claim except for the following (the "Permitted Liens"):
(1) Liens securing taxes, assessments or governmental
charges or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords, and other like Persons, or Liens evidencing consignment
or bailment arrangements with the Borrower or any of the Guarantors as consignee
or bailee, provided the payment thereof is not at the time required by Section
5.1;
(2) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, social security and other like laws and in connection with leases or
trade contracts;
(3) Purchase money security interests (attaching
solely to the fixed asset purchased and securing only the obligation incurred to
finance such purchase) from the Borrower or any of the Guarantors to Persons
providing financing for permitted Consolidated Capital Expenditures provided
that each such financing obligation incurred by the Borrower shall not exceed
the lesser of (A) cost or (B) appraised fair market value;
(4) Existing Liens described on Schedule 4.4 hereto;
(5) Liens (other than on Accounts and/or Inventory)
deemed to be assumed or taken subject to by the Borrower or any of the
Guarantors in connection with Permitted Acquisitions on Property of the acquired
entity as of the date of the Permitted Acquisition;
(6) Liens which are not otherwise permitted pursuant
to this Section, securing Indebtedness not exceeding $1,000,000 in the aggregate
outstanding at any one time;
(7) Trademark license agreements under which the
Borrower or any Guarantor, as licensee, is prohibited from granting a security
interest in such licenses or in inventory with the licensed mark to be sold by
the Borrower or any Guarantor provided, that at no time shall the value of all
licensed inventory exceed the lesser of (i) twenty (20%) percent of the total
value of the Borrower's or any Guarantor's Inventory or (ii) $20,000,000 and,
provided, further, that such restriction on the granting of a security interest
contained in any such license shall only extend to cover the subject license
agreement and the licensed inventory and that in no event shall such lien
restriction apply to the proceeds of any licensed inventory generated from time
to time, including, without limitation, any Accounts generated from the sale of
such licensed inventory; and
(8) Liens in connection with Asset Sales permitted
under Section 6.12(b)(v).
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(b) If the Borrower or any Subsidiary shall create or
assume any Lien upon any of its Property or income or profits therefrom, other
than Liens permitted under this Section 6.3, and without having such provisions
be deemed for any purpose to represent a consent by any Lender or Lenders to
such Lien, it shall make or cause to be made effective provisions whereby the
obligations will be secured by such Lien equally and ratably with any and all
other indebtedness secured thereby.
6.4 Transactions With Affiliates or Subsidiaries. The Borrower
shall not, nor shall it cause or permit any of the Guarantors to, enter into any
transaction of any kind or nature with any Affiliate, including, without
limitation, the purchase, sale, transfer or exchange of Property, or the loaning
or giving of funds to any Affiliate or any Subsidiary, excepting (a) sales of
Property (including the sale of receivables and related accounts to the
Bankruptcy Remote Subsidiary) and/or services and co-licensing or co-marketing
arrangements or agreements pursuant to the reasonable requirements of the
Borrower's or the Guarantors' business and upon terms substantially the same and
no less favorable to such party as it would obtain in a comparable arm's length
transaction with any Person not an Affiliate, and so long as such transaction is
not otherwise prohibited hereunder, (b) loans and transfers of Property by the
Borrower to the Guarantors and loans and transfers of Property by the Guarantors
to the Borrower or to other Guarantors, (c) loans by the Borrower or a Guarantor
to any of the Subsidiaries (other than Guarantors) after the date hereof in an
aggregate amount as to all such loans under this clause (c) not to exceed
$20,000,000 at any time outstanding in the aggregate after the Closing Date,
provided, however, that a loan may be made by the Borrower or a Guarantor to any
of the Subsidiaries (other than Guarantors) which, when aggregated with all then
outstanding loans referenced in this clause (c), would exceed $20,000,000 so
long as the recipient of such loan unconditionally guarantees and becomes surety
for all of the Borrower's Obligations on terms and conditions and under a
written guaranty satisfactory to the Administrative Agent within sixty (60) days
of the funding of such loan, (d) the de minimis transfer by the Borrower or any
of the Guarantors of their Property to any of the Subsidiaries and (e)
transactions expressly permitted pursuant to Sections 6.5 and 6.6 hereof.
6.5 Guarantees. Excepting (a) the endorsement in the ordinary
course of business of negotiable instruments for deposit or collection, (b) the
Guarantees, (c) guarantees by the Borrower or by any Guarantor of operating
leases of any Subsidiary entered into in the ordinary course of business, (d)
indemnification obligations to directors and officers under applicable law or
set forth in the certificate of incorporation and/or by-laws of the Borrower or
any Subsidiary, (e) guarantees by the Borrower or by any Guarantor for the
Indebtedness of Borrower or any Guarantor and (f) additional guarantees by the
Borrower and/or any of the Guarantors for the Indebtedness of any Person which,
together with Indebtedness permitted under Section 6.11(b)(iii) below shall not
exceed $20,000,000 at any one time outstanding (which amount is subject to
temporary increase as set forth in the proviso contained in Section
6.11(b)(iii), the Borrower shall not, nor shall it cause or permit any of the
Guarantors to, become or be liable, directly or indirectly, primary or
secondary, matured or contingent, in any manner, whether as guarantor, surety,
accommodation maker, or otherwise for the existing or future indebtedness or
obligations) of any kind or nature of any Person.
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6.6 Dividends and Redemptions. (a) The Borrower shall not, nor
shall it cause or permit any of its Subsidiaries (other than the Bankruptcy
Remote Subsidiary) to, directly or indirectly: (i) declare, pay, authorize or
make any form of dividend (except for stock dividends or stock splits) or return
any capital, in cash or property, to its shareholders, their successors or
assigns, except (A) as expressly permitted by Section 6.1 hereof, (B) dividends
payable to the Borrower or any Guarantor by any Subsidiary, and (C) if, after
giving effect to such dividend or distribution to shareholders, the Borrower is
in compliance with Section 7.2.
(b) Notwithstanding the provisions of paragraph (a)
above, (i) dividends or redemptions, etc. otherwise permitted as set forth above
shall not be made so long as any Default or Event of Default is then outstanding
or would be outstanding after taking into effect such dividend, redemption or
setting aside of funds, and (ii) no dividend may be declared or paid or
redemption made if the Borrower is not then in compliance with the covenants set
forth in Sections 5.6 and 5.7.
6.7 Loans and Investments. The Borrower shall not, nor shall
it cause or permit any of the Guarantors to, make or have outstanding
Investments in, any Person, other than (a) Investments in commercial paper
maturing in one (1) year or less from the date of issuance rated at the time of
purchase either A-1 by S&P, P-1 by Moody's or other similar nationally
recognized credit rating agency of similar standing; (b) Investments in direct
obligations of the United States of America, or any agency or instrumentality
thereof, maturing in five (5) years or less from the date of acquisition
thereof; (c) Investments in certificates of deposit maturing within one (1) year
from the date of origin issued by, or money market funds on deposit with, a
Lender; (d) Investments in repurchase agreements secured by direct obligations
of the United States of America, or any agency thereof, maturing in twelve (12)
months or less and having a market value at the time such repurchase agreement
is entered into at least equal to the amount of the repurchase obligations
thereunder, entered into with a Lender, (e) loans and guarantees permitted under
Sections 6.4 and 6.5 above, (f) Investments which are Permitted Acquisitions,
(g) by the Borrower or any of the Guarantors as permitted, under Sections 6.2(a)
and (b), (h) Investments in any Guarantor and Investments in any other
Subsidiary of the Borrower as such Investments existed as of the Closing Date,
(i) permitted Investments in connection with Asset Sales permitted pursuant to
Section 6.12(b)(i)(C) and Investments resulting from Asset Sales permitted
pursuant to Section 6.12(b)(v), (j) other Investments not to exceed $5,000,000
in the aggregate outstanding at any one time, (k) loans to its employees or
directors made by the Borrower or any Guarantor for the purpose of enabling such
employees or directors to exercise stock options up to an aggregate loan balance
of $3,500,000 at any time outstanding (as to all loans permitted under this
clause (k)), and (l) Investments in the Bankruptcy Remote Subsidiary from the
sale of Assets to the Bankruptcy Remote Subsidiary as part of the Accounts
Receivable Securitization.
6.8 Amendment or Waivers of Certain Documents. (a) The
Borrower shall not, nor shall it cause or permit any of the Guarantors to,
amend, modify, supplement or otherwise change the terms of their respective
certificates of incorporation or bylaws or any agreement entered into by the
Borrower or any of the Guarantors with respect to their respective capital stock
or other equity interests (other than any amendment, modification, supplement or
change which individually, or together with all amendments, modifications,
waivers or changes
61
made, would not be adverse to the Borrower and the Guarantors taken as a whole,
the Administrative Agent or the Lenders) without the prior written consent of
the Administrative Agent, which consent shall not be unreasonably withheld.
(b) The Borrower shall not, nor shall it cause or
permit any of the Guarantors to, amend, modify, supplement or otherwise change,
or waive compliance with or consent to a departure from, any of the terms or
provisions of any Existing Debt of the Borrower, or any other material
agreement, including, without limitation, the Accounts Receivable Securitization
Documents of the Borrower or the Guarantors (other than any amendments,
modifications, supplements, changes, waivers and consents which individually, or
together with all other amendments, modifications, supplements, changes, waivers
and consents made, would not be adverse to the Borrower, any of the Guarantors,
the Administrative Agent or the Lenders) without the prior written consent of
the Administrative Agent, which consent shall not be unreasonably withheld.
