Exhibit 10.1
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF MAY 30, 1996
among
SOUTH CENTRAL POOL SUPPLY, INC.,
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
TABLE OF CONTENTS
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ARTICLE I: DEFINITIONS........................................................1
1.1 Certain Defined Terms................................................1
1.2 Subsidiary References...............................................26
1.3 Supplemental Disclosure.............................................26
1.4 Amendment and Restatement of Original Credit Agreement..............26
ARTICLE II: THE CREDITS......................................................27
2.1 Term Loans..........................................................27
2.2 Revolving Loans.....................................................28
2.3 Ratable Loans.......................................................28
2.4 Rate Options for all Advances.......................................28
2.5 Optional Payments; Mandatory Prepayments............................29
(A) Optional Payments............................................29
(B) Mandatory Prepayments........................................29
2.6 Reduction of Commitments............................................30
2.7 Method of Borrowing.................................................30
2.8 Determination of Applicable Margins, Applicable Letter of Credit
Fee and Applicable Commitment Fee.................................30
2.9 Method of Selecting Types and Interest Periods for Advances.........32
2.10 Minimum Amount of Each Advance.....................................32
2.11 Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances...........................................32
(A) Right to Convert............................................32
(B) Automatic Conversion and Continuation.......................33
(C) No Conversion Post-Default or Post-Unmatured Default........33
(D) Conversion/Continuation Notice..............................33
2.12 Default Rate.......................................................33
2.13 Method of Payment..................................................33
2.14 Notes, Telephonic Notices..........................................33
2.15 Promise to Pay; Interest and Fees; Interest Payment Dates;
Interest and Fee Basis; Taxes; Loan and Control Accounts.........34
(A) Promise to Pay..............................................34
(B) Interest Payment Dates......................................34
(C) Commitment Fees.............................................34
(D) Interest and Fee Basis......................................34
(E) Taxes.......................................................34
(F) Loan Account................................................37
(G) Control Account.............................................37
(H) Entries Binding.............................................37
2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions.............................38
2.17 Lending Installations..............................................38
2.18 Non-Receipt of Funds by the Agent..................................38
2.19 Termination Date...................................................38
2.20 Replacement of Certain Lenders.....................................38
2.21 Letter of Credit Facility..........................................39
2.22 Letter of Credit Participation.....................................39
2.23 Reimbursement Obligation...........................................40
2.24 Cash Collateral....................................................40
2.25 Letter of Credit Fees..............................................41
2.26 Indemnification; Exoneration.......................................41
ARTICLE III: CHANGE IN CIRCUMSTANCES.........................................42
3.1 Yield Protection....................................................42
3.2 Changes in Capital Adequacy Regulations.............................43
3.3 Availability of Types of Advances...................................43
3.4 Funding Indemnification.............................................43
3.5 Lender Statements; Survival of Indemnity............................44
ARTICLE IV: CONDITIONS PRECEDENT.............................................44
4.1 Conditions Precedent to Effectiveness of this Agreement.............44
4.2 Each Advance and Letter of Credit...................................45
ARTICLE V: REPRESENTATIONS AND WARRANTIES....................................46
5.1 Organization; Corporate Powers......................................46
5.2 Authority...........................................................46
5.3 No Conflict; Governmental Consents..................................47
5.4 Financial Statements................................................47
5.5 No Material Adverse Change..........................................47
5.6 Taxes...............................................................47
(A) Tax Examinations.............................................47
(B) Payment of Taxes.............................................48
5.7 Litigation; Loss Contingencies and Violations.......................48
5.8 Subsidiaries........................................................48
5.9 ERISA...............................................................49
5.10 Accuracy of Information............................................49
5.11 Securities Activities..............................................49
5.12 Material Agreements................................................49
5.13 Compliance with Laws...............................................50
5.14 Assets and Properties..............................................50
5.15 Statutory Indebtedness Restrictions................................50
5.16 Post-Retirement Benefits...........................................50
5.17 Insurance..........................................................50
5.18 Contingent Obligations.............................................50
5.19 Restricted Junior Payments.........................................51
5.20 Labor Matters......................................................51
5.21 Environmental Matters..............................................51
ARTICLE VI: COVENANTS........................................................51
6.1 Reporting...........................................................52
(A) Financial Reporting..........................................52
(B) Notice of Default............................................53
(C) Lawsuits.....................................................54
(D) Insurance....................................................54
(E) ERISA Notices................................................54
(F) Labor Matters................................................55
(G) Other Indebtedness...........................................55
(H) Environmental Notices........................................56
(I) Borrowing Base Certificate...................................56
(J) SEC Filings and Notices......................................56
(K) Other Publicly Available Information.........................56
(L) Other Information............................................56
6.2 Affirmative Covenants...............................................57
(A) Corporate Existence, Etc.....................................57
(B) Corporate Powers; Conduct of Business........................57
(C) Compliance with Laws, Etc....................................57
(D) Payment of Taxes and Claims; Tax Consolidation...............57
(E) Insurance....................................................57
(F) Inspection of Property; Books and Records; Discussions.......58
(G) Insurance and Condemnation Proceeds..........................58
(H) ERISA Compliance.............................................59
(I) Maintenance of Property......................................59
(J) Environmental Compliance.....................................59
(K) Use of Proceeds..............................................59
(L) Interest Rate Agreements.....................................59
(M) Collection Account Arrangements..............................60
(N) Separate Corporate Existence.................................61
6.3 Negative Covenants..................................................62
(A) Indebtedness.................................................62
(B) Sales of Assets..............................................64
(C) Liens........................................................65
(D) Investments..................................................66
(E) Contingent Obligations.......................................66
(F) Restricted Junior Payments...................................67
(G) Conduct of Business; Subsidiaries; Acquisitions..............69
(H) Transactions with Shareholders and Affiliates................69
(I) Restriction on Fundamental Changes...........................70
(J) Sales and Leasebacks.........................................70
(K) Margin Regulations...........................................70
(L) ERISA........................................................70
(M) Issuance of Capital Stock....................................70
(N) Corporate Documents..........................................70
(O) Other Indebtedness...........................................70
(P) Fiscal Year..................................................71
(Q) Subsidiary Covenants.........................................71
(R) Rate Hedging Obligations.....................................71
6.4 Financial Covenants.................................................71
(A) Defined Terms for Financial Covenants........................71
(B) Interest Expense Coverage Ratio..............................72
(C) Fixed Charge Coverage Ratio..................................73
(D) Maximum Leverage Ratio.......................................73
ARTICLE VII: DEFAULTS........................................................73
7.1 Defaults............................................................73
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS,
AMENDMENTS AND REMEDIES............................................76
8.1 Termination of Commitments; Acceleration............................76
8.2 Defaulting Lender...................................................76
8.3 Amendments..........................................................78
8.4 Preservation of Rights..............................................78
ARTICLE IX: GENERAL PROVISIONS...............................................79
9.1 Survival of Representations.........................................79
9.2 Governmental Regulation.............................................79
9.3 Performance of Obligations..........................................79
9.4 Headings............................................................80
9.5 Entire Agreement....................................................80
9.6 Several Obligations; Benefits of this Agreement.....................80
9.7 Expenses; Indemnification...........................................80
(A) Expenses.....................................................80
(B) Indemnity....................................................80
(C) Waiver of Certain Claims.....................................81
(D) Survival of Agreements.......................................81
9.8 Numbers of Documents................................................81
9.9 Accounting..........................................................82
9.10 Severability of Provisions.........................................82
9.11 Nonliability of Lenders............................................82
9.12 GOVERNING LAW......................................................82
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL............82
(A) EXCLUSIVE JURISDICTION......................................82
(B) OTHER JURISDICTIONS.........................................82
(C) SERVICE OF PROCESS..........................................83
(D) WAIVER OF JURY TRIAL........................................83
(E) WAIVER OF BOND..............................................83
(F) ADVICE OF COUNSEL...........................................84
9.14 Subordination of Intercompany Indebtedness.........................84
9.15 No Strict Construction.............................................85
ARTICLE X: THE AGENT.........................................................85
10.1 Appointment........................................................85
10.2 Powers.............................................................85
10.3 General Immunity...................................................85
10.4 No Responsibility for Loans, Creditworthiness, Collateral,
Recitals, Etc....................................................85
10.5 Action on Instructions of Lenders..................................86
10.6 Employment of Agents and Counsel...................................86
10.7 Reliance on Documents; Counsel.....................................86
10.8 Agent's Reimbursement and Indemnification..........................86
10.9 Rights as a Lender.................................................87
10.10 Lender Credit Decision............................................87
10.11 Successor Agent...................................................87
10.12 Collateral Documents..............................................87
ARTICLE XI: SETOFF; RATABLE PAYMENTS.........................................88
11.1 Setoff.............................................................88
11.2 Ratable Payments...................................................88
11.3 Application of Payments............................................88
11.4 Relations Among Lenders............................................89
ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...............89
12.1 Successors and Assigns.............................................89
12.2 Participations.....................................................90
(A) Permitted Participants; Effect..............................90
(B) Voting Rights...............................................90
(C) Benefit of Setoff...........................................90
12.3 Assignments........................................................91
(A) Permitted Assignments.......................................91
(B) Effect; Effective Date......................................91
(C) The Register................................................91
12.4 Confidentiality....................................................92
12.5 Dissemination of Information.......................................92
ARTICLE XIII: NOTICES........................................................92
13.1 Giving Notice......................................................92
13.2 Change of Address..................................................92
ARTICLE XIV: COUNTERPARTS....................................................92
EXHIBITS AND SCHEDULES
EXHIBIT A - Borrowing Base Certificate (Definitions)
EXHIBIT B - Term Loan Amounts and Revolving Loan Commitments
(Definitions)
EXHIBIT C - Form of Substituted and Amended Revolving Note (Definitions)
EXHIBIT D - Form of Substituted and Amended Term Note (Definitions)
EXHIBIT E - Form of Assignment Agreement ((S)(S) 2.20, 12.3)
EXHIBIT F - Form of Officer's Certificate ((S)(S) 4.2, 6.1(A)(iv))
EXHIBIT G - Form of Compliance Certificate ((S)(S)4.2, 6.1(A)(iv))
EXHIBIT H - Form of Demand Intercompany Note ((S)6.3(A)(iii)(a))
EXHIBIT I - Form of Intercompany Security Agreement ((S)6.3(A)(iii)(b))
EXHIBIT J - List of Closing Documents
EXHIBIT K - Holdings Subordination Agreement
SCHEDULE 1.1.1 - Permitted Existing Contingent Obligations
(Definitions)
SCHEDULE 1.1.2 - Permitted Existing Indebtedness (Definitions)
SCHEDULE 1.1.3 - Permitted Existing Investments (Definitions)
SCHEDULE 1.1.4 - Permitted Existing Liens (Definitions)
SCHEDULE 5.3 - Conflicts; Governmental Consents ((S) 5.3)
SCHEDULE 5.7 - Litigation; Loss Contingencies ((S) 5.7)
SCHEDULE 5.8 - Subsidiaries ((S) 5.8)
SCHEDULE 5.17 - Insurance ((S)(S) 5.17, 6.2(E))
SCHEDULE 5.18 - Contingent Obligations ((S)(S) 5.7, 5.18)
SCHEDULE 5.20 - Labor Matters; Compensation Agreements ((S) 5.20)
SCHEDULE 5.21 - Environmental Matters ((S) 5.21)
SCHEDULE 6.2(M) - Deposit Accounts; Collection Account Agreements ((S)
6.2(M))
SCHEDULE 6.3(F)(ii) - Schedule of Permissible Tax Payments ((S)6.3(F)(ii))
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of May 30, 1996 is
entered into among South Central Pool Supply, Inc., a Delaware corporation, the
institutions from time to time a party hereto as Lenders, whether by execution
of this Agreement or an assignment and acceptance pursuant to Section 12.3, and
The First National Bank of Chicago, in its capacity as contractual
representative for itself and the other Lenders. The parties hereto agree as
follows:
WITNESSETH:
WHEREAS, the Borrower has requested and the Agent and the Lenders have
agreed to amend the Original Credit Agreement (as defined below);
WHEREAS, the Borrower, the Lenders and the Agent have agreed to enter into
this Agreement in order to (i) amend and restate the Original Credit Agreement;
(ii) re-evidence the Obligations, which shall be repayable in accordance with
the terms of this Agreement; and (iii) set forth the terms and conditions under
which the Lenders will, from time to time, make loans and extend other financial
accommodations to or for the benefit of the Borrower; and
WHEREAS, it is the intention of the parties to this Agreement that this
Agreement not constitute a novation and that, from and after the Effective Date,
the Original Credit Agreement shall be amended and restated hereby and all
references herein to "hereunder," "hereof," or words of like import and all
references in any other Loan Document to the "Credit Agreement" or words of like
import shall mean and be a reference to the Original Credit Agreement as amended
and restated hereby (and any section references to the Original Credit Agreement
shall refer to the applicable equivalent provision set forth herein although the
section number thereof may have changed);
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrower by the Lenders and the Agent, the
parties hereto agree as follows:
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms. In addition to the terms defined in other
sections of this Agreement, the following terms used in this Agreement shall
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:
As used in this Agreement:
"ACCOMMODATION OBLIGATIONS" is defined in the definition "Contingent
Obligations" below.
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"ACCOUNT DEBTOR" means and includes the account debtor or obligor with
respect to any of the Receivables and/or the prospective purchaser with respect
to any contract right, and/or any party who enters into or proposes to enter
into any contract or other arrangement with the Borrower or any of its
Subsidiaries.