(c) Neither the Borrower nor any Subsidiary shall
enter into, suffer to exist or become or remain subject to any agreement or
instrument to which any such Person is a party or by which any such Person or
its Property may be subject or bound, except for the Loan Documents, that would
prohibit or restrict in any manner, directly or indirectly, or require the
consent of any Person to, any amendment to, or waiver or consent to departure
from the terms of, any of the Loan Documents.
6.9 Sale and Lease-Backs. The Borrower shall not, nor shall it
cause or permit any of the Guarantors to, directly or indirectly, become or
thereafter remain liable as lessee or as guarantor or surety with respect to the
lessee's obligations under any lease, whether an operating lease or a capital
lease, of any property (whether real or personal or mixed), whether now owned or
hereafter acquired, (i) which the Borrower or any of the Guarantors has sold or
transferred or is to sell or transfer to any other Person or (ii) which the
Borrower or any such Subsidiary intends to use for substantially the same
purpose as any other property which has been or is to be sold or transferred by
the Borrower or any such Subsidiary to any Person in connection with such lease,
if in the case of clause (i) or (ii) above, such sale and such lease are part of
the same transaction or a series of related transactions or such sale and such
lease occur within one (1) year of each other or are with the same other Person.
6.10 Business Conducted. The Borrower shall not, nor shall it
cause or permit any of the Guarantors to, engage, directly or indirectly, in any
line of business substantially different from the business conducted by it
immediately prior to the Closing Date, or engage in business or lines of
business which are not reasonably and substantially related thereto.
6.11 Indebtedness. The Borrower shall not, nor shall it cause
or permit any of the Guarantors to (a) make any prepayments of any nature
whatsoever (or deposit money or other Property for the purpose thereof) on any
existing or future long-term Indebtedness to any Person except the conversion of
Indebtedness to equity so long as the entire amount of the portion of the
Indebtedness so prepaid is so converted or (b) hereafter incur or be or become
liable for Indebtedness except for (i) Indebtedness to the Lenders pursuant to
this Agreement, (ii) purchase money financing supported by Liens permitted
pursuant to Sections 6.3(a)(3) or
62
6.3(a)(5) above and Indebtedness secured by the existing Liens described in
Section 6.3(a)(4), (iii) Indebtedness permitted under Section 6.4(b), and (iv)
additional Indebtedness in an aggregate principal amount, together with all
obligations described in Section 6.5(f) herein, not exceeding $20,000,000 at any
one time outstanding, provided, however, that such $20,000,000 limit may be
temporarily exceeded but only during the sixty (60) day period following the
date of this Agreement and solely as a result of the existence of the
intercompany balances disclosed in Item 1 on Schedule 4.10 so long as such
intercompany balances are eliminated or sufficiently reduced by the end of such
sixty (60) day period either as a result of repayment or recharacterization so
that such $20,000,000 limit is no longer exceeded.
6.12 Restrictions on Fundamental Changes; Asset Sales. The
Borrower shall not, nor shall it cause or permit any of its Subsidiaries to, (a)
materially alter the corporate, partnership, capital or legal structure of the
Borrower or any Subsidiary of the Borrower other than alterations of the
structure of (i) Guarantors as permitted in Sections 6.1, 6.2, 6.9 and 6.12(a)
above, (ii) any Subsidiaries which are not Guarantors so long as (A) such
alteration would not give rise to a Material Adverse Effect and (B) no Default
or Event of Default has occurred or is continuing or would occur after taking
into effect such alteration or (b) make or effect any Asset Sale excepting (i)
Asset Sales made (A) at a time when no Default of Event or Default is
outstanding hereunder or would be outstanding after taking into effect such
Asset Sale, (B) the consideration received shall be an amount at least
substantially equal to the fair market value of the Property which is the
subject of the Asset Sale, as certified to the Administrative Agent by the
Borrower's chief financial officer or vice president of finance; (C) at least
20% of the consideration received therefrom shall be cash (any non-cash
consideration must be in the form of either (1) senior commercial paper with a
rating of at least "A-1" by S & P or "P-1" by Moody's, (2) a senior debt
instrument fully secured by marketable securities of a company listed on a
nationally recognized exchange) or (3) a debt instrument secured by a first lien
on the assets sold; (D) such Asset Sales are not to an Affiliate of the seller;
and (E) the assets sold in all transactions permitted hereby after the Closing
Date shall have an aggregate book value of not more than $17,500,000; (ii)
transactions permitted under Section 6.1, 6.2 or Section 6.4 above; (iii) the
Borrower and any of its Subsidiaries may from time to time abandon any personal
Property of the Borrower or such Subsidiary which is not the business of the
Borrower or such Subsidiary and cannot be sold; (iv) at a time when no Default
or Event of Default is outstanding hereunder or would be outstanding after
taking into effect such Asset Sale, sales of minority interests of capital stock
or partnership interests of any Subsidiary (other than a Guarantor) to any
employees thereof; and (v) Asset Sales in connection with the Accounts
Receivable Securitization.
6.13 Agreements Regarding Dividends. Neither the Borrower nor
any of the Guarantors shall create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind (whether
arising by operation of law, by agreement, by its articles or certificate of
incorporation, bylaws or other constituent documents of such Person, or
otherwise) on the ability of any Subsidiary of the Borrower to (i) pay dividends
or make any other distribution on any of such Subsidiary's capital stock,
partnership interests or other interests, as the case may be, owned by the
Borrower or any other Subsidiary of Borrower, (ii) make loans or advances to, or
guarantee any Indebtedness or any other obligation of, the Borrower or any other
Subsidiary of Borrower or (iii) transfer any of its Property to the Borrower
63
or any other Subsidiary of Borrower, except restrictions pursuant to (A) the
Loan Documents, (B) applicable law and (C) the Accounts Receivable
Securitization Documents.
6.14 Miscellaneous Covenants.
(a) The Borrower shall not, nor shall it cause or
permit any of the Guarantors to, become or be a party to any Hedge Agreement
entered into purely for speculative purposes or to any contract or agreement
which materially impairs such party's ability to perform under this Agreement,
or under any other instrument, agreement or document to which the Borrower or
such Subsidiary is a party or by which it is or may be bound.
(b) The Borrower shall not, nor shall it cause or
permit any of the Guarantors to, carry or purchase any "margin security" within
the meaning of Regulations U, T or X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II except in accordance with such
Regulations.
SECTION 7. FINANCIAL COVENANTS.
The Borrower shall comply with the following financial
covenants (each to be measured as of the end of each of the Borrower's fiscal
quarters during the applicable respective measurement periods:
7.1 Fixed Charge Coverage Ratio. The Borrower shall have and
maintain a Fixed Charge Coverage Ratio of not less than 1.40 to 1 (measured on a
rolling four quarter basis).
7.2 Minimum Consolidated Net Worth. The Borrower shall have
and maintain a minimum Consolidated Net Worth of not less than $193,027,000 for
the period from the Closing Date through March 31, 2001. For each subsequent
fiscal quarter thereafter, the Borrower shall maintain, minimum Consolidated Net
Worth in an amount not less than the sum of the preceding fiscal year-end's
minimum Consolidated Net Worth requirement plus an amount equal to fifty (50%)
percent of the Borrower's current year-to-date Consolidated Net Income through
the end of such fiscal quarter (with no adjustment for losses).
7.3 Ratio of Consolidated Funded Debt to Consolidated
Capitalization. The Borrower shall have and maintain at all times from and after
the Closing Date a ratio of Consolidated Funded Debt to Consolidated
Capitalization equal to or less than .50 to 1.
7.4 Ratio of Consolidated EBITDA to Consolidated Interest
Expense. The Borrower shall have and maintain a ratio of Consolidated EBITDA to
Consolidated Interest Expense of not less than 4.50 to 1 (measured on a rolling
four quarter basis).