"ACQUISITION" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions at least a majority (in number of vote) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency), a majority (by percentage of voting power) of the membership,
ownership or other equity interests in a limited liability company or a majority
(by percentage of voting power) of the outstanding partnership interests of a
partnership.
"ADJUSTED NET INCOME" is defined in Section 6.4(A) hereof.
"ADVANCE" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by the Lenders to the Borrower of the same Type and, in
the case of Eurodollar Advances, for the same Interest Period.
"AFFECTED LENDER" is defined in Section 2.20 hereof.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act)
of twenty percent (20%) or more of any class of voting securities (or other
voting interests) of the controlled Person or possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, membership, ownership or
other equity interests, by contract or otherwise.
"AGENT" means First Chicago in its capacity as contractual representative
for itself and the Lenders pursuant to Article X hereof and any successor Agent
appointed pursuant to Article X hereof.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the Revolving
Loan Commitments of all the Lenders, as reduced from time to time pursuant to
the terms hereof. The Aggregate Revolving Loan Commitment is Thirty-Five Million
and 00/100 dollars ($35,000,000.00) subject to reduction as provided in this
Agreement.
"AGREEMENT" means this Amended and Restated Credit Agreement, as it may be
further amended, restated or otherwise modified and in effect from time to time.
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"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect as of the Original Closing Date, applied in a manner
consistent with that used in preparing the historical financial statements
referred to in Section 5.4 hereof.
"ALLIANCE" means Alliance Packaging, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Borrower, and its successors and assigns,
including a debtor-in-possession on behalf of Alliance Packaging, Inc.
"ALLIANCE GUARANTY" means that certain Guaranty entered into between
Alliance and the Agent dated as of January 20, 1995, as the same may from time
to time be amended, modified, supplemented or restated.
"ALLIANCE SECURITY AGREEMENT" means that certain Amended and Restated
Security Agreement entered into between Alliance and the Agent dated as of the
Closing Date, as the same may from time to time be amended, modified,
supplemented or restated.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of interest
per annum equal to the higher of (i) the Corporate Base Rate for such day and
(ii) the sum of (a) the Federal Funds Effective Rate for such day and (b) one-
half of one percent (1/2%) per annum.
"APPLICABLE COMMITMENT FEE" as at any date of determination, shall be the
rate per annum then applicable in the determination of the amount payable under
Section 2.15(C) with respect to the unused Aggregate Revolving Loan Commitment,
determined in accordance with the provisions of Section 2.8(a).
"APPLICABLE EURODOLLAR MARGIN" as at any date of determination, shall be
the rate per annum then applicable to Eurodollar Loans determined in accordance
with the provisions of Section 2.8(a).
"APPLICABLE FLOATING RATE MARGIN" as at any date of determination, shall be
the rate per annum then applicable to Floating Rate Loans determined in
accordance with the provisions of Section 2.8(a).
"APPLICABLE LETTER OF CREDIT FEE" as at any date of determination, shall be
the rate per annum then applicable in the determination of the amount payable
under Section 2.25 with respect to Letters of Credit, determined in accordance
with the provisions of Section 2.8(a).
"APPLICABLE MARGINS" defined in Section 2.5(B)(i)(d).
"ASSET SALE" means, with respect to any Person, (i) the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction and including the sale or
other transfer of any of the capital stock of any Subsidiary of such Person) or
(ii) the issuance, sale, conveyance, disposition or other transfer by such
Person of any Capital Stock of or ownership, membership or other equity
interests in such Person; provided, however, that notwithstanding the foregoing,
the term "Asset Sale" shall not include the sale, lease, conveyance, disposition
or other transfer of any assets in the ordinary course of business.
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"AUTHORIZED OFFICER" means any of the Chairman, President, Treasurer,
Controller and Secretary of the Borrower, acting singly.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which Borrower or any
other member of the Controlled Group is, or within the immediately preceding six
(6) years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means South Central Pool Supply, Inc., a Delaware corporation,
and its successors and assigns, including a debtor-in-possession on behalf of
Borrower.
"BORROWING BASE" means, as of any date of calculation, an amount, as set
forth on the most current Borrowing Base Certificate delivered to the Agent,
equal to: (i) eighty percent (80%) of the Gross Amount of Eligible Receivables
of the Borrower and Alliance; plus (ii) forty-five percent (45%) of the lesser
of (A) $1,000,000 multiplied by the number of service centers operated by the
Borrower and (B) the Gross Amount of Eligible Inventory of the Borrower and
Alliance; minus (iii) the aggregate outstanding L/C Obligations less any Cash
Equivalents on deposit as cash collateral therefor; minus (iv) the then
applicable Rentals Reserve. The Agent shall give the Borrower commercially
reasonable notice, taking into account all facts and circumstances known by the
Agent at such time, of any change in the criteria to determine the eligibility
of any Receivables or Inventory of the Borrower or Alliance or to the
establishment by the Agent of any reserves which, in any such case, might
reasonably be expected to materially decrease the amount of the Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate, in substantially the form
of Exhibit A attached hereto and made a part hereof, setting forth the Borrowing
Base and the component calculations thereof.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BORROWING NOTICE" is defined in Section 2.9 hereof.
"BUSINESS ACTIVITY REPORT" means (A) a Notice of Business Activities Report
from the State of Minnesota, Department of Revenue, or (B) any similar report
required by any other State relating to the ability of the Borrower or its
Subsidiaries to enforce their accounts receivable claims against Account Debtors
located in any such state.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurodollar Rate, a day (other than a
Saturday or Sunday) on which banks are open for business in Chicago and New York
and on which dealings in United States dollars are carried on in the London
interbank market and (ii) for all other purposes a day (other than a Saturday or
Sunday) on which banks are open for business in Chicago, Illinois and New York,
New York.
"CAPITAL EXPENDITURES" is defined in Section 6.4(A) hereof.
4
"CAPITALIZED LEASE" of a Person means any lease of property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CAPITAL STOCK", with respect to any Person, means any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, or its branches or agencies and having capital and surplus in an
aggregate amount not less than $500,000,000 (fully protected against currency
fluctuations for any such deposits with a term of more than ten (10) days);
(iii) shares of money market, mutual or similar funds having net assets in
excess of $500,000,000 and the investments of which are limited to investment
grade securities (i.e., securities rated at least Baa by Moody's Investors
Service, Inc. or at least BBB by Standard & Poor's Corporation) and (iv)
commercial paper of United States and foreign banks and bank holding companies
and their subsidiaries and United States and foreign finance, commercial
industrial or utility companies which, at the time of acquisition, are rated A-1
(or better) by Standard & Poor's Corporation or P-1 (or better) by Moody's
Investors Services, Inc.; provided, that the maturities of such Cash Equivalents
shall not exceed 365 days.
"CASH FLOW PERIOD" means the period from January 1, 1995 through the end of
the Borrower's fiscal year ending December 31, 1995 and, thereafter, as separate
periods, each subsequent 12-month period ending on December 31 of each calendar
year.
"CHANGE" is defined in Section 3.2 hereof.
"CHANGE OF CONTROL" means an event or series of events by which:
(a) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act), other than CHS, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act), directly or indirectly, of thirty percent (30%) or more of the
combined voting power of the then outstanding Capital Stock of the Borrower
entitled to vote generally in the election of the directors of the
Borrower;
(b) with respect to either Borrower or Holdings, during any period of
12 consecutive calendar months, individuals:
5
(i) who were directors of such Person on the first day of such
period, or
(ii) whose election or nomination for election to the board of
directors of such Person was recommended or approved by at
least a majority of the directors then still in office who
were directors of such Person on the first day of such
period, or whose election or nomination for election was so
approved,
shall cease to constitute a majority of the board of directors of such
Person; and
(c) Borrower ceases to be the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act), directly or indirectly, of one-
hundred percent (100%) of the combined voting power of Alliance's
outstanding Capital Stock ordinarily having the right to vote at an
election of directors; or
(d) Borrower ceases to have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of Alliance.
"CHS" means Code, Hennessy & Simmons Limited Partnership, an Illinois
limited partnership.
"CLOSING DATE" means May 30, 1996.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means all property and interests in property now owned or
hereafter acquired by Borrower or any of its Subsidiaries in or upon which a
security interest, lien or mortgage is granted to the Agent, for the benefit of
the Holders of Secured Obligations, or to the Agent, for the benefit of the
Lenders, whether under the Security Agreement, under any of the other Collateral
Documents or under any of the other Loan Documents.
"COLLATERAL DOCUMENTS" means all agreements, instruments and documents
executed in connection with the Original Credit Agreement or this Agreement,
including, without limitation (a) the Security Agreement, (b) the Alliance
Guaranty, (c) the Intercompany Note, (d) the Intercompany Security Agreement,
(e) the Alliance Security Agreement, (f) the Pledge Agreement, (g) all security
agreements relating to any intellectual property of the Borrower or Alliance,
(h) the Collection Account Agreements, and (i) all other security agreements,
loan agreements, notes, guarantees, subordination agreements, pledges, powers of
attorney, consents, assignments, contracts, fee letters, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of Borrower or any of its Subsidiaries and
delivered to the Agent or any of the Lenders, together, in each case, with all
agreements and documents referred to therein or contemplated thereby.
6
"COLLECTION ACCOUNT" means each lock-box and blocked depository account
maintained by Borrower or Alliance, subject to a Collection Account Agreement,
for the collection of Borrower's or Alliance's Receivables, as applicable, and
other proceeds of Collateral.
"COLLECTION ACCOUNT AGREEMENT" means a written agreement among the Borrower
or Alliance, as applicable, the Agent, and, as applicable, each of the banks at
which the Borrower or Alliance, as applicable, maintains a Collection Account.
"COLLECTION ACCOUNT BLOCKAGE DATE" means the date, following the occurrence
and during the continuance of a Default on which the Agent or the Required
Lenders, in the Agent's or the Required Lenders' sole discretion, instruct(s)
any financial institution party to a Collection Account Agreement as described
in the applicable Collection Account Agreement to remit, during the continuance
of such Default, all amounts deposited in the Collection Account to the Agent or
as the Agent shall direct.
"COMMISSION" means the Securities and Exchange Commission and any Person
succeeding to the functions thereof.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
Exhibit G delivered to the Agent and each Lender by the Borrower pursuant to the
provisions of this Agreement and covering, among other things, Borrower's
calculation of the Applicable Margins, applicable Commitment Fee, Applicable
Letter of Credit Fee, Borrower's compliance with the financial covenants
contained in Section 6.4 and certain other provisions of this Agreement.
"CONSOLIDATED NET WORTH" is defined in Section 6.4(A) hereof.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBS") and includes
but is not limited to these terms as defined in Environmental, Health or Safety
Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means (i) any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability of
another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including Contractual Obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such Indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition, or to make payment other than for value received (such obligations
under this clause (i) being sometimes referred to as "Accommodation
Obligations") and (ii) any other contingent obligation or liability of such
Person, whether or not reflected in financial statements of such Person as a
liability.
7
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any equity or debt securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument, in any case in writing, to which that
Person is a party or by which it or any of its properties is bound, or to which
it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower; (ii) a partnership or other trade
or business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower; and (iii) a member
of the same affiliated service group (within the meaning of Section 414(m) of
the Code) as the Borrower, any corporation described in clause (i) above or any
partnership or trade or business described in clause (ii) above.
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.11(D) hereof.
"CORPORATE BASE RATE" means the corporate base rate of interest announced
by First Chicago from time to time, changing when and as said corporate base
rate changes.
"CURE LOAN" is defined in Section 8.2(iii) hereof.
"CURRENT ASSETS" is defined in Section 6.4(A) hereof.
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in favor of
the IRS or the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other similar
Liens imposed by law created in the ordinary course of business for amounts
not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with Agreement
Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in favor of
the IRS or the PBGC) incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance
or other types of social security benefits or to secure the performance of
bids, tenders, sales, contracts (other than for the repayment of borrowed
money), surety, appeal and performance bonds; provided that (A) all such
Liens do not in the aggregate materially detract from the value of the
Borrower's or such Subsidiary's assets or property taken as a whole or
materially impair the use thereof in the operation of the
8
businesses taken as a whole, and (B) all Liens securing bonds to stay
judgments or in connection with appeals that do not secure at any time an
aggregate amount exceeding $1,000,000;
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of real property which do not interfere with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(v) Liens of attachment or judgment with respect to judgments,
writs or warrants of attachment, or similar process against the Borrower or
any of its Subsidiaries which do not constitute a Default under Section
7.1(h);
(vi) Liens arising from leases or subleases granted to others
which do not interfere in any material respect with the business of the
Borrower or any of its Subsidiaries; and
(vii) any interest or title of the lessor in the property subject
to any operating lease entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business.
"DATED RECEIVABLES" is defined in the definition of Eligible Receivables
below.
"DECISION PERIOD" is defined in Section 6.2(G) hereof.
"DECISION RESERVE" is defined in Section 6.2(G) hereof.
"DEFAULT" means an event described in Article VII hereof.
"DESIGNATED PREPAYMENT" is defined in Section 2.5(B)(i)(d).
"DOL" means the United States Department of Labor and any Person succeeding
to the functions thereof.
"EBITA" is defined in Section 6.4(A) hereof.
"EFFECTIVE DATE" means the date on which this Agreement has become
effective in accordance with the provisions of Article IV hereto but not later
than May 25, 1996.
"ELIGIBLE INVENTORY" means Inventory of the Borrower or Alliance which is
held for sale or lease or furnished under any contract of service by the
Borrower or Alliance which is at all times and shall continue to be acceptable
to the Agent in all respects. Standards of eligibility may be fixed and revised
from time to time by the Agent in the Agent's reasonable business judgment
(which credit judgment shall be exercised in a manner that is not arbitrary or
capricious). In general, without limiting the foregoing, the following inventory
is not Eligible Inventory:
9
(i) (to the extent not provided for by reserves described in the
definition of the Gross Amount of Eligible Inventory) Inventory which is
obsolete, not in good condition, not either currently usable or currently
saleable in the ordinary course of the Borrower's or Alliance's, as
applicable, business or does not meet all material standards imposed by any
Governmental Authority having regulatory authority over such item of
Inventory, its use or its sale;
(ii) Inventory which the Agent determines, in the exercise of its
reasonable discretion (which discretion shall not be exercised in a manner
that is arbitrary or capricious), to be unacceptable due to age, type,
category and/or quantity;
(iii) Inventory consisting of packaging material, supplies, raw
materials and work in process;
(iv) Inventory which (a) is consigned to a third party for sale or
(b) is on consignment from a third party to the Borrower or Alliance for
sale;
(v) Inventory which has been held by the Borrower or Alliance for
more than two (2) years;
(vi) Inventory which consists of goods in transit;
(vii) Inventory which is subject to a Lien in favor of any Person
other than the Agent;
(viii) Inventory with respect to which the Agent does not have a
first and valid fully perfected security interest;
(ix) (a) Inventory of the Borrower which is not located either (i)
on the Borrower's owned premises in the United States listed on Schedule 2
to the Security Agreement or (ii) (A) on the Borrower's leased premises in
the United States listed on Schedule 2 to the Security Agreement, (B) in
warehouses or with other bailees in the United States, in each case as
listed on Schedule 2-A to the Security Agreement or (C) in other leased
premises, warehouses or with other bailees in the United States not listed
on Schedule 2-A to the Security Agreement permitted to be established under
the Security Agreement or established in connection with a Permitted
Acquisition, in each case under the immediately preceding clauses (B) and
(C) in connection with which the Agent shall have received bailee and/or
warehousemen's access and lien waiver agreements, as applicable, in each
case in form and substance acceptable to the Agent; or (b) Inventory of
Alliance which is not located either (i) on Alliance's owned premises in
the United States listed on Schedule 2 to the Alliance Security Agreement
or (ii) (A) on Alliance's leased premises in the United States listed on
Schedule 2 to the Alliance Security Agreement, (B) in warehouses or with
other bailees in the United States, in each case as listed on Schedule 2-A
to the Alliance Security Agreement or (C) in other leased premises,
warehouses or with other bailees in the United States not listed on
Schedule 2-A to the Alliance Security Agreement permitted to be established
under the Alliance Security Agreement or established in connection with a
Permitted Acquisition, in each case under the immediately preceding clauses
(B) and (C) in connection with which the Agent shall have received bailee
10
and/or warehousemen's access and lien waiver agreements, as applicable, in
each case in form and substance acceptable to the Agent;
(x) Inventory which is evidenced by a Receivable; and
(xi) Inventory which is not in full conformity with the
representations and warranties made by the Borrower or Alliance to the
Agent with respect thereto whether contained in this Agreement or the
Security Agreement.
Without limiting the foregoing, (i) Inventory of the Borrower and/or Alliance
which is acquired pursuant to a Permitted Acquisition shall not be deemed
Eligible Inventory unless and until the Agent and the Required Lenders, after
concluding any due diligence they reasonably deem necessary, shall be satisfied
as to the condition thereof and that such Inventory would otherwise meet the
standards of eligibility set forth herein (including, without limitation,
perfection and priority of the Agent's security interests in such Inventory) but
for the fact that it was acquired by the Borrower and/or Alliance outside of the
ordinary course of business and (ii) Inventory acquired pursuant to such
Permitted Acquisition may be deemed Eligible Inventory from and after such
Permitted Acquisition if the foregoing determinations have been made to the
Agent's and the Required Lenders' satisfaction.
"ELIGIBLE RECEIVABLES" means Receivables created by the Borrower or
Alliance in the ordinary course of its respective business arising out of the
sale of goods or rendition of services by the Borrower or Alliance, as
applicable, which Receivables are and at all times shall continue to be
acceptable to the Agent in all respects. Standards of eligibility may be fixed
and revised from time to time by the Agent in the Agent's reasonable credit
judgment (which credit judgment shall be exercised in a manner that is not
arbitrary or capricious). In general, without limiting the foregoing, the
following Receivables are not Eligible Receivables:
(i) Receivables which remain unpaid sixty (60) days after the
original due date (provided the Borrower or Alliance, as applicable,
continues to offer dating terms to its account debtors consistent with past
practices);
(ii) all Receivables owing by a single Account Debtor (including a
Receivable which remains unpaid fewer than sixty (60) days after the
original due date) if twenty-five percent (25%) of the balance owing by
such Account Debtor to either the Borrower or Alliance, calculated without
taking into account any credit balances of such Account Debtor, remains
unpaid sixty (60) days after the original due date or has otherwise become,
or has been determined by the Agent to be ineligible;
(iii) Receivables from any single Account Debtor and its Affiliates
which otherwise constitute Eligible Receivables comprising more than
fifteen percent (15%) of all Eligible Receivables;
(iv) Receivables with respect to which the Account Debtor is a
director, officer, employee, Subsidiary or Affiliate of the Borrower or
Alliance;
11
(v) Receivables with respect to which the Account Debtor is (a)
any federal Governmental Authority, the United States of America, or, in
each case, any department, agency or instrumentality thereof, unless with
respect to any such Account, the Borrower or Alliance, as applicable, has
complied to the Agent's satisfaction with the provisions of the Federal
Assignment of Claims Act or other applicable statutes, including, without
limitation, executing and delivering to Agent all statements of assignment
and/or notification which are in form and substance acceptable to Agent and
which are deemed necessary by Agent to effectuate the assignment to the
Agent of such Receivables on behalf of the Lenders of such Accounts or (b)
any state or municipal Governmental Authority or any agency or
instrumentality thereof;
(vi) Receivables with respect to which the Account Debtor is any
state or municipal Governmental Authority or any agency or instrumentality
thereof;
(vii) Receivables not denominated in U.S. dollars or with respect
to which the Account Debtor is not a resident of the United States unless
the Account Debtor has supplied the Borrower with an irrevocable letter of
credit, issued by a financial institution satisfactory to the Agent,
sufficient to cover such Receivable in form and substance satisfactory to
the Agent;
(viii) Receivables with respect to which the Account Debtor has (a)
asserted a counterclaim, (b) a right of setoff or (c) a receivable owing
from the Borrower or Alliance but only to the extent of such counterclaim,
setoff or receivable;
(ix) Receivables for which the prospect of payment or performance
by the Account Debtor is or will be impaired as determined by the Agent in
the exercise of its reasonable credit judgment (which credit judgment shall
not be exercised in a manner that is arbitrary or capricious);
(x) Receivables with respect to which the Agent does not have a
first and valid fully perfected and enforceable security interest;
(xi) Receivables with respect to which the Account Debtor is the
subject of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been conveyed
to a receiver, trustee or assignee for the benefit of creditors;
(xii) Receivables with respect to which the Account Debtor's
obligation to pay the Receivable is conditional upon the Account Debtor's
approval or is otherwise subject to any repurchase obligation or return
right, as with sales made on a bill-and-hold, guaranteed sale, sale-and-
return, sale on approval (except with respect to Receivables in connection
with which Account Debtors are entitled to return Inventory on the basis of
the quality of such Inventory) or consignment basis;
(xiii) Receivables with respect to which the Account Debtor is
located in Minnesota (or any other jurisdiction which adopts a statute or
other requirement with respect to which any Person that obtains business
from within such jurisdiction or is otherwise subject to such
12
jurisdiction's tax law requiring such Person to file a Business Activity
Report or make any other required filings in a timely manner in order to
enforce its claims in such jurisdiction's courts or arising under such
jurisdiction's laws); provided, however, such Receivables shall nonetheless
be eligible if the Borrower or Alliance, as applicable, has filed a
Business Activity Report (or other applicable report) with the applicable
state office or is qualified to do business in such jurisdiction and, at
the time the Receivable was created, was qualified to do business in such
jurisdiction or had on file with the applicable state office a current
Business Activity Report (or other applicable report);
(xiv) Receivables with respect to which the Account Debtor's
obligation does not constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms;
(xv) Receivables with respect to which the Borrower or Alliance,
as applicable, has not yet shipped the applicable goods or performed the
applicable service or in connection with which an invoice has not been
issued;
(xvi) Receivables which the Agent, exercising reasonable discretion
(which discretion shall not be exercised in a manner that is arbitrary or
capricious), has determined to be unacceptable to it;
(xvii) any Receivable which is not in conformity with the
representations and warranties made by the Borrower or Alliance to the
Agent with respect thereto whether contained in this Agreement, the
Security Agreement or the Alliance Security Agreement;
(xviii) Receivables in connection with which the Borrower or
Alliance, as applicable, has not complied with all material requirements
contained in the charter and by-laws or other organizational or governing
documents of the Borrower or Alliance, as applicable, and any law, rule or
regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon the
Borrower or Alliance, as applicable, or any of its property or to which the
Borrower or Alliance, as applicable, or any of its property is subject,
including, without limitation, all laws, rules, regulations and orders of
any Governmental Authority or judicial authority relating to truth in
lending, billing practices, fair credit reporting, equal credit
opportunity, debt collection practices and consumer debtor protection,
applicable to such Receivable (or any related contracts) or affecting the
collectability of such Receivables;
(xix) Receivables in connection with which the Borrower or
Alliance, as applicable, or any other party to such Receivable, is in
default in the performance or observance of any of the terms thereof in any
material respect; and
(xx) (y) for the period from January 1 through April 30 in each
year, Receivables for which the due date is greater than thirty (30) days
after the date of the applicable invoice ("DATED RECEIVABLES") to the
extent such Dated Receivables comprise greater than sixty-five percent
(65%) of all Receivables of either the Borrower or Alliance; and (z) for
the period
13
from May 1 through December 31 in each year, Dated Receivables to the
extent such Dated Receivables comprise greater than forty percent (40%) of
all Receivables of the Borrower or Alliance.
Without limiting the foregoing, (i) Receivables of the Borrower or Alliance
which are acquired pursuant to a Permitted Acquisition shall not be deemed
Eligible Receivables unless and until the Agent and the Required Lenders, after
concluding any due diligence they reasonably deem necessary, shall be satisfied
as to the quality and creditworthiness thereof and that such Receivables would
otherwise meet the standards of eligibility set forth herein (including, without
limitation, perfection and priority of the Agent's security interests in such
Receivables) but for the fact that they were acquired by the Borrower or
Alliance outside of the ordinary course of business and (ii) Receivables
acquired pursuant to such Permitted Acquisition may be deemed Eligible
Receivables from and after such Permitted Acquisition if the foregoing
determinations have been made to the Agent's and the Required Lenders'
satisfaction.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to federal, state and local laws or
regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including but not limited
to the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. (S)(S) 9601 et seq., the Occupational Safety and Health Act of 1970, 29
U.S.C. (S)(S) 651 et seq., the Resource Conservation and Recovery Act of 1976,
42 U.S.C. (S)(S) 6901 et seq., and the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. (S)(S) 136 et seq., in each case including any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder, and any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental Authority
for (a) any liability under Environmental, Health or Safety Requirements of Law,
or (b) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement of
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site Recovery
Act" or "Responsible Property Transfer Act."
"EQUIPMENT" means all of the Borrower's and each of its Subsidiaries'
respective present and future (i) equipment, including, without limitation,
machinery, manufacturing, distribution, selling, data processing and office
equipment, assembly systems, tools, molds, dies, fixtures, appliances,
furniture, furnishings, vehicles, vessels, aircraft, aircraft engines, and trade
fixtures, (ii) other tangible personal property (other than the Borrower's and
each such Subsidiary's respective Inventory), and (iii) any and all accessions,
parts and appurtenances attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements, products and
proceeds thereof.
14
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"EURODOLLAR ADVANCE" means an Advance which bears interest at the
Eurodollar Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the rate determined by the Agent to be the rate at
which deposits in U.S. dollars are offered by First Chicago to first-class banks
in the London interbank market at approximately 11 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Loan and having a maturity
approximately equal to such Interest Period, as adjusted for Reserves.
"EURODOLLAR LOAN" means a Loan, or portion thereof, which bears interest at
the Eurodollar Rate.
"EURODOLLAR RATE" means, with respect to a Eurodollar Loan for the relevant
Interest Period, the Eurodollar Base Rate applicable to such Interest Period
plus the Applicable Eurodollar Margin. The Eurodollar Rate shall be rounded to
the next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"EXCLUDED PROCEEDS" is defined in Section 6.2(G).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"FEES" is defined in Section 6.4(A) hereof.
"FIRST CHICAGO" means The First National Bank of Chicago, in its individual
capacity, and its successors.
"FLOATING RATE" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day plus (ii) the Applicable Floating Rate Margin,
changing when and as the Alternate Base Rate changes.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
"FLOATING RATE LOAN" means a Loan, or portion thereof, which bears interest
at the Floating Rate.
15
"GOVERNMENTAL ACTS" is defined in Section 2.26(A) hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GROSS AMOUNT OF ELIGIBLE INVENTORY" means Eligible Inventory valued at the
lower of cost determined on a first-in-first-out basis (determined in accordance
with Agreement Accounting Principles, consistently applied) or market value less
(i) the value of reserves which have been recorded by the Borrower or Alliance,
as applicable, with respect to obsolete, slow-moving or excess Inventory and
(ii) such other reserves as the Agent elects to establish in accordance with its
reasonable credit judgment (which credit judgment shall be exercised in a manner
that is not arbitrary or capricious).