SECTION 8. DEFAULT
8.1 Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default"):
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(a) Payments. The Borrower fails to make any payment
of principal or interest under the Revolving Credit on its due date; or
(b) Other Charges. The Borrower fails to pay any
other charges, fees, Expenses or other monetary obligations owing to any Lender
or the Administrative Agent or the Fronting Lender arising out of or incurred in
connection with this Agreement when such payment is due and payable and such
breach is not cured within five (5) days of the Borrower's receipt of notice
from the Administrative Agent of such breach; or
(c) Particular Covenant Defaults. The Borrower fails
to perform or observe any covenant or undertaking contained in this Agreement,
(other than with respect to the covenants contained in Sections 5.7(b), 6.1
through 6.15 and Sections 7.1 through 7.4 inclusive, as to which no notice and
cure period shall be applicable), and such breach is not cured within fifteen
(15) days of the Borrower's receipt of notice thereof from the Administrative
Agent, or if such breach could not be cured by the Borrower due to circumstances
beyond the Borrower's control within such fifteen (15) day period, for such
longer period as may be necessary for the Borrower to cure such default (in no
event to exceed a total of thirty (30) days from any such notice) so long as the
Borrower is diligently taking all necessary steps to cure any such default(s);
or
(d) Financial Information. Any statement, report,
financial statement, or certificate made and delivered by the Borrower or any of
its officers, employees or agents, to the Administrative Agent or any Lender, is
not true and correct, in all material respects, when made (provided, however,
that an Event of Default shall not be deemed to have occurred hereunder because
interim financial statements are subject to normal and recurring year end
adjustments in the ordinary course); or
(e) Uninsured Loss. There shall occur any uninsured
damage to or loss, theft, or destruction of any portion of any Property of the
Borrower or any of the Guarantors in excess of $5,000,000; or
(f) Warranties or Representations. Any warranty,
representation or other statement by or on behalf of the Borrower or any of the
Guarantors contained in or pursuant to this Agreement, or in any of the Loan
Documents or in any other existing or future agreement between the Borrower
and/or any of the Borrower's Subsidiaries, on the one hand, and the
Administrative Agent and/or any one or more of the Lenders, on the other hand,
is false, erroneous, or misleading in any material respect when made; or
(g) Agreements with Others. The Borrower or any of
the Guarantors shall (i) default beyond any grace period under any agreement(s)
with any creditor(s) of the Borrower or any such Subsidiary or holder(s) of
Indebtedness from the Borrower or such Subsidiary which has an aggregate
outstanding principal balance of $1,000,000, if the effect of such default is to
cause or enable the holder(s) of such party's obligations to declare any such
obligation of such party to become due (whether or not actually accelerated)
prior to its maturity date or prior to its regularly scheduled date of payment
or (ii) fail to pay any Indebtedness at final maturity; or
65
(h) Other Agreements with Lenders. The Borrower or
any of the Guarantors materially breaches or violates the terms of, or if a
default (subject to any cure periods contained therein) or an Event of Default
occurs under any other existing or future agreement (related or unrelated)
between the Borrower and/or any of the Borrower's Subsidiaries, on the one hand,
and the Administrative Agent and/or any/all Lenders, on the other hand; or
(i) Judgments. Any final, non-appealable judgment for
the payment of $5,000,000 or more or final, non-appealable judgments aggregating
$5,000,000 or more (not acknowledged, in writing, by the Borrower's or its
applicable Subsidiary's insurance company as unconditionally covered by
insurance or not stayed within five (5) days of entry) shall be rendered by a
court of competent jurisdiction against the Borrower or any of the Guarantors;
or
(j) Assignment for Benefit of Creditors, etc. The
Borrower or any of the Guarantors makes or proposes an assignment for the
benefit of creditors generally or offers a composition or extension to
creditors; or
(k) Bankruptcy, Dissolution, etc. Any action is taken
for the dissolution or liquidation of the Borrower or any of the Guarantors not
otherwise permitted hereunder, or if there shall be commenced any case or
proceeding for reorganization or liquidation of the Borrower's or any of
Subsidiary's debts under the Bankruptcy Code or any other state or federal law,
now or hereafter enacted for the relief of debtors, whether instituted by or
against such party, provided that as to any such action or proceeding commenced
against any Borrower or any of the Guarantors, such Borrower or Subsidiary shall
have forty-five (45) days to have such action or proceeding dismissed, it being
understood that prior to such dismissal, the Lenders and the Administrative
Agent shall not be obligated to make Advances to or for the benefit of the
Borrower; or
(l) Receiver. There shall be appointed a receiver,
liquidator, custodian, trustee or similar official or fiduciary for (i) the
Borrower or any of the Guarantors, (ii) a substantial part of the Borrower's or
any of the Guarantors' Property or (iii) for such part of the Property of the
Borrower or a Guarantor, such control over which would give rise to a Material
Adverse Effect; or
(m) Execution Process, etc. There shall be issued any
execution or distraint process against the Borrower or any of the Guarantors, or
any Property of the Borrower or any Property of any Subsidiary of the Borrower,
which execution is not released, stayed or dismissed within fifteen (15) days of
its entry, it being understood that nothing herein shall in any way impair the
Administrative Agent's and the Lenders' rights to immediately effect an offset
against any asset of the Borrower or the Guarantors; or
(n) Termination of Business. The Borrower or any of
the Guarantors ceases any material portion of its respective business operations
as presently conducted unless, in the case of a Guarantor, such Guarantor
immediately merges into or consolidates with or is dissolved or liquidated into
the Borrower or another Guarantor; or
66
(o) Pension Benefits, etc. The Borrower or any of the
Guarantors fail to comply with ERISA so that grounds exist to permit the
appointment of a trustee under ERISA to administer the Borrower's or such
Subsidiary's employee plans or to allow the Pension Benefit Guaranty Corporation
to institute proceedings to appoint a trustee to administer such plan(s), or to
permit the entry of a Lien to secure any deficiency or claim; or
(p) Transfer of Stock. The Borrower shall not be the
owner (directly or indirectly) of at least 100% of all of the issued and
outstanding voting stock of each of the Guarantors (or 80% in the case of
Guarantors formed in connection with Permitted Acquisitions), provided, however,
that the foregoing shall not prohibit mergers, dissolutions or stock dividends
expressly permitted by Sections 6.1 or 6.4 hereof; or
(q) Investigations. Evidence shall be received by the
Administrative Agent or any Lender that the Borrower or any of the Guarantors is
or has been engaged in any type of activity which, in the Administrative Agent's
reasonable judgment, could result in the forfeiture of Property of any of the
Guarantors or the Borrower to any Governmental Authority other than a forfeiture
under Environmental Laws or products liability law which would not give rise to
a Material Adverse Effect; or
(r) Guarantees. Any Guarantee ceases to be effective
or any Guarantor disclaims liability under such Guarantee or attempts to revoke
or otherwise terminate its respective Guarantee for any reason and to any
extent, except to the extent of a merger, consolidation or liquidation permitted
hereunder; or
(s) Change of Control. There shall occur any Change
of Control.
8.2 Rights and Remedies on Default.
(a) Upon the occurrence of a Default or an Event of
Default, the Administrative Agent may, in its discretion, or shall, upon the
direction of the Majority Lenders, withhold or cease making Advances under the
Revolving Credit.
(b) In addition to all other rights, options and
remedies granted or available to the Administrative Agent under this Agreement
or the other Loan Documents (each of which is also then exercisable by the
Administrative Agent), the Administrative Agent may, in its discretion, or
shall, upon the direction of Majority Lenders, upon the occurrence and during
the continuance of an Event of Default, terminate the Revolving Credit,
accelerate the Obligations (other than any Obligations under any Hedge Agreement
which may be accelerated only by the Lender which is a party thereto pursuant to
the terms of such Hedge Agreement) and exercise any rights and remedies
available hereunder or under any of the other Loan Documents, at law or in
equity to enforce the Lenders, and the Administrative Agent's rights and collect
the obligations, all without demand, notice, presentment or protest or further
action of any kind (it also being understood that the occurrence of any of the
events or conditions set forth in subparagraphs (j), (k) or (1) of Section 8.1
above shall automatically cause an acceleration of the Obligations).
Nevertheless, if at any time within sixty (60) days after acceleration of the
Obligations, (i) the Borrower shall pay all accrued and unpaid interest and all
payments on account of the principal Obligations, which shall have become due
otherwise than by
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acceleration (with interest, to the extent permitted by law, on overdue
interest, at the Alternate Base Rate) and all other fees or Expenses then owed
hereunder and (ii) all Defaults and Events of Default (other than non-payment of
principal of and accrued interest on the Advances and the Revolving Credit Notes
due and payable solely by virtue of acceleration) shall be remedied or waived
pursuant to Section 9.15, then the Majority Lenders, by written notice to the
Borrower, may (in their absolute and sole discretion) rescind and annul the
acceleration and its consequences; but such action shall not affect any
subsequent Default or Event of Default or impair any right consequent thereto.
The provisions of the immediately preceding sentence are intended merely to bind
the Lenders to a decision that may be made at the election of the Lenders and
are not intended in any manner or under any circumstances whatsoever to benefit
the Borrower or any of the Guarantors and do not grant in any manner or under
any circumstances whatsoever the Borrower or any of the Guarantors the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
(c) Upon the occurrence and during the continuance of
an Event of Default and in addition to all other rights and remedies available
to the Administrative Agent, the Borrower shall, upon demand of the
Administrative Agent, be obligated to deliver and pledge to the Administrative
Agent, on behalf of all Lenders, cash collateral in the amount of all
outstanding Letters of Credit.
8.3 Nature of Remedies. All rights and remedies granted the
Administrative Agent and/or the Lenders hereunder and under any of the other
Loan Documents, or otherwise available at law or in equity, shall be deemed
concurrent and cumulative, and not alternative remedies, and the Administrative
Agent and/or the Lenders may proceed with any number of remedies at the same
time until all Obligations are satisfied in full. The exercise of any one right
or remedy shall not be deemed a waiver or release of any other right or remedy,
and the Administrative Agent, upon the occurrence of an Event of Default, may
proceed against the Borrower, at any time, under any agreement, document or
instrument, with any available remedy and in any order.