"GROSS AMOUNT OF ELIGIBLE RECEIVABLES" means the face amount outstanding
under the Eligible Receivables, determined in accordance with Agreement
Accounting Principles, consistently applied less (i) all finance charges, late
fees and other fees that are unearned, (ii) the value of any accrual which has
been recorded by the Borrower or Alliance with respect to downward price
adjustments, and (iii) such other reserves as the Agent elects to establish in
accordance with its reasonable credit judgment (which credit judgment shall be
exercised in a manner that is not arbitrary or capricious).
"GROSS NEGLIGENCE" means recklessness, the absence of the slightest care or
the complete disregard of consequences. Gross Negligence does not mean the
absence of ordinary care or diligence, or an inadvertent act or inadvertent
failure to act. If the term "gross negligence" is used with respect to the Agent
or any Lender or any indemnitee in any of the other Loan Documents, it shall
have the meaning set forth herein.
"HOLDERS OF SECURED OBLIGATIONS" is defined as set forth in the Security
Agreement.
"HOLDINGS" means SCP Pool Corporation, a Delaware corporation (formerly
known as SCP Holding Corp.), and its successors and assigns, including a debtor-
in-possession on behalf of Holdings. From and after the date on which Holdings
changed its name from SCP Holding Corp. to SCP Pool Corporation all references
in this Agreement and each of the other Loan Documents to "Holdings" or "SCP
Holding Corp." shall be references to SCP Pool Corporation (formerly known as
SCP Holding Corp.).
"HOLDINGS' DIVIDENDS" is defined in Section 6.3(F)(i).
"HOLDINGS GUARANTY" means that certain Guaranty entered into between
Holdings and the Agent dated as of the Closing Date, as the same may from time
to time be amended, modified, supplemented or restated.
16
"HOLDINGS SUBORDINATED DEBT" means (a) the Convertible Subordinated
Promissory Note of Holdings issued as of December 31, 1993 to the SCP Seller in
the original principal amount of $125,000; and (b) the Orcal Notes,
$1,766,667.00 of which is outstanding as of the Closing Date.
"HOLDINGS SUBORDINATION AGREEMENT" has the meaning given that term in
Section 6.3(A).
"INDEBTEDNESS" of any Person means, without duplication, (i) any
indebtedness of such Person, contingent or otherwise, in respect of borrowed
money including all principal, interest, fees and expenses with respect thereto
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), or evidenced by bonds, notes, acceptances,
debentures or other instruments or letters of credit (or reimbursement
obligations with respect thereto, including, in the case of the Borrower,
Reimbursement Obligations under the Letters of Credit) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to Capitalized Leases) or services, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles (except that
any such balance that constitutes a trade payable and/or an accrued liability
arising in the ordinary course of business shall not be considered
Indebtedness); and (ii) to the extent not otherwise included, (a) interest
accruing after the commencement of any bankruptcy, insolvency, receivership or
similar proceedings and other interest that would have accrued but for the
commencement of such proceedings, (b) any Capitalized Lease Obligations, (c) the
maximum fixed repurchase price of any Redeemable Stock, (d) obligations, whether
or not assumed, secured by Liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, (e) Contingent
Obligations (exclusive of whether such items would appear upon such balance
sheet) and (f) Rate Hedging Obligations. For purposes of the preceding sentence,
the maximum fixed repurchase price of any Redeemable Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Agreement, provided that if such Redeemable Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Redeemable
Stock. The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such Contingent
Obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the Indebtedness
secured.
"INDEMNIFIED MATTERS" is defined in Section 9.7(B) hereof.
"INDEMNITEES" is defined in Section 9.7(B) hereof.
"INTERCOMPANY INDEBTEDNESS" is defined in Section 9.14 hereof.
"INTERCOMPANY LOANS" is defined in Section 6.3(A)(iii) hereof.
"INTERCOMPANY NOTE" is defined in Section 6.3(A)(iii) hereof.
17
"INTERCOMPANY SECURITY AGREEMENT" is defined in Section 6.3(A)(iii) hereof.
"INTEREST EXPENSE" is defined in Section 6.4(A) hereof.
"INTEREST EXPENSE COVERAGE RATIO" is defined in Section 6.4(B) hereof.
"INTEREST PERIOD" means, with respect to a Eurodollar Loan, a period of one
(1), two (2), three (3) or six (6) months commencing on a Business Day selected
by the Borrower pursuant to this Agreement. Such Interest Period shall end on
(but exclude) the day which corresponds numerically to such date one, two, three
or six months thereafter; provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If an Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"INTEREST RATE AGREEMENTS" is defined in Section 6.3(R) hereof.
"INVENTORY" shall mean any and all goods, including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter acquired
by the Borrower or Alliance which are held for sale or lease, furnished under
any contract of service or held as raw materials, work in process or supplies,
and all materials used or consumed in the Borrower's or Alliance's business, and
shall include such property the sale or other disposition of which has given
rise to Receivables and which has been returned to or repossessed or stopped in
transit by the Borrower or Alliance.
"INVESTMENT" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of stock, partnership interest, membership, ownership
or other equity interests, notes, debentures or other securities, or of a
beneficial interest in stock, partnership interest, membership, ownership or
other equity interests, notes, debentures or other securities, issued by any
other Person, (ii) any purchase by that Person of all or substantially all of
the assets of a business conducted by another Person, and (iii) any loan,
advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances to
employees and similar items made or incurred in the ordinary course of business)
or ca pital contribution by that Person to any other Person, including all
Indebtedness to such Person arising from a sale of property by such Person other
than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeding to the
functions thereof.
"L/C DRAFT" means a draft drawn on the Agent pursuant to a Letter of
Credit.
"L/C INTEREST" shall have the meaning ascribed to such term in Section
2.22.
"L/C OBLIGATIONS" means, without duplication, an amount equal to the sum of
(i) the aggregate of the amount then available for drawing under each of the
Letters of Credit, (ii) the face amounts of
18
all outstanding L/C Drafts corresponding to the Letters of Credit, which L/C
Drafts have been accepted by the Agent, (iii) the aggregate face amount of all
Letters of Credit requested by the Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied) and (iv) the aggregate
outstanding amount of all Reimbursement Obligations at such time.
"LENDERS" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"LETTER OF CREDIT " means any letter of credit previously issued under the
Original Credit Agreement or to be issued by the Agent pursuant to Section 2.21
hereof.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(S)" means, with respect to a Lender, such Lender's portion of any
Advance made pursuant to Section 2.1 or Section 2.2, as applicable, and
collectively all Term Loans and Revolving Loans, whether made or continued as or
converted to Floating Rate Loans or Eurodollar Loans.
"LOAN ACCOUNT" is defined in Section 2.15(F) hereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Holdings Guaranty and
the other Collateral Documents and all other documents, instruments and
agreements executed in connection therewith or contemplated thereby, as the same
may be amended, restated or otherwise modified and in effect from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Borrower, or the Borrower and its Subsidiaries, taken as a
whole, (b) the ability of the Borrower or any of its Subsidiaries to perform
their respective obligations under the Loan Documents in any material respect,
or (c) the ability of the Lenders or the Agent to enforce in any material
respect the Obligations or their rights with respect to the Collateral.
"MAXIMUM REVOLVING CREDIT AMOUNT" means, at any particular time, (i) the
lesser of (A) the Aggregate Revolving Loan Commitment at such time and (B) the
Borrowing Base at such time minus (ii) the amount of any Decision Reserve in
effect at such time.
"MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is party to which more than one employer is
obligated to make contributions.
19
"NET CASH PROCEEDS" means, with respect to any Asset Sale of any Person,
(a) cash (freely convertible into U.S. dollars) received by such Person or any
Subsidiary of such Person from such Asset Sale (including cash received as
consideration for the assumption or incurrence of liabilities incurred in
connection with or in anticipation of such Asset Sale), after (i) provision for
all income or other taxes measured by or resulting from such Asset Sale, (ii)
payment of all brokerage commissions and other fees and expenses related to such
Asset Sale, (iii) all amounts used to repay Indebtedness secured by a Lien on
any asset disposed of in such Asset Sale or which is or may be required (by the
express terms of the instrument governing such Indebtedness) to be repaid in
connection with such Asset Sale (including payments made to obtain or avoid the
need for the consent of any holder of such Indebtedness), and (iv) deduction of
appropriate amounts to be provided by such Person or a Subsidiary of such Person
as a reserve, in accordance with Agreement Accounting Principles, against any
liabilities associated with the assets sold or disposed of in such Asset Sale
and retained by such Person or a Subsidiary of such Person after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with the assets sold or disposed of in
such Asset Sale; and (b) cash payments in respect of any Indebtedness, Capital
Stock, ownership or membership interest or other consideration received by such
Person or any Subsidiary of such Person from such Asset Sale upon receipt of
such cash payments by such Person or such Subsidiary.
"NET DISTRIBUTION" is defined in Section 6.3(F).
"NET INCOME" is defined in Section 6.4(A) hereof.
"NON PRO RATA LOAN" is defined in Section 8.2 hereof.
"NOTES" means the Revolving Notes and the Term Notes.
"NOTICE OF ASSIGNMENT" is defined in Section 12.3(B) hereof.
"OBLIGATIONS" means all Loans, Reimbursement Obligations, obligations,
advances, debts, liabilities, covenants and duties owing by the Borrower to the
Agent, any Lender, any Affiliate of the Agent or any Lender, or any Indemnitee,
of any kind or nature, present or future, arising under this Agreement, the
Notes, the Collateral Documents, or any other Loan Document, whether or not
evidenced by any note, guaranty or other instrument, whether or not for the
payment of money, whether arising by reason of an extension of credit, loan,
guaranty, indemnification, or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired. The term
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and disbursements, paralegals' fees (in each case whether or not allowed),
and any other sum chargeable to the Borrower under this Agreement or any other
Loan Document.
"ORCAL NOTES" means the Subordinated Promissory Notes dated February 28,
1995 in the aggregate original principal amount of $2,650,000 issued by Holdings
to Ronald Hetzner.
"ORIGINAL CLOSING DATE" means December 31, 1993.
20
"ORIGINAL CREDIT AGREEMENT" means the Credit Agreement dated as of December
31, 1993 among the Borrower, the Lenders and the Agent as the same was amended
prior to the Effective Date.
"OTHER TAXES" is defined in Section 2.15(E)(ii) hereof.
"PARTICIPANTS" is defined in Section 12.2(A) hereof.
"PARENT ENTITY" is defined in Section 6.2(M).
"PAYMENT DATE" means the last Business Day of each month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERMITTED ACQUISITION" is defined in Section 6.3(G) hereof.
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means those Contingent
Obligations of the Borrower and its Subsidiaries identified as such on Schedule
1.1.1 to this Agreement.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement.
"PERMITTED EXISTING INVESTMENTS" means those Investments identified as such
on Schedule 1.1.3 to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Borrower or any
of its Subsidiaries identified as such on Schedule 1.1.4 to this Agreement.
"PERMITTED INVENTORY AND EQUIPMENT SALES" is defined in Section 6.3(B)(iv)
hereof.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means the Indebtedness permitted
pursuant to Section 6.3(A)(ii)(j).
"PERMITTED SUBORDINATED INDEBTEDNESS" means Subordinated Indebtedness
permitted pursuant to Section 6.3(A)(ii)(c) and the Subordinated Intercompany
Indebtedness.
"PERSON" means any natural person, corporation, company, firm, joint
venture, partnership, association, enterprise, trust or other entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.
"PLAN" means an employee pension benefit plan defined in Section 3(3) of
ERISA in respect of which the Borrower or any member of the Controlled Group is,
or within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"PLEDGE AGREEMENT" means that certain Pledge Agreement executed by the
Borrower in favor of the Agent for the benefit of itself and the Holders of
Secured Obligations pursuant to which
21
Borrower has pledged all of the Capital Stock of Alliance as additional security
for the Secured Obligations, as the same may from time to time be amended,
modified, supplemented or restated.
"PRO RATA SHARE" means, with respect to any Lender, the percentage obtained
by dividing (A) the sum of such Lender's Term Loans and Revolving Loan
Commitment at such time (in each case, as adjusted from time to time in
accordance with the provisions of this Agreement) by (B) the sum of the
aggregate amount of all of the Term Loans and the Aggregate Revolving Loan
Commitment at such time; provided, however, if all of the Commitments are
terminated pursuant to the terms of this Agreement, then "Pro Rata Share" means
the percentage obtained by dividing (x) the sum of such Lender's Term Loans and
Revolving Loans by (y) the aggregate amount of all Term Loans and Revolving
Loans .
"PURCHASERS" is defined in Section 12.3(A) hereof.
"RATE HEDGING OBLIGATIONS" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or cross-
currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"RATE OPTION" means the Eurodollar Rate or the Floating Rate.
"RECEIVABLE(S)" means and includes all of the Borrower's and Alliance's
presently existing and hereafter arising or acquired accounts, accounts
receivable, and all present and future rights of the Borrower or Alliance as
applicable, to payment for goods sold or leased or for services rendered (except
those evidenced by instruments or chattel paper), whether or not they have been
earned by performance, and all rights in any merchandise or goods which any of
the same may represent, and all rights, title, security and guaranties with
respect to each of the foregoing, including, without limitation, any right of
stoppage in transit.
"REDEEMABLE STOCK" means any Capital Stock which by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, in whole or in part, prior to the maturity of the Obligations
(including any extensions thereof contemplated by this Agreement), or is, by its
terms or upon the happening of any event, redeemable at the option of the holder
thereof, in whole or in part, prior to the maturity of the Obligations
(including any extensions thereof contemplated by this Agreement).
"REGISTER" is defined in Section 12.3(C) hereof.
22
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by nonbank, nonbroker lenders for the purpose of purchasing
or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of securities for the purpose
of purchasing or carrying margin stock (as defined therein).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stock (as defined therein) applicable to member banks of the Federal Reserve
System.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in Section 2.23 hereof.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including the unrestricted migration of Contaminants
through or in the air, soil, surface water or groundwater.
"RENTALS" is defined in Section 6.4(A) hereof.
"RENTALS RESERVE" is the amount established by the Agent from time to
time approximating three (3) months rent for those leased locations of the
Borrower and Alliance for which landlord agreements have not been obtained under
the terms of the applicable Security Agreement and where the landlord has a lien
which may take priority over the Lien in favor of the Agent. The initial
Rentals Reserve shall be $263,000.
"REPLACEMENT LENDER" is defined in Section 2.20 hereof.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum
23
funding standards of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the aggregate,
are equal to or greater than sixty-six and two-thirds percent (66-2/3%);
provided, however, that, in the event any of the Lenders shall have failed to
fund its Pro Rata Share of any Revolving Loan requested by the Borrower which
such Lenders are obligated to fund under the terms of this Agreement and any
such failure has not been cured, then for so long as such failure continues,
"Required Lenders" means Lenders (excluding all Lenders whose failure to fund
their respective Pro Rata Shares of such Revolving Loans have not been so cured)
whose Pro Rata Shares represent at least sixty-six and two-thirds percent (66-
2/3%) of the aggregate Pro Rata Shares of such Lenders; provided, further,
however, that, in the event that the Commitments have been terminated pursuant
to the terms of this Agreement, "Required Lenders" means Lenders (without regard
to such Lenders' performance of their respective obligations hereunder) whose
aggregate ratable shares (stated as a percentage) of the aggregate outstanding
principal balance of all Loans are equal to or greater than sixty-six and two-
thirds percent (66-2/3%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law,
rule or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act, the Worker
Adjustment and Retraining Notification Act, the Americans with Disabilities Act
of 1990, and any certificate of occupancy, zoning ordinance, building,
environmental or land use requirement or Permit or environmental, labor,
employment, occupational safety or health law, rule or regulation, including
Environmental, Health or Safety Requirements of Law.
"RESERVES" shall mean the maximum reserve requirement, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined or category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Borrower now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock or in any junior class of stock to the holders of
that class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of the Borrower or any of its Subsidiaries now or
hereafter outstanding, (iii) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to any Permitted Subordinated
Indebtedness, (iv) any payment made to redeem, purchase, repurchase or retire,
or to obtain the surrender of, any outstanding warrants, options or other
24
rights to acquire shares of any class of Capital Stock of the Borrower or
any of its Subsidiaries now or hereafter outstanding (v) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of any Permitted Subordinated Indebtedness or any
shares of the capital stock of Holdings, Borrower or any of Borrower's
Subsidiaries or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission and (vi)
any payment of management fees to Holdings, CHS or any of their Affiliates.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount
by which the Maximum Revolving Credit Amount at such time exceeds the Revolving
Credit Obligations.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum
of (i) the outstanding principal amount of the Revolving Loans at such time,
plus (ii) the L/C Obligations at such time.
"REVOLVING LOAN" is defined in Section 2.2.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of
such Lender to make Revolving Loans and to purchase participations in Letters
of Credit not exceeding the amount set forth on Exhibit B to this Agreement
under the heading "Revolving Loan Commitment" opposite its name thereon or as
identified in the Assignment and Acceptance by which it became a Lender, as such
amount may be modified from time to time pursuant to the terms of this Agreement
or to give effect to any applicable assignment under Section 12.3.
"REVOLVING NOTE" means a promissory note, in substantially the form of
Exhibit C hereto, duly executed by the Borrower and payable to the order of a
Lender in the amount of its Revolving Loan Commitment, including any amendment,
restatement modification, renewal or replacement of such Revolving Note.
"RISK BASED CAPITAL GUIDELINES" is defined in Section 3.2 hereof.
"SCP SELLER" means South Central Pool Supply, Inc., a Louisiana
corporation.
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and
(ii) all Rate Hedging Obligations owing to one or more of the Lenders or any
Affiliate of one or more of the Lenders.
"SECURITY AGREEMENT" means that certain Amended and Restated Security
Agreement of even date herewith executed by the Borrower in favor of the Agent
for the benefit of the Holders of Secured Obligations as further amended,
restated or otherwise modified from time to time.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group.
"SPECIFIED DEFAULT" means a Default under any of : (a) Section 7.1(a);
(b) Section 7.1(b)(iii) to the extent such Default relates to a breach of
Section 6.4; (c) Section 7.1(e); (d) Section 7.1(f); (e) Section 7.1(g); (f)
Section 7.1(i); (g) Section 7.1(m); or (h) Section 7.1(n).
25
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Borrower or
any Subsidiary of Borrower the payment of which is subordinated to payment of
the Secured Obligations to the written satisfaction of the Required Lenders,
including, without limitation, the Subordinated Intercompany Indebtedness.
"SUBORDINATED INTERCOMPANY INDEBTEDNESS" has the meaning given to that term
in Section 6.3(A).
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"TAXES" is defined in Section 2.15(E)(i) hereof.
"TERMINATION DATE" means the earlier of (a) December 31, 2000 and (b)
the date of termination of the Commitments pursuant to Section 2.6 or Section
8.1.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Borrower or
such Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Borrower or any member of the Controlled Group; (iii)
the imposition of an obligation on the Borrower or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Benefit Plan; or (vi) the partial or complete
withdrawal of the Borrower or any member of the Controlled Group from a
Multiemployer Plan.
"TERM LOAN" is defined in Section 2.1(a).
"TERM LOAN TERMINATION DATE" means December 31, 2000.
"TERM NOTES" means the promissory notes, in substantially the form of
Exhibit D hereto, duly executed by the Borrower and payable to the order of a
Lender in the amount of its Term Loans, including any amendment, restatement
modification, renewal or replacement of such promissory note.
"TRANSACTION DOCUMENTS" means the Loan Documents, the documents evidencing
the Holdings Subordinated Debt, the documents evidencing the Subordinated
Intercompany Indebtedness, the Holdings Subordination Agreement and the
documents, instruments and agreements entered into
26
in connection with any Permitted Acquisition, including, without limitation, in
connection with the "SCP Acquisition", the "Aqua Fab Acquisition," the "Alliance
Acquisition", the "Orcal Acquisition" (each as defined in the Original Credit
Agreement) and in connection with the Acquisitions of certain of the assets or
the stock of Aman Enterprises, Inc., Pool Mart of Nevada, Inc. and Steven
Portnoff Corporation.
"TRANSFEREE" is defined in Section 12.5 hereof.
"TYPE" means, with respect to any Loan, its nature as a Floating Rate Loan
or a Eurodollar Loan.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"UPSTREAM GUARANTEE" is defined in Section 6.3(E).
"WORKING CAPITAL" means, as at any date of determination, the excess, if
any, of (i) the Borrower's consolidated current assets, except cash and Cash
Equivalents, over (ii) the Borrower's consolidated current liabilities, except
current maturities of long-term debt and Revolving Credit Obligations as of such
date and all accrued interest as of such date.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with generally accepted accounting
principles in existence as of the Original Closing Date. Any references to
Subsidiaries of the Borrower set forth herein shall (i) with respect to
representations and warranties which deal with historical matters be deemed to
include all former Subsidiaries of any seller in connection with any Permitted
Acquisition previously consummated or consummated after the date of this
Agreement; and (ii) shall not be deemed a consent by the Lenders to the
formation of any Subsidiaries by the Borrower.
1.2 Subsidiary References. The existence throughout the Agreement of
references to the Borrower's Subsidiaries is for a matter of convenience only
and shall not in any way be construed as consent by the Agent or any Lender to
the establishment, maintenance or acquisition of any Subsidiary other than
Alliance.
1.3 Supplemental Disclosure. At any time at the request of the Agent
and at such additional times as the Borrower determines, the Borrower shall
supplement each schedule or representation herein or in the other Loan Documents
with respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in such schedule or as an exception to such representation or which is
necessary to correct any information in such schedule or representation which
has been rendered inaccurate thereby. If any such supplement to such schedule
or representation discloses the existence or occurrence of events, facts or
circumstances which are restricted or prohibited by the terms of this Agreement
or any other Loan Documents, such supplement to such schedule or representation
shall not be deemed an amendment thereof unless expressly consented to in
writing by Agent and the Required Lenders, and
27
no such amendments, except as the same may be consented to in a writing which
expressly includes a waiver, shall be or be deemed a waiver by the Agent or any
Lender of any Default disclosed therein. Any items disclosed in any such
supplemental disclosures shall be included in the calculation of any baskets,
limits or similar restrictions contained in this Agreement or any other Loan
Document.
1.4 Amendment and Restatement of Original Credit Agreement. The Borrower,
the Lenders and the Agent agree that, upon (i) the execution and delivery by
each of the parties hereto of this Agreement and (ii) satisfaction of the
conditions set forth in Sections 4.1 and 4.2, the terms and provisions of the
Original Credit Agreement shall be and hereby are amended, superseded and
restated in their entirety by the terms and provisions of this Agreement. This
Agreement is not intended to and shall not constitute a novation. All Loans made
and Secured Obligations incurred under the Original Credit Agreement which are
outstanding on the Effective Date shall continue as Loans and Obligations under
(and shall be governed by the terms of) this Agreement. Without limiting the
foregoing, (a) all Letters of Credit issued for the account of the Borrower
under the Original Credit Agreement which remain outstanding on the Effective
Date shall continue as Letters of Credit under (and shall be governed by the
terms of) this Agreement and (b) all Secured Obligations consisting of Rate
Hedging Obligations incurred under Interest Rate Agreements with any Lender or
any Affiliate of any Lender which are outstanding on the Effective Date shall
continue as Secured Obligations under this Agreement and the other Loan
Documents.
ARTICLE II: THE CREDITS
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2.1. Term Loans. (a) Amount of Term Loans. Prior to the Effective Date,
term loans were previously made to the Borrower under the Original Credit
Agreement in the aggregate principal amount of Twenty Million and no/100 dollars
($20,000,000), the principal balance of which has been reduced to $9,825,554.42
as of the date of this Agreement (such outstanding loans being hereinafter
referred to as the "TERM LOANS").
(b) Repayment of the Term Loans.
---------------------------
(i) The Term Loans shall be repayable in twenty (20) consecutive
quarterly installments payable on the last day of each calendar quarter
commencing June 30, 1996 and continuing thereafter until September 30, 2000
and a final installment on the Term Loan Termination Date, and the Term
Loans shall be permanently reduced by the amount of each installment on the
date payment thereof is required to be made hereunder. The installments
shall be in the aggregate amount set forth below:
Installment Date Installment Amount
---------------- ------------------
June 30, 1996 $ 500,000
September 30, 1996 $ 500,000
December 31, 1996 $ 500,000
March 31, 1997 $ 500,000
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June 30, 1997 $ 500,000
September 30, 1997 $ 500,000
December 31, 1997 $ 500,000
March 31, 1998 $ 525,000
June 30, 1998 $ 525,000
September 30, 1998 $ 525,000
December 31, 1998 $ 525,000
March 31, 1999 $ 525,000
June 30, 1999 $ 525,000
September 30, 1999 $ 525,000
December 31, 1999 $ 525,000
29
Installment Date Installment Amount
---------------- ------------------
March 31, 2000 $ 525,000
June 30, 2000 $ 525,000
September 30, 2000 $ 525,000
December 31, 2000 The outstanding principal balance
Notwithstanding the foregoing, the final installment on the Term Loan
Termination Date shall be in the amount of the then outstanding
principal balance of the Term Loans. No installment of any Term Loan
shall be reborrowed once repaid. In addition, the then outstanding
principal balance of all of the Term Loans shall be due and payable on
the Termination Date.
(ii) In addition to the scheduled payments on the Term Loans, the
Borrower may make the voluntary prepayments described in Section
2.5(A) for credit against the scheduled payments on the Term Loans
pursuant to Section 2.5(A) and shall make the mandatory prepayments
prescribed in Section 2.5(B), for credit against such scheduled
payments on the Term Loans pursuant to Section 2.5(B).
2.2 Revolving Loans. Upon the satisfaction of the conditions
precedent set forth in Sections 4.1 and 4.2 hereof, from and including the
date of this Agreement and prior to the Termination Date, each Lender
severally agrees, on the terms and conditions set forth in this Agreement,
to make revolving loans to the Borrower from time to time in dollars in an
amount not to exceed such Lender's Pro Rata Share of Revolving Credit
Availability at such time (each individually, a "REVOLVING LOAN" and,
collectively, the "REVOLVING LOANS"); provided, however, at no time shall
the Revolving Credit Obligations exceed the Maximum Revolving Credit
Amount. Subject to the terms of this Agreement, the Borrower may borrow,
repay and reborrow Revolving Loans at any time prior to the Termination
Date. The Revolving Loans made on the Original Closing Date shall initially
be Floating Rate Loans and thereafter may be continued as Floating Rate
Loans or converted into Eurodollar Loans in the manner provided in Section
2.11 and subject to the other conditions and limitations therein set forth
and set forth in this Article II. On the Termination Date, the Borrower
shall repay in full the outstanding principal balance of the Revolving
Loans.