8.4 Set-Off. If any bank account of the Borrower with the
Administrative Agent, any Lender or any participant is attached or otherwise
liened or levied upon by any third party, the Administrative Agent and/or such
Lender (and/or any participant) need not await the running of any applicable
grace period hereunder, but the Administrative Agent and/or such Lender (and/or
such participant) as agent for the Lenders and the Administrative Agent shall
have and be deemed to have the immediate right of set-off and may apply the
funds or amount thus set-off against any of the Obligations. Any such funds
shall be held for the ratable benefit of all Lenders and shall be remitted to
the Administrative Agent for distribution to all Lenders in accordance with each
Lender's Pro Rata Percentage (subject to such sharing agreements as the
Administrative Agent may reasonably determine to effectuate the terms of this
Agreement).
SECTION 9. THE ADMINISTRATIVE AGENT.
9.1 Appointment and Authorization. Each Lender, and each
subsequent holder of any of the Revolving Credit Notes by its acceptance
thereof, hereby irrevocably appoints and authorizes the Administrative Agent to
take such action on its behalf and to
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exercise such powers under this Agreement as are delegated to the Administrative
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The Administrative Agent will handle all transactions
relating to the Revolving Credit and all other Obligations, including without
limitation, all transactions with respect to Letters of Credit, this Agreement,
and all of the other Loan Documents, in accordance with its usual banking
practices. The Borrower is hereby authorized by the Lenders to deal solely with
the Administrative Agent in all transactions which affect the Lenders under this
Agreement and the Loan Documents. The rights, privileges and remedies accorded
to the Administrative Agent hereunder shall be exercised by the Administrative
Agent on behalf of all of the Lenders.
9.2 General Immunity. In performing its duties as the
Administrative Agent hereunder, the Administrative Agent will take the same care
as it takes in connection with loans in which it alone is interested, using
reasonable and prudent banking practices. However, neither the Administrative
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith except as such actions or omissions are caused from its or
their own gross negligence or willful misconduct unless such action was taken or
omitted to be taken by the Administrative Agent at the direction of the Majority
Lenders.
9.3 Consultation with Counsel. The Administrative Agent may
consult with legal counsel and other experts selected by it and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
9.4 Documents. The Administrative Agent shall not be under a
duty to examine into or pass upon the effectiveness, genuineness or validity of
this Agreement or any of the Revolving Credit Notes or any of the other Loan
Documents, and the Administrative Agent shall be entitled to assume that the
same are valid, effective and genuine and what they purport to be. In addition,
the Administrative Agent shall not be liable for failing to make any inquiry
concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument, document or agreement. The
Administrative Agent shall furnish to the Lenders copies of all notices and
other documents (including financial statements) received from the Borrower
hereunder.
9.5 Rights as a Lender. With respect to its Pro Rata Share of
the Revolving Credit, the Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not the Administrative Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include the Administrative Agent in its
capacity as a Lender. Subject to the provisions of this Agreement, the
Administrative Agent and any Lender may accept deposits from, lend money to and
generally engage in any kind of banking or trust business with the Borrower and
its Affiliates and Subsidiaries as if it were not the Administrative Agent.
9.6 Responsibility of the Administrative Agent. It is
expressly understood and agreed that the obligations of the Administrative Agent
hereunder are only those expressly set forth in this Agreement and that the
Administrative Agent shall be entitled to assume that no Event of Default, and
no event that, with notice, or lapse of time or both would, if unremedied,
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constitute an Event of Default, has occurred and is continuing, unless the
Administrative Agent has actual knowledge of such fact. Except to the extent the
Administrative Agent is required by the Lenders pursuant to the express terms
hereof to take a specific action, the Administrative Agent shall be entitled to
use its discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions that it may he able to take under or in
respect of, this Agreement and the Loan Documents. The Administrative Agent
shall incur no liability under or in respect of this Agreement and the other
Loan Documents by acting upon any notice, consent, certificate, warranty or
other paper or instrument believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything that it may
do or refrain from doing in the reasonable exercise of its judgment, or that may
seem to it to be necessary or desirable under the circumstances. It is agreed
among the Administrative Agent and the Lenders that the Administrative Agent
shall have no responsibility to carry out audits or otherwise examine the books
and records or properties of the Borrower or any of the Borrower's Subsidiaries,
except as the Administrative Agent in its sole discretion deems appropriate or
unless directed to do so by the Majority Lenders. The relationship between the
Administrative Agent and each Lender is and shall be that of agent and principal
only and nothing herein shall be construed to constitute the Administrative
Agent a joint venturer with any Lender, a trustee or fiduciary for any of the
Lenders or for the holder of a participation herein nor impose on the
Administrative Agent duties and obligations other than those set forth herein.
Nothing contained in this Section 9.6 is intended to relieve the Administrative
Agent from liability for its gross negligence or its willful misconduct unless
any act, omission or conduct of the Administrative Agent is or has been directed
by the Majority Lenders.
9.7 Collections and Disbursements.
(a) The Administrative Agent will have the right to
collect and receive all payments of the Obligations, and to collect and receive
all reimbursements for draws made under the Letters of Credit, together with all
fees, charges or other amounts due under this Agreement and the Loan Documents,
and the Administrative Agent will remit to each Lender, according to its Pro
Rata Percentage, all such payments actually received by the Administrative Agent
(subject to any required clearance procedures) on the same Business Day of
receipt thereof (provided such payments shall have been received by the
Administrative Agent prior to 1:00 p.m., Philadelphia time, on such Business
Day) otherwise on the next Business Day.
(b) If any such payment received by the
Administrative Agent is rescinded or otherwise required to be returned for any
reason at any time, whether before or after termination of this Agreement and
the Loan Documents, each Lender will, upon written notice from the
Administrative Agent promptly pay over to the Administrative Agent its Pro Rata
Percentage of the amount so rescinded or returned, together with interest and
other fees thereon if also required to be rescinded or returned.
(c) On the same Business Day on which notice is given
to the Lenders by the Administrative Agent (or on the next following Business
Day if such notice is not given by the Administrative Agent prior to 1:00 p.m.,
Philadelphia time) with respect to any payment which has been made on account of
any Letter of Credit, which notice shall state the date and
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amount of such payment, each Lender (other than the Fronting Lender) shall remit
to the Fronting Lender its Pro Rata Percentage of the payment in respect of such
Letter of Credit. The obligations of the Lenders hereunder are unconditional,
not subject to setoff and irrevocable and may not be terminated at any time.
(d) All payments by the Administrative Agent and the
Lenders to each other hereunder shall be in lawful money of the United States of
America and at all times maintain proper books of account and records reflecting
the interest of each Lender in the Revolving Credit and the Letters of Credit,
in a manner customary to the Administrative Agent's keeping of such records,
which books and records shall be available for inspection by each Lender at
reasonable times during normal business hours, at such Lender's sole expense.
The Administrative Agent may treat the payees of any Revolving Credit Note as
the holder thereof until written notice of the transfer thereof shall have been
received by the Administrative Agent.
(e) The Lenders and any subsequent holder by
acceptance of a Revolving Credit Note agree among themselves that (i) with
respect to all amounts received by them which are applicable to the payment of
principal of or interest on the Revolving Credit Notes and amounts payable in
respect of any fees or commissions hereunder, equitable adjustment will be made
so that, in effect, all such amounts will be shared among the Lenders pro rata
based on their respective Pro Rata Share of the Obligations with respect to
which such payment was received, whether received by voluntary payment, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action or by the enforcement of any or all of the Revolving Credit Notes, (ii)
if any of them shall exercise any right of counterclaim, setoff, banker's lien
or similar right with respect to amounts owed by the Borrower or any Guarantor
hereunder or under the Revolving Credit Notes that Lender or holder, as the case
may be, shall apportion the amount recovered as a result of the exercise of such
right pro rata in accordance with each Lender's Pro Rata Percentage, and (iii)
if any of them shall thereby through the exercise of any right of counterclaim,
setoff, banker's lien or otherwise or as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code, receive payment or
rejection of a proportion of the aggregate amount of principal and interest due
with respect to the Revolving Credit Notes held by a Lender or holder, or any
other amount payable hereunder which is greater than the proportion received by
any other holder of the Revolving Credit Notes in respect of the aggregate
amount of principal and interest due with respect to the Revolving Credit Notes
held by it or any other amount payable hereunder that Lender or that holder of
the Revolving Credit Notes receiving such proportionately greater payments shall
(y) notify each other Lender and the Administrative Agent of such receipt and
(z) purchase for cash, without recourse or warranty, participations (which it
shall be deemed to have done simultaneously upon the receipt of such payment) in
the Revolving Credit Notes held by the other holders so that all such recoveries
of principal and interest with respect to the Revolving Credit Notes shall be
proportionate to their respective Pro Rata Percentages; provided, however, that
if all or part of such proportionately greater payment received by such
purchasing holder is thereafter recovered from such holder, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to that holder to the extent of such recovery, but without interest.
The Borrower expressly consents to the foregoing arrangement.
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9.8 Indemnification. The Lenders severally and not jointly
hereby each indemnify the Administrative Agent ratably according to the
respective amounts of their Pro Rata Percentages to the extent not paid or
otherwise reimbursed by the Borrower, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement, any other Loan Document or the Revolving
Credit or any action taken or omitted by the Administrative Agent under or
related to this Agreement, any other Loan Document or the Revolving Credit,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct unless such action was taken or omitted to be
taken by the Administrative Agent at the direction of the Majority Lenders. The
Administrative Agent shall have the right to deduct, from any amounts to be paid
by the Administrative Agent to any Lender hereunder, any amounts owing to the
Administrative Agent by such Lender by virtue of this paragraph.