2.3 Ratable Loans. Each Advance under Section 2.2 shall consist of
Revolving Loans made by each Lender ratably in proportion to such Lender's
respective Pro Rata Share.
2.4 Rate Options for all Advances. The Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof, selected by the
Borrower in accordance with Section 2.11. The Borrower may select, in
accordance with Section 2.11, Rate Options and Interest Periods applicable to
portions of the Revolving Loans and the Term Loans; provided that there shall
be no more than six (6) Interest Periods in effect with respect to all of the
Loans at any time.
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2.5 Optional Payments; Mandatory Prepayments.
----------------------------------------
(A) Optional Payments. Subject to payment of all amounts required pursuant
to Section 3.4, Borrower may from time to time repay or prepay, without further
penalty or premium all or any part of outstanding Floating Rate Advances and all
of any outstanding Eurodollar Rate Advance. Unless the aggregate outstanding
principal balance of the Term Loans is to be prepaid in full, voluntary
prepayments of the Term Loans shall be in an aggregate minimum amount of
$500,000 and integral multiples of $250,000 in excess of that amount. Each
voluntary prepayment of the Term Loan shall be applied to the unpaid
installments of the Term Loan in inverse order of maturity.
(B) Mandatory Prepayments.
---------------------
(i) Mandatory Prepayments of Term Loans.
-----------------------------------
(a) Upon the consummation of any Asset Sale by Holdings, the Borrower
or any Subsidiary of Borrower (other than the Permitted Inventory and Equipment
Sales) the Net Cash Proceeds of which are greater than $500,000, within three
(3) Business Days after Holdings', the Borrower's or any of its Subsidiaries'
(i) receipt of any Net Cash Proceeds from any such Asset Sale, or (ii)
conversion to cash or Cash Equivalents of non-cash proceeds (whether principal
or interest and including securities, release of escrow arrangements or lease
payments) received from any Asset Sale, the Borrower shall make or cause to be
made a mandatory prepayment of the Obligations in an amount equal to (y) one
hundred percent (100%) of such Net Cash Proceeds or such proceeds converted from
non-cash to cash or Cash Equivalents in the case of Asset Sales other than in
connection with the issuance of Capital Stock and (z) seventy-five percent (75%)
of such Net Cash Proceeds or such proceeds converted from non-cash to cash or
Cash Equivalents in the case of Asset Sales consisting of the issuance of
Capital Stock.
(b) Within two (2) Business Days after receipt by the Borrower or
any of its Subsidiaries of any proceeds of Indebtedness permitted by Section
6.3(A)(ii)(c), the Borrower shall make or cause to be made a mandatory
prepayment in an amount equal to one-hundred percent (100%) of such proceeds of
Indebtedness.
(c) Nothing in this Section 2.5(B)(i) shall be construed to constitute
the Lenders' consent to any transaction referred to in clauses (a) and (c) above
which is not expressly permitted by the terms of this Agreement.
(d) Each mandatory prepayment required by clauses (a) and (b) of this
Section 2.5(B)(i) shall be referred to herein as a "DESIGNATED PREPAYMENT".
Designated Prepayments shall be allocated and applied to the Obligations as
follows:
(I) the amount of each Designated Prepayment shall be applied to
the unpaid installments of the Term Loans in the inverse order of maturity; and
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(II) following the payment in full of the Term Loans, the amount
of each Designated Prepayment shall be applied to repay Revolving
Loans (but shall reduce Revolving Loan Commitments only at the option
of the Required Lenders) and following the payment in full of the
Revolving Loans, the amount of each Designated Prepayment shall be
applied first to interest on the Reimbursement Obligations, then to
principal on the Reimbursement Obligations, then to fees on account of
Letters of Credit and then, to the extent any L/C Obligations are
contingent, deposited with the Agent as cash collateral in respect of
such L/C Obligations.
(e) On the date any Designated Prepayment is received by the Agent,
such prepayment shall be applied (unless the Borrower shall have designated
an alternative application in writing which alternative application shall
be subject to payment of all amounts required pursuant to Section 3.4)
first to Floating Rate Loans and to any Eurodollar Loans maturing on such
date. The Agent shall hold the remaining portion of such Designated
Prepayment as cash collateral in an interest bearing deposit account and
shall apply funds from such account to subsequently maturing Eurodollar
Loans in order of maturity.
(ii) Mandatory Prepayments of Revolving Loans. In addition to
repayments under Section 2.5(B)(i)(d)(III), immediately, if the Revolving Credit
Obligations are greater than the Maximum Revolving Credit Amount, the Borrower
shall immediately make a mandatory prepayment of the Obligations in an amount
equal to such excess. In addition, if the Revolving Credit Availability is at
any time less than the amount of contingent L/C Obligations outstanding at any
time, the Borrower shall deposit cash collateral with the Agent in an amount
equal to the amount by which such L/C Obligations exceed such Revolving Credit
Availability.
2.6 Reduction of Commitments. The Borrower may permanently reduce the
Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an aggregate minimum amount of $500,000 and integral multiples of
$250,000 in excess of that amount, upon at least three Business Days' written
notice to the Agent, which notice shall specify the amount of any such
reduction; provided, however, that the amount of the Aggregate Revolving Loan
Commitment may not be reduced below the aggregate principal amount of the
outstanding Revolving Credit Obligations. All accrued commitment fees shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
2.7 Method of Borrowing. Not later than 2:00 p.m. (Chicago time) on each
Borrowing Date, each Lender shall make available its Revolving Loan or Revolving
Loans, in funds immediately available in Chicago to the Agent at its address
specified pursuant to Article XIII hereof. The Agent will promptly make the
funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
2.8 Determination of Applicable Margins, Applicable Letter of Credit Fee
--------------------------------------------------------------------
and Applicable Commitment Fee.
- -----------------------------
32
(a) Definitions. As used in this Section 2.8 and in this Agreement,
the following terms shall have the following meanings:
"Applicable Margins", "Applicable Commitment Fee" and "Applicable
Letter of Credit Fee" shall mean the Applicable Floating Rate Margin
and/or Applicable Eurodollar Margin, with respect to Loans and the
Applicable Commitment Fee and/orApplicable Letter of Credit Fee, with
respect to fees payable as the case may be. The Applicable Margins
shall be determined, in accordance with the provisions of this Section
2.8, by reference to the following:
===============================================================================
LEVERAGE APPLICABLE APPLICABLE APPLICABLE APPLICABLE
RATIO EURODOLLAR FLOATING RATE COMMITMENT LETTER OF
RATE MARGIN MARGIN FEE CREDIT FEE
===============================================================================
Less-than 2.50 to 1.25% 0.00% 0.375% 1.25%
1.00
- -------------------------------------------------------------------------------
Greater or equal 2.50 to
1.00 and Less-than 1.50% 0.00% 0.375% 1.50%
3.00 to 1.00
- -------------------------------------------------------------------------------
Greater or equal 3.00 to
1.00 and Less-than 1.75% 0.25% 0.50% 1.75%
3.50 to 1.00
- -------------------------------------------------------------------------------
Greater or equal 3.50 2.00% 0.50% 0.75% 2.00%
1.00
===============================================================================
"Leverage Ratio" shall have the meaning ascribed to that term in
---------------------------------------------------------------
Section 6.4(D).
--------------
(b) Determination of Applicable Margins, Applicable Letter of Credit
-----------------------------------------------------------------
Fee and Applicable Commitment Fee.
- ---------------------------------
(i) The applicable Margin in respect of any loan, the Applicable
Letter of Credit Fee payable under Section 2.25 and the Applicable Commitment
Fee payable under Section 2.15(c) shall be determined by reference to the tables
set forth in paragraph (a) above, as applicable, on the basis of the Leverage
Ratio (calculated (a) with respect to Revolving Loans, the average of the
outstanding amounts as of the last day of each quarter for the four quarters in
the period then ended and (b) with respect to the Term Loans and other
Indebtedness, the outstanding
33
amount as of the end of the quarter then ended) determined by reference to
the most recent financial statements delivered pursuant to Section
6.1(A)(ii) or 6.1(A)(iii).
(ii) Upon receipt of the financial statements delivered pursuant to
Section 6.1(A)(ii) or Section 6.1(A)(iii), as applicable, the Applicable
Margins for all outstanding Obligations, the Applicable Letter of Credit
Fee and Applicable Commitment Fee shall be adjusted, such adjustment being
effective on the fifth (5th) Business Day after receipt of such financial
statements and the Compliance Certificate to be delivered in connection
therewith; provided, however, if the Borrower shall not have timely
delivered such financial statements in accordance with Section 6.1(A)(ii)
or Section 6.1(A)(iii), as applicable, beginning with the date upon which
such financial statements should have been delivered and continuing until
such financial statements are delivered, it shall be assumed for purposes
of determining the Applicable Margins, the Applicable Commitment Fee and
the Applicable Letter of Credit Fee that the Leverage Ratio was greater
than 3.50 to 1.0.
2.9 Method of Selecting Types and Interest Periods for Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable to each Advance from time to time. The
Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not
later than 11:00 a.m. (Chicago time) on the Borrowing Date of each Floating Rate
Advance and three Business Days before the Borrowing Date for each Eurodollar
Advance, specifying: (i) the Borrowing Date (which shall be a Business Day) of
such Advance; (ii) the aggregate amount of such Advance; (iii) the Type of
Advance selected; and (iv) in the case of each Eurodollar Advance, the Interest
Period applicable thereto. The Borrower shall select Interest Periods so that,
to the best of the Borrower's knowledge, it will not be necessary to prepay all
or any portion of any Eurodollar Advance prior to the last day of the applicable
Interest Period in order to make mandatory prepayments as required pursuant to
the terms hereof. Each Floating Rate Advance shall bear interest from and
including the later of (i) the date of the making of such Advance or (ii) the
Effective Date to (but not including) the date of repayment thereof at the
Floating Rate, changing when and as such Floating Rate changes. All Obligations
(other than Advances) shall bear interest from and including the date such
Obligation is payable under the terms of this Agreement or any other Loan
Document to (but not including) the date of payment thereof at the Floating
Rate, changing when and as such Floating Rate changes. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Loan or
other Obligations which bear interest by reference to the Floating Rate will
take effect simultaneously with each change in the Alternate Base Rate. Each
Eurodollar Advance shall bear interest from and including the later of (i) the
first day of the Interest Period applicable thereto or (ii) the Effective Date
to (but not including) the last day of such Interest Period at the interest rate
determined as applicable to such Eurodollar Advance, changing only with respect
to the Applicable Eurodollar Margin to take effect simultaneously with each
change in the Applicable Eurodollar Margin. Interest with respect to Advances
made prior to the Effective Date shall be calculated and paid in accordance with
the terms of the Original Credit Agreement for periods prior to the Effective
Date.
2.10 Minimum Amount of Each Advance. Each Eurodollar Advance shall be in
the minimum amount of $1,000,000 (and in multiples of $500,000 if in excess
thereof), and each Floating Rate Advance shall be in the minimum amount of
$300,000 (and in multiples of $75,000 if in excess
34
thereof), provided, however, that any Floating Rate Advance may be in the amount
of the unused Aggregate Revolving Loan Commitment.
2.11 Method of Selecting Types and Interest Periods for Conversion and
-----------------------------------------------------------------
Continuation of Advances.
- ------------------------
(A) Right to Convert. The Borrower may elect from time to time, subject
to the provisions of Section 2.4 and Section 2.11, to convert all or any part of
a Loan of any Type into any other Type or Types of Loans; provided that any
conversion of any Eurodollar Advance shall be made on, and only on, the last day
of the Interest Period applicable thereto.
(B) Automatic Conversion and Continuation. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurodollar Loans. Eurodollar Loans shall continue as Eurodollar
Loans until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Loans shall be automatically converted into Floating Rate
Loans unless the Borrower shall have given the Agent notice in accordance with
Section 2.11(D) requesting that, at the end of such Interest Period, such
Eurodollar Loans continue as a Eurodollar Loan.
(C) No Conversion Post-Default or Post-Unmatured Default. Notwithstanding
anything to the contrary contained in Section 2.11(A) or Section 2.11(B), no
Loan may be converted into or continued as a Eurodollar Loan (except with the
consent of the Required Lenders) when any Default or Unmatured Default has
occurred and is continuing.
(D) Conversion/Continuation Notice. The Borrower shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a
Floating Rate Loan into a Eurodollar Loan or continuation of a Eurodollar Loan
not later than 11:00 a.m. (Chicago time) three Business Days prior to the date
of the requested conversion or continuation, specifying: (1) the requested date
(which shall be a Business Day) of such conversion or continuation; (2) the
amount and Type of the Loan to be converted or continued; and (3) the amount of
Eurodollar Loan(s) into which such Loan is to be converted or continued and the
duration of the Interest Period applicable thereto.
2.12 Default Rate. After the occurrence and during the continuance of a
Specified Default, at the option of the Agent or at the direction of the
Required Lenders, the interest rate(s) applicable to the Obligations and the
letter of credit fee payable under Section 2.25 with respect to Letters of
Credit shall be increased by two percent (2.0%) above the Floating Rate,
Eurodollar Rate or Applicable Letter of Credit Fee, as applicable.