9.9 Expenses.
(a) All out-of-pocket costs and out-of-pocket
expenses incurred by the Administrative Agent for which the Borrower is
responsible hereunder and not reimbursed on demand by the Borrower, in
connection with the analysis, negotiation, preparation, consummation, amendment,
administration, refinancing, termination, work-out, forbearance and enforcement
of the Loan Documents, the Revolving Credit or the Obligations (including,
without limitation, reasonable counsel and expert fees and expenditures to
enforce, protect, preserve, analyze, negotiate and defend the Administrative
Agent's and each Lender's rights and interest under the Loan Documents) shall be
shared and paid on demand by the Lenders pro rata based on their respective Pro
Rata Percentages.
(b) The Administrative Agent may deduct from payments
or distributions to be made to the Lenders such funds as may be necessary to pay
or reimburse the Administrative Agent for such costs or expenses.
9.10 No Reliance. Each Lender has entered into this Agreement
and the Loan Documents solely upon its own independent investigation and is not
relying upon any information supplied by or any representations made by the
Administrative Agent. Each Lender shall continue to make its own analysis and
evaluation of the Borrower and the Guarantors. The Administrative Agent makes no
representation or warranty and assumes no responsibility with respect to the
financial condition, prospects or results of operations of the Borrower or any
of the Guarantors, any obligor or any account debtor of the Borrower; the
accuracy, sufficiency or currency of any information concerning the financial
condition, prospects or results of operations of the Borrower or any Subsidiary;
the sufficiency, authenticity, legal effect, validity or enforceability of the
Loan Documents; or with regard to any other matters, whether similar or
dissimilar. The Administrative Agent assumes no responsibility or liability with
respect to the collectibility of the obligations or the performance by the
Borrower or any Subsidiary of any obligation under the Loan Documents.
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9.11 Reporting. During the term of this Agreement, the
Administrative Agent will promptly furnish each Lender with copies of all
financial statements and reports with respect to the Borrower or any Guarantor
actually received by the Administrative Agent pursuant to Section 5 of this
Agreement. The Administrative Agent will promptly notify the Lenders when it
receives actual knowledge of any Event of Default under the Loan Documents.
9.12 Resignation of the Administrative Agent. The
Administrative Agent may resign at any time upon giving thirty (30) days prior
written notice thereof to the Lenders and the Borrower. Upon the resignation of
the Administrative Agent, the Lenders (exclusive of the Administrative Agent)
shall have the right to appoint a successor to the Administrative Agent by
majority vote of the Lenders (exclusive of the Administrative Agent and based
upon the percentages of the total Pro Rata Shares of such other Lenders). Upon
the acceptance of its appointment as a successor to the Administrative Agent
hereunder, by such successor to the Administrative Agent, such successor to the
Administrative Agent shall thereupon succeed to and become vested with all
rights, powers, obligations and duties of the retiring Administrative Agent and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.
9.13 Action on Instructions of Lenders. With respect to any
provision of this Agreement or any of the other Loan Documents, or any issue
arising hereunder or thereunder, concerning which the Administrative Agent is
authorized to act or withhold action by direction of the Lenders (or, if
applicable, the Majority Lenders), the Administrative Agent shall in all cases
be fully protected in so acting, or in so refraining from acting, hereunder or
thereunder in accordance with written instructions signed by the Lenders (or, if
applicable, the Majority Lenders). Such instructions and any action taken or
failure to act pursuant thereto shall be binding on all Lenders and on all
holders of the Revolving Credit Notes.
9.14 Several Obligations. The obligations of each Lender
hereunder and under each of the other Loan Documents are several, and neither
the Administrative Agent nor any other Lender shall be responsible for the
obligations and commitments of any other Lender.
9.15 Amendments.
(a) Except as expressly provided herein, the
Administrative Agent shall have the sole and exclusive right to, service,
administer and monitor the Revolving Credit and the Loan Documents, including
without limitation, the right to exercise all rights, privileges and options
under the Loan Documents, including the credit judgment with respect to the
making of Advances and the determination as to the basis on which and the extent
to which Advances may be made.
(b) Notwithstanding anything to the contrary
contained in subparagraph (a) above, prior to an acceleration of the
Obligations, the Administrative Agent shall not, without the prior written
consent of all Lenders: (i) extend the Maturity Date or any payment date under
the Revolving Credit Notes or under this Agreement, including without
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limitation, any mandatory prepayment date under Section 2.11 hereof, (ii)
decrease any interest rate on the Revolving Credit (unless otherwise expressly
provided for herein) or any fee (except fees that are solely for the account of
the Fronting Lender) chargeable to the Borrower by the Lenders and/or the
Administrative Agent and/or the Fronting Lender hereunder or elsewhere, (iii)
increase the Available Commitment or the Pro Rata Share or Pro Rata Percentage
of any of the Lenders except by permitted assignments (or unless otherwise
expressly provided for herein), (iv) release any obligor from the Obligations
(including releasing any Guarantor from its obligations under its respective
Guarantee), except in connection with termination of the Revolving Credit and
full payment and satisfaction of all obligations (v) change the definition of
Majority Lenders, (vi) consent to the assignment or delegation by the Borrower
or any Guarantor of its obligations under any Loan Document, (vii) change the
definition of Available Commitment, (viii) change the definition of
Outstandings; or (ix) modify this Subsection 9.15(b) or any of Sections 2.9(f),
2.10, 2.12, 8.4, 10.5, 10.10 or 10.15.
(c) Notwithstanding anything to the contrary
contained in subparagraph (a) above, prior to an acceleration of the
obligations, the Administrative Agent shall not, without the prior written
consent of the Majority Lenders: (i) enter into any written amendment to any of
the Loan Documents; (ii) waive the Borrower's compliance with the terms and
conditions of the Loan Documents or any Event of Default hereunder or
thereunder; or (iii) consent to the Borrower taking any action which, if taken,
would constitute an Event of Default under this Agreement or under any of the
Loan Documents.
(d) After an acceleration of the Obligations, the
Administrative Agent shall have the sole and exclusive right, after consultation
(to the extent reasonably practicable under the circumstances) with all Lenders,
to exercise or refrain from exercising any and all rights, remedies, privileges
and options under the Loan Documents or available at law or in equity, to
protect the rights of the Lenders and collect the obligations, including without
limitation, instituting and pursuing all legal actions brought against the
Borrower or to collect the Obligations, or defending any and all actions brought
by the Borrower; incurring Expenses or otherwise making expenditures to protect
the Revolving Credit or the Lenders' rights or remedies; modifying the Revolving
Credit or the Loan Documents; and releasing or settling any amounts owing under
the Obligations. Notwithstanding this subsection (d), after an acceleration of
the Obligations, the Administrative Agent may not, without the prior written
consent of the Majority Lenders, enter into a written agreement with the
Borrower which provides that the obligations are not immediately due and payable
or which provides that the Administrative Agent will forebear from exercising
its remedies hereunder, and may not without the prior written consent of all of
the Lenders (i) compromise or satisfy the Obligations for less than payment in
full; (ii) reduce any rate of interest charged to any outstanding Advance; or
(iii) release the Borrower or any of the Guarantors from its obligations
hereunder or under the Guarantees (as applicable).
9.16 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Agent shall give notice thereof
to the
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Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Majority
Lenders; provided, that unless and until the Administrative Agent shall have
received such directions, it may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
SECTION 10. MISCELLANEOUS.
10.1 GOVERNING LAW. THIS AGREEMENT, AND ALL OF THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS THEREOF.
10.2 Integrated Agreement. This Agreement, the Revolving
Credit Notes and the other Loan Documents shall be construed as integrated and
complementary of each other, and as augmenting and not restricting Lenders'
and/or the Administrative Agent's rights and remedies. If, after applying the
foregoing, an inconsistency still exists, the provisions of this Agreement shall
constitute an amendment to such inconsistent document and shall control.
10.3 Omission or Delay Not Waiver. No omission or delay by the
Administrative Agent or any Lender in exercising any right or power under this
Agreement or any of the other Loan Documents will impair such right or power or
be construed to be a waiver of any Default, or Event of Default or an
acquiescence therein, and any single or partial exercise of any such right or
power will not preclude other or further exercise thereof or the exercise of any
other right, and as to the Borrower, no waiver will be valid unless in writing
and signed by the Administrative Agent and then only to the extent specified.
10.4 Time. Unless otherwise expressly set forth herein,
whenever the Borrower shall be required to make any payment or perform any act
on a day which is not a Business Day, such payment may be made, or such act may
be performed, on the next succeeding Business Day. Time is of the essence in the
Borrower's, the Administrative Agent's and each Lender's performance under all
provisions of this Agreement and all Loan Documents.
10.5 Expenses of the Administrative Agent and Lenders. At
Closing and from time to time thereafter, the Borrower will pay promptly upon
demand of the Administrative Agent all reasonable out-of-pocket costs, fees and
expenses (a) of the Administrative Agent in connection with (i) the analysis,
negotiation, preparation, execution, administration and delivery of this
Agreement and the other Loan Documents and the documents and instruments
referred to herein and therein and any amendment, amendment and restatement,
supplement, waiver or consent relating hereto or thereto, whether or not any
such amendment, amendment and restatement, supplement, waiver or consent is
executed or becomes effective (including, without limitation, search costs, the
reasonable fees, expenses and disbursements of counsel for the Administrative
Agent, and reasonable charges of any expert consultant to the Administrative
Agent) and (ii) the syndication of the commitments and (b) the Administrative
Agent and each of the Lenders in connection with the enforcement of any
Obligations of, or the collection of any
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payments owing from, the Borrower or any of the Borrower's Subsidiaries under
this Agreement and/or the other Loan Documents to which they are a party, or
protection or defense of the rights of the Lenders and/or the Administrative
Agent under the Loan Documents, following the occurrence of any Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement and the other Loan Documents in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings, or
otherwise (including the reasonable fees and disbursements of counsel for the
Administrative Agent and each of the Lenders and reasonable allocated costs of
internal counsel) (collectively, the "Expenses");
10.6 Brokerage. Except as otherwise provided herein, this
transaction was brought about and entered into by the Administrative Agent, the
Lenders and the Borrower acting as principals and without any brokers, agents or
finders being the effective procuring cause hereof. The Borrower, the
Administrative Agent and each Lender each represents that it has not committed
any party hereunder to the payment of any brokerage fee, commission or charge in
connection with this transaction. If any such claim is made on the Borrower,
Administrative Agent or any Lender by any broker, finder or agent or other
Person (unless such broker, finder, agent or other similar Person is engaged by
the affected party), the party or parties (each, a "Responsible Party") which
committed the affected party to the payment of such fees hereby agrees to
indemnify, defend and save the affected party or parties harmless against such
claim and further will defend, with counsel satisfactory to the affected party
or parties, any action or actions to recover on such claim, at the sole cost and
expense of the Responsible Party, including such affected party's counsel fees
and costs. The Borrower further agrees that, if it is the Responsible Party,
until any such claim or demand is adjudicated in the affected party's favor, the
amount demanded shall be deemed a liability of the Borrower under this
Agreement.
10.7 Notices; Lending Offices. (a) All notices, requests and
demands to or upon the respective parties hereto (i) to be effective shall be in
writing (including electronic transmission, facsimile transmission or posting on
a secured Web site), and if any such notice, request or demand is regarding an
Event of Default shall be transmitted by hand delivery, mail or facsimile
transmission and (ii) unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or three days
after being deposited in the mail, postage prepaid, or, in the case of facsimile
transmission notice, when sent during normal business hours with electronic
confirmation or otherwise when received, or in the case of electronic
transmission, when received and in the case of posting on a secured Web site,
upon receipt of (x) in each instance, notice of such posting and (y) rights to
access such Web site, addressed as follows in the case of the Borrower, and the
Administrative Agent, and as set forth in Annex I in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:
If to the Administrative Agent to:
PNC Bank, National Association
1600 Market Street
Philadelphia, PA 19103
Attention: Robert J. Giannone
Director
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Telecopy No: (215) 585-6987
With copies to:
PNC Bank, National Association
One PNC Plaza, 22nd Floor
249 Fifth Avenue
Pittsburgh, PA 15222
Attention: Arlene M. Ohler
Telecopy No: (412) 762-8672
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
Attention: Carl H. Fridy, Esquire
Telecopy No: (215) 864-8999
If to the Borrower or any Guarantor to:
CSS Industries, Inc.
1845 Walnut Street, Suite
800 Philadelphia, PA 19102
Attention: Clifford E. Pietrafitta
Telecopy No.: (215) 569-9979
With copies to:
Stephen V. Dubin, Esquire
CSS Industries, Inc.
1845 Walnut Street, Suite 800
Philadelphia, PA 19102
Telecopy No:(215) 569-9979
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Howard Shecter, Esquire
Telecopy No. (215) 963-5442
(b) Any notice sent by the Administrative Agent, any
Lender or the Borrower by any of the above methods shall be deemed to be given
when so received. Any notice sent by overnight carrier shall be presumed to have
been received the day after it was sent, if by hand delivery by 5:00 p.m.
Philadelphia, PA time on the day sent, and if by facsimile, no such presumption
shall be raised.
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(c) The Administrative Agent shall be fully entitled
to rely upon any facsimile transmission or other writing purported to be sent by
any Authorized Officer (whether requesting an Advance or otherwise) as being
genuine and authorized.
10.8 Headings. The headings of any paragraph or Section of
this Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
10.9 Survival. All warranties, representations, and covenants
made by the Borrower herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement or any of the other Loan Documents, shall be considered to have
been relied upon by the Administrative Agent and the Lenders, and shall survive
the delivery to the Lenders of the Revolving Credit Notes, regardless of any
investigation made by the Lenders or on their behalf. All statements in any such
certificate or other instrument prepared and/or delivered for the benefit of the
Administrative Agent and any/all Lenders shall constitute warranties and
representations by the Borrower hereunder. Except as otherwise expressly
provided herein, all covenants made by the Borrower hereunder or under any other
agreement or instrument shall be deemed continuing until all obligations are
satisfied in full and the Revolving Credit is terminated.
10.10 Successors and Assigns.
(a) This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties. Neither the
Borrower nor any Guarantor may transfer, assign or delegate any of its duties or
obligation hereunder.
(b) (i) Notwithstanding any other provision of this
Agreement, each Lender may assign all or any part of, or any interest in, such
Lender's rights and benefits hereunder, under the Revolving Credit Notes and
under the other Loan Documents, as well as all obligations related to such
assigned rights and interest, provided that each such assignment:
(A) must (unless the assignment is to an
Affiliate of the assigning Lender that is a U.S. person within the meaning of
Section 7701(a) of the Code) be approved by the Borrower (such approval not to
be unreasonably withheld or delayed); provided, however, that if a Default or
Event of Default has occurred hereunder, the approval of the Borrower shall not
be required,
(B) shall, if not an assignment of the entire
commitment of the applicable Lender, be in a minimum amount of $5,000,000),
(C) must be evidenced by an Assignment Agreement
in the form of Exhibit F attached hereto and made a part hereof, a true and
correct copy of which shall be delivered to the Administrative Agent,
(D) shall be accompanied by the unconditional
payment by the assigning Lender to the Administrative Agent of an assignment fee
equal to $3,500 except if the assignment is made to an Affiliate of the
assigning Lender or to another Lender, and
78
(E) shall be effective upon the Administrative
Agent's receipt of written notice from the assignor and assignee Lenders of such
assignment and compliance with subparagraphs (A), (B), (C) and (D) above.
(ii) Each Lender may at any time enter into
participation agreements with one or more participating lenders whereby such
Lender may allocate certain percentages of its Pro Rata Share of the Revolving
Credit to such participant(s), provided that no participant shall have, except
as provided below, any voting or consent rights on any issue with respect to
this Agreement, the other Loan Documents or the Revolving Credit. No participant
(unless and only to the extent such participant is itself a Lender) shall be
entitled to require the Lender from whom its participation interest was
obtained, to take or refrain from taking any action under this Agreement or any
other Loan Document, except that such Lender may agree with such participant
that such Lender will not, without such participant's consent, agree to any
modification, amendment or waiver of this Agreement described in Section
9.15(b)(i)-(viii). Notwithstanding the foregoing, any such participant shall be
considered to be a "Lender" for purposes of Sections 2.2(f), 2.9, 2.10, 2.12,
8.4, 10.5 and 10.15 with respect to its participation; provided, however, that
no participant shall be entitled to receive any greater amount pursuant to
Sections 2.2(f), 2.9, 2.10 or 2.12 than the transferor Lender would have been
entitled to receive in respect of the participation effected by such transferor
Lender had no participation occurred. The Borrower acknowledges that, for the
convenience of all parties, this Agreement is being entered into with the
Lenders only and that its obligations under this Agreement are, to the extent
expressly provided for in this Section 10.10(b)(ii), undertaken for the benefit
of, and as an inducement to, any such participating lenders as well as the
Lenders. Any grant of a participation by any Lender shall not discharge, reduce
or otherwise affect said Lender's obligation, in accordance with its Pro Rata
Percentage, under this Agreement to fund Advances, which obligations shall
remain primary and absolute. Such grants of participations shall not affect or
diminish the rights of the granting Lender to reimbursement or other payments
which may become due to said Lender under this Agreement and such reimbursements
and other payments will be calculated as if said Lender had not granted any such
participation. Except as provided for herein, no participant shall have, by
virtue of any participation, any rights or benefits under this Agreement or
claims of any kind against the Administrative Agent or any Lender or the
Borrower other than the Lender from whom the participation has been obtained.
(c) Nothing in this Section 10.10 shall prevent or
prohibit any Lender from pledging its Advances hereunder to a Federal Reserve
Bank in support of borrowings made by such Lender from such Federal Reserve
Bank.