2.13 Method of Payment. All payments of principal, interest, and fees
hereunder shall be made, without setoff, deduction or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to Article XIII, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by 2:00 p.m. (Chicago time)
on the date when due and shall be made ratably among the Lenders (unless such
amount is not to be shared ratably in accordance with the terms hereof). Each
payment delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified pursuant to Article XIII or at any Lending
Installation specified in a
35
notice received by the Agent from such Lender. The Agent is hereby authorized to
charge the account of the Borrower maintained with First Chicago for each
payment of principal, interest, fees and other Obligations as it becomes due
hereunder.
2.14 Notes, Telephonic Notices. Each Lender is hereby authorized to record
the principal amount of each of its Loans and each repayment with respect to its
Loans on the schedule attached to its respective Note; provided, however, that
the failure to so record shall not affect the Borrower's obligations under any
such Note. The Borrower hereby authorizes the Lenders and the Agent to extend
Advances, effect selections of Types of Advances and to transfer funds based on
telephonic notices made by any person or persons the Agent or any Lender in good
faith believes to be acting on behalf of the Borrower. The Borrower agrees to
deliver promptly to the Agent a written confirmation signed by an Authorized
Officer, if such confirmation is requested by the Agent or any Lender, of each
telephonic notice. If the written confirmation differs in any material respect
from the action taken by the Agent and the Lenders, (i) the telephonic notice
shall govern absent manifest error and (ii) the Agent or the Lender, as
applicable, shall promptly notify the Authorizing Officer who provided such
confirmation of such difference.
2.15 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest
and Fee Basis; Taxes; Loan and Control Accounts.
(A) Promise to Pay. The Borrower hereby unconditionally promises to pay
when due the principal amount of each Loan which is made to it and all other
Obligations incurred by it, and to pay all unpaid interest accrued thereon, in
accordance with the terms of this Agreement and Notes.
(B) Interest Payment Dates. Interest accrued on each Floating Rate Loan
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof and at maturity (whether by acceleration or
otherwise). Interest accrued on each Eurodollar Loan shall be payable on the
last day of its applicable Interest Period, on any date on which the Eurodollar
Loan is prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Eurodollar Loan having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (i) on the last day of each calendar
month, commencing on the first such day following the incurrence of such
Obligation, (ii) upon repayment thereof in full or in part, and (iii) if not
theretofore paid in full, at the time such other Obligation becomes due and
payable (whether by acceleration or otherwise).
(C) Commitment Fees. The Borrower shall pay to the Agent, for the account
of the Lenders, in accordance with their Pro Rata Shares, a commitment fee
accruing at the rate of the Applicable Commitment Fee per annum from and after
the Original Closing Date until the Revolving Credit Termination Date on the
average daily outstanding amount by which (A) the maximum amount of the
Aggregate Revolving Loan Commitment exceeds (B) the Revolving Credit Obligations
minus the aggregate of such Borrower's Letter of Credit Obligations relating to
outstanding Commercial Letters of Credit. All such commitment fees payable under
this clause (C) shall be payable quarterly in arrears on the last calendar day
of each March, June, September and December occurring after the Original Closing
Date and, in addition, on the Revolving Credit Termination Date.
36
(D) Interest and Fee Basis. Interest and fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest shall be payable
for the day an Obligation is incurred but not for the day of any payment on the
amount paid if payment is received prior to 2:00 p.m. (Chicago time) at the
place of payment. If any payment of principal of or interest on a Loan or any
payment of any other Obligations shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
(E) Taxes.
-----
(i) Any and all payments by the Borrower hereunder shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges, or withholdings, and all liabilities
with respect thereto including those arising after the Original Closing
Date as a result of the adoption of or any change in any law, treaty, rule,
regulation, guideline or determination of a Governmental Authority or any
change in the interpretation or application thereof by a Governmental
Authority but excluding, in the case of each Lender and the Agent, such
taxes (including income taxes, franchise taxes and branch profit taxes) as
are imposed on or measured by such Lender's or Agent's, as the case may be,
income by the United States of America or any Governmental Authority of the
jurisdiction under the laws of which such Lender or Agent, as the case may
be, is organized or maintains a Lending Installation (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings, and liabilities
which the Agent or a Lender determines to be applicable to this Agreement,
the other Loan Documents, the Revolving Loan Commitments, the Loans or the
Letters of Credit being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under the other Loan Documents to any Lender
or the Agent, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable
to additional sums payable under this Section 2.15(E)) such Lender or Agent
(as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make
such deductions, and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law. If a withholding tax of the United States of America or any
other Governmental Authority shall be or become applicable (y) after the
Original Closing Date, to such payments by the Borrower made to the Lending
Installation or any other office that a Lender may claim as its Lending
Installation, or (z) after such Lender's selection and designation of any
other Lending Installation, to such payments made to such other Lending
Installation, such Lender shall use reasonable efforts to make, fund and
maintain its Loans through another Lending Installation of such Lender in
another jurisdiction so as to reduce the Borrower's liability hereunder, if
the making, funding or maintenance of such Loans through such other Lending
Installation of such Lender does not, in the judgment of such Lender,
otherwise adversely affect such Loans, or obligations under the Revolving
Loan Commitments or such Lender.
(ii) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges,
or similar levies which arise from any payment made hereunder, from the
issuance of Letters of Credit hereunder, or from
37
the execution, delivery or registration of, or otherwise with respect to,
this Agreement, the other Loan Documents, the Revolving Loan Commitments,
the Loans or the Letters of Credit (hereinafter referred to as "Other
Taxes").
(iii) The Borrower will indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any Governmental Authority on amounts
payable under this Section 2.15(E)) paid by such Lender or the Agent (as
the case may be) and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days after the date such
Lender or the Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender or the Agent
under this Section 2.15(E) submitted to the Borrower and the Agent (if a
Lender is so submitting) by such Lender or the Agent shall show in
reasonable detail the amount payable and the calculations used to determine
such amount and shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. With respect to such deduction or
withholding for or on account of any Taxes and to confirm that all such
Taxes have been paid to the appropriate Governmental Authorities, the
Borrower shall promptly (and in any event not later than thirty (30) days
after receipt) furnish to each Lender and the Agent such certificates,
receipts and other documents as may be required (in the judgment of such
Lender or the Agent) to establish any tax credit to which such Lender or
the Agent may be entitled.
(iv) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by the Borrower, the Borrower will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.15(E) shall survive the payment in full of
principal and interest hereunder, the termination of the Letters of Credit
and the termination of this Agreement.
(vi) Without limiting the obligations of the Borrower under this
Section 2.15(E), each Lender that is not created or organized under the
laws of the United States of America or a political subdivision thereof
shall deliver to the Borrower and the Agent on or before the Original
Closing Date, or, if later, the date on which such Lender becomes a Lender
pursuant to Section 12.3 hereof, a true and accurate certificate executed
in duplicate by a duly authorized officer of such Lender, in a form
satisfactory to the Borrower and the Agent, to the effect that such Lender
is capable under the provisions of an applicable tax treaty concluded by
the United States of America (in which case the certificate shall be
accompanied by two executed copies of Form 1001 of the IRS) or under
Section 1442 of the Code (in which case the certificate shall be
accompanied by two copies of Form 4224 of the IRS) of receiving payments of
interest hereunder without deduction or withholding of United States
federal income tax. Each such Lender further agrees to deliver to the
Borrower and the Agent from time to time a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender
substantially in a form satisfactory to the Borrower and the Agent, before
or
38
promptly upon the occurrence of any event requiring a change in the most
recent certificate previously delivered by it to the Borrower and the Agent
pursuant to this Section 2.15(E)(vi). Further, each Lender which delivers a
certificate accompanied by Form 1001 of the IRS covenants and agrees to
deliver to the Borrower and the Agent within fifteen (15) days prior to
January 1, 1997, and every third (3rd) anniversary of such date thereafter,
on which this Agreement is still in effect, another such certificate and
two accurate and complete original signed copies of Form 1001 (or any
successor form or forms required under the Code or the applicable
regulations promulgated thereunder), and each Lender that delivers a
certificate accompanied by Form 4224 of the IRS covenants and agrees to
deliver to the Borrower and the Agent within fifteen (15) days prior to the
beginning of each subsequent taxable year of such Lender during which this
Agreement is still in effect, another such certificate and two accurate and
complete original signed copies of IRS Form 4224 (or any successor form or
forms required under the Code or the applicable regulations promulgated
thereunder). Each such certificate shall certify as to one of the
following:
(a) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America
federal income tax;
(b) that such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of United States of America
federal income tax as specified therein but is capable of recovering the
full amount of any such deduction or withholding from a source other than
the Borrower and will not seek any such recovery from the Borrower; or
(c) that, as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority after the date such Lender became a party hereto,
such Lender is not capable of receiving payments of interest hereunder
without deduction or withholding of United States of America federal income
tax as specified therein and that it is not capable of recovering the full
amount of the same from a source other than the Borrower.
Each Lender shall promptly furnish to the Borrower and the Agent such
additional documents as may be reasonably required by the Borrower or the
Agent to establish any exemption from or reduction of any Taxes or Other
Taxes required to be deducted or withheld and which may be obtained without
undue expense to such Lender.
(F) Loan Account. Each Lender shall maintain in accordance with its usual
practice an account or accounts (a "Loan Account") evidencing the Obligations of
the Borrower to such Lender owing to such Lender from time to time, including
the amount of principal and interest payable and paid to such Lender from time
to time hereunder and under the Notes.
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(G) Control Account. The Register maintained by the Agent pursuant to
Section 12.3 shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Advance made hereunder, the type of Loan comprising such Advance
and any Interest Period applicable thereto, (ii) the effective date and amount
of each assignment and acceptance delivered to and accepted by it and the
parties thereto pursuant to Section 12.3, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder or under the Notes, (iv) the amount of any sum received by the
Agent from the Borrower hereunder and each Lender's share thereof, and (v) all
other appropriate debits and credits as provided in this Agreement, including,
without limitation, all fees, charges, expenses and interest.
(H) Entries Binding. The entries made in the Register and each Loan Account
shall be conclusive and binding for all purposes, absent manifest error, unless
the Borrower objects to information contained in the Register and each Loan
Account within thirty (30) days of the Borrower's receipt of such information.
2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions. Promptly after receipt thereof, the Agent
will notify each Lender of the contents of each Aggregate Revolving Loan
Commitment reduction notice, Borrowing Notice, Continuation/Conversion Notice,
and repayment notice received by it hereunder. The Agent will notify each Lender
of the interest rate applicable to each Eurodollar Loan promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.
2.17 Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or facsimile notice to
the Agent and the Borrower, designate a Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as
the case may be, notifies the Agent prior to the date on which it is scheduled
to make payment to the Agent of (i) in the case of a Lender, the proceeds of a
Loan or (ii) in the case of the Borrower, a payment of principal, interest or
fees to the Agent for the account of the Lenders, that it does not intend to
make such payment, the Agent may assume that such payment has been made. The
Agent may, but shall not be obligated to, make the amount of such payment
available to the intended recipient in reliance upon such assumption. If such
Lender or the Borrower, as the case may be, has not in fact made such payment to
the Agent, the recipient of such payment shall, on demand by the Agent, repay to
the Agent the amount so made available together with interest thereon in respect
of each day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to (i) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (ii) in the case of payment by the Borrower, the
interest rate applicable to the relevant Loan.
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2.19 Termination Date. This Agreement shall be effective until the
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent indemnity
obligations) shall have been fully and indefeasibly paid and satisfied, all
financing arrangements among the Borrower and the Lenders shall have been
terminated (other than under Interest Rate Agreements or other agreements with
respect to Rate Hedging Obligations) and all of the Letters of Credit shall have
expired, been canceled or terminated, all of the rights and remedies under this
Agreement and the other Loan Documents shall survive and the Agent shall be
entitled to retain its security interest in and to all existing and future
Collateral for the benefit of itself and the Holders of Secured Obligations.
2.20 Replacement of Certain Lenders. In the event a Lender ("Affected
Lender") shall have: (i) failed to fund its Pro Rata Share of any Advance
requested by the Borrower which such Lender is obligated to fund under the terms
of this Agreement and which failure has not been cured, (ii) requested
compensation from the Borrower under Sections 2.15(E), 3.1 or 3.2 to recover
Taxes, Other Taxes or other additional costs incurred by such Lender which are
not being incurred generally by the other Lenders, (iii) delivered a notice
pursuant to Section 3.3 claiming that such Lender is unable to extend Eurodollar
Loans to the Borrower for reasons not generally applicable to the other Lenders
or (iv) has invoked Section 9.2, then, in any such case, the Borrower or the
Agent may make written demand on such Affected Lender (with a copy to the Agent
in the case of a demand by the Borrower and a copy to the Borrower in the case
of a demand by the Agent) for the Affected Lender to assign, and such Affected
Lender shall use its best efforts to assign pursuant to one or more duly
executed assignment and acceptance agreements in substantially the form of
Exhibit E five (5) Business Days after the date of such demand, to one or more
financial institutions which complies with the provisions of Section 12.3(A)
(and, if selected by the Borrower is reasonably acceptable to the Agent) which
the Borrower or the Agent, as the case may be, shall have engaged for such
purpose ("Replacement Lender"), all of such Affected Lender's rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Revolving Loan Commitment, all Loans owing to it, all of
its participation interests in existing Letters of Credit, and its obligation to
participate in additional Letters of Credit hereunder) in accordance with
Section 12.3. The Agent hereby agrees, upon the occurrence of such events with
respect to an Affected Lender and upon the written request of the Borrower, to
use its reasonable efforts to obtain the commitments from one or more financial
institutions to act as a Replacement Lender. The Agent is hereby authorized to
execute one or more of such assignment agreements as attorney-in-fact for any
Affected Lender failing to execute and deliver the same within five (5) Business
Days after the date of such demand. Further, with respect to such assignment the
Affected Lender shall have concurrently received, in cash, all amounts due and
owing to the Affected Lender hereunder or under any other Loan Document,
including, without limitation, the aggregate outstanding principal amount of the
Loans owed to such Lender, together with accrued interest thereon through the
date of such assignment, amounts payable under Sections 2.15(E), 3.1, and 3.2
with respect to such Affected Lender and compensation payable under Section
2.15(C) in the event of any replacement of any Affected Lender under clause (ii)
or clause (iii) of this Section 2.20; provided, upon such Affected Lender's
replacement, such Affected Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.15(E), 3.1, 3.2, 3.4, and
9.7, as well as to any fees accrued for its account hereunder and not yet paid,
and shall continue to be obligated under Section 10.8. Upon the replacement of
any Affected Lender pursuant to this Section 2.20, the provisions of Section 8.2
shall continue to apply with respect to Advances which are then
41
outstanding with respect to which the Affected Lender failed to fund its Pro
Rata Share and which failure has not been cured.