(d) Subject to the provisions of Section 10.24
hereof, the Borrower on its own behalf and on behalf of each of its Subsidiaries
authorizes each Lender to disclose to any participant or assignee (each, a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the Borrower or any of its Subsidiaries which has
been delivered to such Lender by the Borrower or any such Subsidiary in
connection with such Lender's credit evaluation of the Borrower and its
Subsidiaries. In addition, subject to Section 10.24 hereof, the Administrative
Agent may furnish any information concerning the Borrower or any of its
Subsidiaries in the Administrative Agent's possession to any Affiliate of the
Administrative Agent. The Borrower shall and shall cause each of its
Subsidiaries to assist
79
any Lender in effectuating any assignment or participation pursuant to this
Section 10.10 (including during syndication) in whatever manner such Lender
reasonably deems necessary, including the participation in meetings with
prospective Transferee.
(e) Any Proposed New Lender shall, at least seven (7)
days before the effective date of such Lender's joinder hereto, complete and
deliver to the Administrative Agent a New Lender Joinder. Such New Lender
Joinder shall include, among other things, a joinder to this Agreement and
otherwise be satisfactory to the Administrative Agent and the Borrower. Upon the
effective date of such joinder, such Proposed New Lender shall be a party hereto
and shall be one of the Lenders hereunder for all purposes except as provided
below. Such Proposed New Lender's rights and the rights of any existing Lender
which increases its Pro Rata Share according to Section 2.3(b) shall be limited
in the following respects: (i) on the effective date of such joinder or
increase, the Borrower shall repay all outstanding Advances that are Alternate
Base Rate Advances, if any, and reborrow a like amount of the Alternate Base
Rate Advances from the Lenders, including the Proposed New Lender, according to
their new Pro Rata Percentages and (ii) such Proposed New Lender or existing
Lender which increases it Pro Rata Share shall not participate in any LIBOR
Based Rate Advances (except, with respect to an existing lender, with respect to
its existing interest) which are outstanding on the effective date of such
joinder or increase but shall participate in all new Advances made to the
Borrower after the effective date of such joinder or increase in accordance with
its new Pro Rata Percentage, including, without limitation, new LIBOR Based Rate
Advances and renewals and conversions of LIBOR Based Rate Advances. If the
Borrower should (i) renew after the effective date of such joinder or increase
any Advances that are LIBOR Based Rate Advances existing on such effective date
or (ii) convert after the date of such joinder or increase any Advances that are
LIBOR Based Rate Advances existing on such effective date, the Borrower shall be
deemed to repay the applicable Advances on the conversion or renewal date, as
the case may be, and then reborrow a similar amount on such date so that the
Proposed New Lender and any Lender that increases its Pro Rata Share shall
participate in such Advances after such renewal or conversion date in accordance
with its Pro Rata Percentage. Simultaneously, with the execution and delivery of
such joinder or the increase in a Lender's Pro Rata Share, the Borrower shall
execute a new Revolving Credit Note for such Proposed New Lender or existing
Lender. Notwithstanding the foregoing, upon the occurrence of an Event of
Default prior to the date on which such Proposed New Lender or such existing
Lender that is increasing its Pro Rata Share is holding Advances that are LIBOR
Based Rate Advances equal to its pro rata share (in accordance with its then Pro
Rata Percentage without giving effect to any termination of the Available
Commitment), such Lender shall, upon notice from the Administrative Agent, on or
after the date on which the Advances are accelerated or become due following
such Event of Default, pay to the Administrative Agent (for the account of the
other Lenders, to which the Administrative Agent shall pay their pro rata share
thereof promptly after receipt) a sum equal to such Lender's pro rata share of
each Advance that is a LIBOR Based Rate Advance then outstanding with respect to
which such Lender does not then hold its pro rata share in accordance with its
Pro Rata Percentage; such payment by such Lender shall constitute an Alternate
Base Rate Advance hereunder.
80
10.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original and, all of which,
taken together, shall constitute one fully executed document.
10.12 Modification. No modification hereof or any agreement
referred to herein shall be binding or enforceable unless in writing and signed
by the Borrower, the Administrative Agent and the Lenders required by Section
9.15 hereof.
10.13 Signatories. Each individual signatory hereto represents
and warrants that he is duly authorized to execute this Agreement on behalf of
his principal and that he executes the Agreement in such capacity and not as a
party.
10.14 Third Parties. No rights are intended to be created
hereunder or under any of the other Loan Documents for the benefit of any third
party donee, creditor or incidental beneficiary of the Borrower. Nothing
contained in this Agreement shall be construed as a delegation to the
Administrative Agent or any Lender of the Borrower's duty of performance,
including, without limitation, the Borrower's duties under any account or
contract with any other Person.
10.15 Indemnification. (a) The Borrower agrees to indemnify
each of the Lenders and the Administrative Agent and their respective officers,
directors, employees, representatives, agents, attorneys-in-fact and Affiliates
and each other Person, if any, controlling any of them or any of their
Affiliates within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act (each, an "Indemnitee" and collectively, the
"Indemnities") from, and hold each of them harmless against, any and all Losses
resulting from, arising out of, in any way related to or by reason of, (i) the
execution, delivery, performance, administration or enforcement of any Loan
Document, (ii) the Lenders' or the Administrative Agent's agreement to make the
Advances, (iii) the use or intended use of the proceeds of any Advances
hereunder (iv) the consummation of any other transactions contemplated in any
Loan Document, (v) the performance by the Administrative Agent of their duties
hereunder or (vi) any inaccuracy in any material respect, or any untrue
statement or alleged untrue statement of any material fact, made in any report,
exhibit, schedule or publication in connection with the transactions
contemplated hereby furnished to the Administrative Agent or the Lenders by or
on behalf of the Borrower, or by reason of the omission or the alleged omission
therefrom of a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, whether or not
such Indemnitee is a party and whether or not such Proceeding is initiated or
brought by or on behalf of the Borrower; provided, however, that the Borrower
shall not be liable under the foregoing indemnification provision to an
Indemnitee to the extent that any such Loss is judicially determined by a court
of competent jurisdiction in a final non-appealable judgment to have resulted
solely by reason of the gross negligence or willful misconduct of such
Indemnitee. To the extent that the undertaking to indemnify and hold harmless
set forth in this Section 10.15 is unenforceable because it is violative of any
law or public policy or otherwise, the Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnified liabilities incurred by any of the
Indemnities.
81
(b) The Borrower agrees on its own behalf and on
behalf of the Guarantors that no Indemnitee shall have any liability (whether
direct or indirect, in contract or tort or otherwise) for any Losses to the
Borrower or any of the Guarantors or any such entities, security holders or
creditors resulting from, arising out of, in any way related to or by reason of
(i) the execution, delivery, performance, administration or enforcement of any
Loan Document, (ii) the Lenders' or the Administrative Agent's agreement to make
the Advances, (iii) the use or intended use of the proceeds of any Advances
hereunder or (iv) the consummation of any other transactions contemplated in any
Loan Document, except to the extent that any Losses judicially determined by a
court of competent jurisdiction in a final non-appealable judgment to have
resulted solely by reason of the gross negligence or willful misconduct of such
Indemnitee.
(c) Each Indemnitee shall give prompt notice to the
Borrower of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify the Borrower shall not relieve it
from any liability which it may otherwise have hereunder. The Borrower may
participate at its own expense in the defense of such action.
(d) In the event that any Indemnitee is requested or
required to appear as a witness in any Proceeding brought by or on behalf of or
against the Borrower or any Affiliate of the Borrower in which such Indemnitee
is not named as a defendant, the Borrower agrees to reimburse each Indemnitee
for all reasonable expenses incurred by each Indemnitee in connection with such
Indemnitee's appearing and preparing to appear as such a witness, including,
without limitation, the reasonable fees and disbursements of each Indemnitee's
legal counsel, and to compensate such Indemnitee in an amount to be mutually
agreed upon.
(e) The Borrower agrees on its own behalf and on
behalf of each of the Guarantors that, without the prior written consent of the
Administrative Agent and the Majority Lenders, no such entity will settle,
compromise or consent to the entry of any judgment in any pending or threatened
Proceeding in respect of which indemnification could be sought under the
indemnification provisions of this Section 10.15 (whether or not any Indemnitee
is an actual or potential party to such Proceeding), unless such settlement,
compromise or consent includes an unconditional written release in form, scope
and substance satisfactory to the Administrative Agent and the Majority Lenders,
of each Indemnitee from all liability arising out of such Proceeding and does
not include any statement as to an admission of fault, culpability or failure to
act by or on behalf of any Indemnitee.
10.16 Discharge of Taxes, The Borrower's Obligations, Etc. The
Administrative Agent, in its sole discretion, shall have the right at any time,
and from time to time, on one day's notice to Borrower (unless the
Administrative Agent deems immediate action to be necessary under the
circumstances), if the Borrower fails to do so, to: (a) pay for the performance
of any of the Borrower's obligations hereunder, and (b) discharge taxes or
Liens, at any time levied or placed on any of the Borrower's Property in
violation of this Agreement unless the Borrower or such Subsidiary or any of the
Borrower's Subsidiaries is in good faith with due diligence by appropriate
proceedings contesting such taxes or Liens and maintaining proper reserves
therefor in accordance with GAAP. Such expenses and advances shall be added to
the Revolving Credit and shall bear interest at the Alternate Base Rate until
reimbursed to the Administrative Agent.
82
Such payments and advances made by the Administrative Agent shall not be
construed as a waiver by the Administrative Agent or the Lenders of an Event of
Default under this Agreement.
10.17 Withholding and Other Tax Liabilities. The
Administrative Agent, in its sole discretion and without any duty to exercise
such rights or monitor such obligation of the Borrower, shall have the right to
withhold or direct the Lenders to withhold any Advances from time to time unless
the Borrower shall, at the Administrative Agent's request, have given to the
Administrative Agent evidence, reasonably satisfactory to the Administrative
Agent, that the Borrower has properly deposited or paid, as required by law, all
withholding taxes and all federal, state, city, county or other taxes due up to
and including the date of the requested Advance. Copies of deposit slips showing
payment shall likewise constitute satisfactory evidence for such purpose. In the
event that any Lien, assessment or tax liability against the Borrower or any of
the Borrower's Subsidiaries shall arise in favor of any taxing authority,
whether or not notice thereof shall be filed or recorded as may be required by
law, the Administrative Agent shall have the right, on one day's notice to
Borrower (unless the Administrative Agent deems immediate action to be necessary
under the circumstances) (but shall not be obligated, nor shall the
Administrative Agent or any Lender hereby assume the duty) to pay any such Lien,
assessment or tax liability by virtue of which such charge shall have arisen;
provided, however, that the Administrative Agent shall not pay any such tax,
assessment or Lien before its due date or if the amount, applicability or
validity thereof is being contested in good faith and by appropriate proceedings
by the Borrower or such Subsidiary. In order to pay any such Lien, assessment or
tax liability, the Administrative Agent shall not be obliged to wait until said
Lien, assessment or tax liability is filed before taking such action as
hereinabove set forth. Any sum or sums which the Administrative Agent (shared
ratably by the Lenders) shall have paid for the discharge of any such Lien shall
be added to the Revolving Credit and shall be paid by the Borrower to the
Administrative Agent with interest thereon, upon demand, and the Administrative
Agent shall be subrogated to all rights of such taxing authority against the
Borrower or such Subsidiary.
10.18 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement or the Notes, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the Commonwealth of Pennsylvania, the courts of
the United States of America for the Eastern District of Pennsylvania, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may
be brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar
83
form of mail), postage prepaid, to the Borrower at its address set forth in
Section 9.2 or at such other address of which the Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, and without limiting the provisions of
Section 5.8(c), each of the Agent and the Banks waives, any right it may have to
claim or recover in any legal action or proceeding referred to in this Section
any special, exemplary, punitive or consequential damages.
10.19 Waivers.
(a) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this transaction,
including without limitation, contract, claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Agreement, and that each will continue to rely on the waiver in their related
future dealings. Each party hereto further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
ADVANCES. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
(b) (i) The Borrower, on behalf of itself and each of
the Guarantors, waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover any special, exemplary, punitive or
consequential damages from the Administrative Agent or the Lenders in any
Proceeding in connection with, arising out of, or in any way related to the
transactions contemplated herein or in any other Loan Document.
(ii) The Agent and each of the Lenders waives, to
the maximum extent not prohibited by law, any right it may have to claim or
recover any special, exemplary, punitive or consequential damages from the
Borrower or any of the Guarantors in any Proceeding in connection with, arising
out of, or in any way related to the transactions contemplated herein or in any
other Loan Document to the extent the foregoing is not in derogation of the
Administrative Agent's or any of the Lender's rights to claim or recover any
84
amounts under Sections 2.2(g), 2.9, 2.10, 2.12, 10.5, 10.6, 10.15 or for any
other Obligations expressly provided for in this Agreement or any of the other
Loan Documents.
(c) The Borrower, on its own behalf and on behalf of
the Guarantors, hereby waives promptness, diligence, notice of acceptance and
any other notice with respect to any of the obligations and any requirement that
any Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right to take any action against any other obligor or any
other Person or any collateral or other direct or indirect security for any of
the obligations.
10.20 Severability. Each provision of this Agreement shall be
severable from every other provision of this Agreement. If any provision is
determined to be invalid or unenforceable, such determination shall not affect
or limit the validity or enforceability of all other provisions.
10.21 Independence of Representations, Warranties and
Covenants. The representations, warranties and covenants contained herein shall
be independent of each other and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exception be deemed to permit any action or omission that would be in
contravention of applicable law.
10.22 Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several, no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder, and
the Administrative Agent shall not be responsible for any obligations of any
Lender. Nothing contained in this Agreement and no action taken by the Lenders
pursuant hereto shall be deemed to constitute the Lenders to be a partnership,
an association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for any other Lender to be
joined as an additional party in any Proceeding for such purpose.
10.23 Prior Understandings. This Agreement and the other Loan
Documents supersede all prior and contemporaneous understandings and agreements,
whether written or oral, among the parties hereto relating to the transactions
provided for herein and therein, except (a) the letter (the "Engagement Letter")
agreement dated February 21, 2001 among PNC and the Borrower (other than the
Term Sheet (as defined in the Engagement Letter) and (b) the Fee Letter (as
defined in the Engagement Letter) shall remain in effect, to the extent not
conflicting herewith.
10.24 Confidentiality. The Administrative Agent and each
Lender agree to keep confidential all material non-public information provided
to it by or on behalf of the Borrower and/or the Guarantors pursuant to this
Agreement or the other Loan Documents that is designated by the provider of such
information in writing as confidential; provided that nothing herein shall
prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the
85
Administrative Agent or any other Lender, (b) to any assignee, proposed
assignee, participant or proposed participant which agrees to comply with the
provisions of this subsection, (c) to its Affiliates, employees, directors,
agents, attorneys, accountants and other professional advisors, (d) upon the
request or demand of any Governmental Authority having jurisdiction over such
Person, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any requirement of
applicable law, (f) which has been publicly disclosed other than in breach of
this Agreement, or (g) in connection with the exercise of any remedy or other
enforcement of the rights of the Administrative Agent and/or the Lenders
hereunder.
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.
CSS INDUSTRIES, INC.,
a Delaware corporation
By:
-------------------------------------
Title
Attest:
------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as the Administrative Agent
By:
-------------------------------------
Title
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name
Title
FIRST UNION NATIONAL BANK,
as a Lender
By:
-------------------------------------
Name
Title
FLEET NATIONAL BANK,
as a Lender
By:
-------------------------------------
Name
Title
MELLON BANK, N.A.,
as a Lender
By:
-------------------------------------
Name
Title
UNION PLANTERS BANK
By:
-------------------------------------
Name
Title
EXHIBIT AND SCHEDULE LIST
Annex I -- Lenders, Pro Rata Shares, Pro Rata Percentages
Annex II -- Applicable Margins
Exhibit A -- Form of Guarantee
Exhibit B-1 -- Form of Revolving Credit Note
Exhibit B-2 -- Form of Swing Line Note
Exhibit C -- Form of Notice of Borrowing
Exhibit D -- Form of Quarterly Compliance Certificate
Exhibit E -- Form of Certificate regarding Permitted Acquisitions
Exhibit F -- Form of Assignment Agreement
Exhibit G -- Form of Commitment and Acceptance
Exhibit H -- Form of New Lender Joinder
Schedule 1.1(c) -- Financial Statements
Schedule 3.1(h) -- Material Environmental Investigations,
Studies, Audits, Etc.
Schedule 4.2 -- Places of Business
Schedule 4.3 -- Judgments, Proceedings, Litigation and Orders
Schedule 4.4 -- Existing Liens and Claims
Schedule 4.9 -- Subsidiaries and Affiliates and Jurisdictions of
Incorporation
Schedule 4.10 -- Existing Guarantees, Investments and Borrowings
Schedule 4.11(c) -- ERISA Matters
Schedule 4.12 -- Business Interruptions
Schedule 4.13(a) -- Schedule of Names
Schedule 4.13(b) -- Trademarks, Patents and Copyrights
-1-
Schedule 4.14 -- Other Associations
Schedule 4.15 -- Environmental Matters
Schedule 4.17 -- Capital Stock
-2-
ANNEX I
Lenders Pro Rata Percentage Pro Rata Share
------- ------------------- --------------
PNC Bank, National Association 26.667% $ 20,000,000
First Union National Bank 23.333% 17,500,000
Fleet National Bank 23.333% 17,500,000
Mellon Bank, N.A. 13.333% 10,000,000
United Planters Bank 13.333% 10,000,000
-----------------------------------------
100% $ 75,000,000
-3-
Swing Line Lender Swing Line Commitment
----------------- ---------------------
PNC Bank, National Association $10,000,000
-4-
ANNEX II
Applicable Margins
Compliance Levels
- ----------------------------------------------------------------------------------------------------
Basis for Determination I II III
- ----------------------------------------------------------------------------------------------------
Interest Coverage Ratio Greater than or Less than 8.00 to 1 Less than 6.25 to 1
equal to 8.00 to 1 but greater than or
equal to 6.25 to 1
- ----------------------------------------------------------------------------------------------------
Applicable Base Rate Margin -.50% -.25% 0%
- ----------------------------------------------------------------------------------------------------
Applicable LIBO Rate Margin 1.00% 1.25% 1.5%
- ----------------------------------------------------------------------------------------------------
Applicable Available .25% .30% .35%
Commitment Fee Percentage
- ----------------------------------------------------------------------------------------------------
-5-