2.21 Letter of Credit Facility. Pursuant to the Original Credit Agreement
the Agent may have previously issued and, upon receipt of duly executed
applications therefor, and such other documents, instructions and agreements as
the Agent may require, and subject to the provisions of Article IV, the Agent
will hereafter issue letters of credit for the account of the Borrower, on terms
as are satisfactory to the Agent; provided, however, that no Letter of Credit
will be issued for the account of the Borrower by the Agent if on the date of
issuance, before or after taking such Letter of Credit into account, (i) the
Revolving Credit Obligations at such time would exceed the Maximum Revolving
Credit Amount at such time or (ii) the aggregate outstanding amount of the L/C
Obligations exceeds $5,000,000; and provided, further, that no Letter of Credit
shall be issued which has an expiration date later than the date which is five
(5) Business Days immediately preceding the Termination Date.
2.22 Letter of Credit Participation. Immediately upon the issuance of
each Letter of Credit by the Agent hereunder or under the Original Credit
Agreement, as applicable, each Lender shall be deemed to have automatically,
irrevocably and unconditionally purchased and received from the Agent an
undivided interest and participation in and to such Letter of Credit, the
obligations of the Borrower in respect thereof, and the liability of the Agent
thereunder (collectively, an "L/C Interest") in an amount equal to the amount
available for drawing under such Letter of Credit multiplied by such Lender's
Pro Rata Share. The Agent will notify each Lender promptly upon presentation
to it of an L/C Draft or upon any other draw under a Letter of Credit. On or
before the Business Day on which the Agent makes payment of each such L/C Draft
or, in the case of any other draw on a Letter of Credit, on demand of the Agent,
each Lender shall make payment to the Agent, in immediately available funds on
an amount equal to such Lender's pro rata share of the amount of such payment or
draw. The obligation of each Lender to reimburse the Agent under this Section
2.22 shall be unconditional, continuing, irrevocable and absolute. In the event
that any Lender fails to make payment to the Agent of any amount due under this
Section 2.22, the Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied; provided, however, that nothing
contained in this sentence shall relieve such Lender of its obligation to
reimburse the Agent for such amount in accordance with this Section 2.22.
2.23 Reimbursement Obligation. The Borrower agrees unconditionally,
irrevocably and absolutely to pay immediately to the Agent (which payment shall
be for the account of the Lenders to the extent that the Lenders have funded
their participation in the applicable Letter of Credit otherwise for the account
of the Agent as the issuer of the Letter of Credit) the amount of each advance
which may be drawn under or pursuant to a Letter of Credit issued for its
account or an L/C Draft related thereto (such obligation of the Borrower to
reimburse the Agent for an advance made under a Letter of Credit or L/C Draft
being hereinafter referred to as a "Reimbursement Obligation" with respect to
such Letter of Credit or L/C Draft). If the Borrower at any time fails to repay
a Reimbursement Obligation pursuant to this Section 2.23, the Borrower shall be
deemed to have elected to borrow a Revolving Loan from the Lenders, as of the
date of the advance giving rise to the Reimbursement Obligation equal in amount
to the amount of the unpaid Reimbursement Obligation. Such Revolving Loan shall
be made as of the date of the payment giving rise to such Reimbursement
Obligation,
42
automatically, without notice and without any requirement to satisfy the
conditions precedent otherwise applicable to an Advance of Revolving Loans
if Borrower shall have failed to make such payment to the Agent prior to such
time. Such Revolving Loans shall constitute a Floating Rate Advance, the
proceeds of which Advance shall be used to repay such Reimbursement Obligation.
If, for any reason, the Borrower fails to repay a Reimbursement Obligation on
the day such Reimbursement Obligation arises and, for any reason, the Lenders
are unable to make or have no obligation to make a Revolving Loan, then such
Reimbursement Obligation shall bear interest from and after such day, until
paid in full, at the interest rate applicable to a Floating Rate Advance.
2.24 Cash Collateral. Notwithstanding anything to the contrary herein or
in any application for a Letter of Credit, after the occurrence and during the
continuance of Default, the Borrower shall, upon the Agent's demand, deliver to
the Agent for the benefit of the Lenders, cash, or other collateral of a type
satisfactory to the Required Lenders, having a value, as determined by such
Lenders, equal to the aggregate outstanding L/C Obligations. In addition, to
the extent the Maximum Revolving Credit Amount is at any time less than the
amount of contingent L/C Obligations outstanding at any time, the Borrower shall
deposit cash collateral with the Agent in an amount equal to the amount by which
such L/C Obligations exceed such Maximum Revolving Credit Amount. Any such
collateral shall be held by the Agent in a separate account appropriately
designated as a cash collateral account in relation to this Agreement and the
Letters of Credit and retained by the Agent for the benefit of the Lenders as
collateral security for the Borrower's obligations in respect of this Agreement
and each of the Letters of Credit and L/C Drafts. Such amounts shall be applied
to reimburse the Agent for drawings or payments under or pursuant to Letters of
Credit or L/C Drafts, or if no such reimbursement is required, to payment of
such of the other Obligations as the Agent shall determine. If no Default shall
be continuing, amounts remaining in any cash collateral account established
pursuant to this Section 2.24 which are not to be applied to reimburse the Agent
for amounts actually paid or to be paid by the Agent in respect of a Letter of
Credit or L/C Draft, shall be returned to the Borrower (after deduction of the
Agent's expenses incurred in connection with such cash collateral account).
2.25 Letter of Credit Fees. The Borrower agrees to pay (i) monthly, in
arrears, to the Agent for the ratable benefit of the Lenders, except as set
forth in Section 8.2, a letter of credit fee in the amount of the Applicable
Letter of Credit Fee rate per annum on the aggregate amount available for
drawing under all of the standby Letters of Credit and (ii) to the Agent for
the benefit of the Agent, as issuing bank, all customary fees and other
issuance, amendment, negotiation and presentment expenses and related charges in
connection with the issuance, amendment, presentation of L/C Drafts, and the
like customarily charged by the Agent with respect to standby and commercial
Letters of Credit, including, without limitation standard commissions with
respect to commercial Letters of Credit, payable at the time of invoice of such
amounts.
2.26 Indemnification; Exoneration. (a) In addition to amounts payable
as elsewhere provided in this Agreement, the Borrower hereby agrees to protect,
indemnify, pay and save harmless the Agent and each Lender from and against any
and all liabilities and costs which the Agent or any Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit other than, in the case of the issuer thereof, as a result of
its Gross Negligence or willful misconduct, as determined by the final judgment
of a court of competent jurisdiction, or (ii) the failure of the issuer
43
of such Letter of Credit to honor a drawing under such Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto Governmental Authority (all such acts or omissions
herein called "Governmental Acts").
(b) As among the Borrower, the Lenders and the Agent, the Borrower assumes
all risks of the acts and omissions of, or misuse of such Letter of Credit by,
the beneficiary of any Letter of Credit. In furtherance and not in limitation
of the foregoing, subject to the provisions of the Letter of Credit applications
and Letter of Credit reimbursement agreements executed by the Borrower at the
time of request for any Letter of Credit, the issuer of the Letter of Credit,
the Agent and the Lenders shall not be responsible (in the absence of Gross
Negligence or willful misconduct in connection therewith, as determined by the
final judgment of a court of competent jurisdiction): (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
the 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 a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of a
Letter of Credit to comply duly 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
other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a 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 Agent, the issuer of the Letter of Credit
and the Lenders including, without limitation, any Governmental Acts. None of
the above shall affect, impair, or prevent the vesting of any of the Letter of
Credit issuers' rights or powers under this Section 2.26.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Letter of
Credit issuer under or in connection with Letters of Credit issued on behalf of
the Borrower or any related certificates shall not, in the absence of Gross
Negligence or willful misconduct, as determined by the final judgment of a court
of competent jurisdiction, put the Letter of Credit issuer, the Agent or any
Lender under any resulting liability to the Borrower or relieve the Borrower of
any of its obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.26 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
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ARTICLE III: CHANGE IN CIRCUMSTANCES
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3.1 Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) adopted after the Original Closing Date and having general
applicability to all banks within the jurisdiction in which such Lender operates
(excluding, for the avoidance of doubt, the effect of and phasing in of capital
requirements or other regulations or guidelines passed prior to the Original
Closing Date), or any interpretation or application thereof by any Governmental
Authority charged with the interpretation or application thereof, or the
compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of any
Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans, its L/C
Interests, the Letters of Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation (other than reserves
and assessments taken into account in determining the interest rate
applicable to Eurodollar Loans) with respect to its Loans, L/C Interests or
the Letters of Credit, or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making,
funding or maintaining the Loans, the L/C Interests or the Letters of
Credit or reduces any amount received by any Lender or any applicable
Lending Installation in connection with Loans or Letters of Credit, or
requires any Lender or any applicable Lending Installation to make any
payment calculated by reference to the amount of Loans or L/C Interests
held or interest received by it or by reference to the Letters of Credit,
by an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender of
making, renewing or maintaining its Loans, L/C Interests or Letters of Credit or
to reduce any amount received under this Agreement, then, within 15 days after
receipt by the Borrower of written demand by such Lender pursuant to Section
3.5, the Borrower shall pay such Lender that portion of such increased expense
incurred or reduction in an amount received which such Lender determines is
attributable to making, funding and maintaining its Loans, L/C Interests,
Letters of Credit and its Revolving Loan Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender determines (i) the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation to
make Loans hereunder, then, within 15 days after receipt by the Borrower of
written demand by such Lender pursuant to Section 3.5, the Borrower shall pay
such Lender the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender determines is
attributable to this
45
Agreement, its Loans, its L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder (after taking into account such Lender's policies as to
capital adequacy). "Change" means (i) any change after the Original Closing Date
in the "Risk-Based Capital Guidelines" (as defined below) excluding, for the
avoidance of doubt, the effect of any phasing in of such Risk Based Capital
Guidelines or any other capital requirements passed prior to the Original
Closing Date, or (ii) any adoption of or change in any other law, governmental
or quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the Original Closing
Date and having general applicability to all banks and financial institutions
within the jurisdiction in which such Lender operates which affects the amount
of capital required or expected to be maintained by any Lender or any Lending
Installation or any corporation controlling any Lender. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the United
States on the Original Closing Date, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International Convergence
of Capital Measurements and Capital Standards," including transition rules, and
any amendments to such regulations adopted prior to the Original Closing Date.
3.3 Availability of Types of Advances. If (i) any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation or directive, whether or not having
the force of law, or (ii) the Required Lenders determine that (x) deposits of a
type and maturity appropriate to match fund Eurodollar Advances are not
available or (y) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such an Advance, then the
Agent shall suspend the availability of the affected Type of Advance and, in the
case of any occurrence set forth in clause (i) require any Advances of the
affected Type to be repaid.
3.4 Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment, or otherwise, or a Eurodollar Advance is
not made on the date specified by the Borrower for any reason other than default
by the Lenders, the Borrower will indemnify each Lender for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or maintain the
Eurodollar Advance.
3.5 Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of
Advance under Section 3.3, so long as such designation is not disadvantageous to
such Lender. Each Lender requiring compensation pursuant to Section 2.15(E) or
to this Article III shall use its best efforts to notify the Borrower and the
Agent in writing of any Change, law, policy, rule, guideline or directive giving
rise to such demand for compensation not later than ninety (90) days following
the date upon which the responsible account officer of such Lender knows or
should have known of such Change, law, policy, rule, guideline or directive. Any
demand for compensation pursuant to this Article III shall be in writing and
shall state the amount due, if any, under Section 3.1, 3.2 or 3.4 and shall set
forth in reasonable detail the calculations upon which such Lender determined
such amount. Such written demand shall be rebuttably presumed correct for all
purposes.
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Notwithstanding anything in this Agreement to the contrary, the Borrower shall
not be obligated to pay any amount or amounts under Section 2.15(E) or this
Article III to the extent such amount or amounts result from a Change, law,
policy, rule, guideline or directive which took effect more than 120 days prior
to the date of delivery of the notice described above. Determination of amounts
payable under such Sections in connection with a Eurodollar Loan shall be
calculated as though each Lender funded its Eurodollar Loan through the purchase
of a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such Loan, whether in
fact that is the case or not. The obligations of the Borrower under Sections
3.1, 3.2 and 3.4 shall survive payment of the Obligations and termination of
this Agreement.
ARTICLE IV: CONDITIONS PRECEDENT
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4.1 Conditions Precedent to Effectiveness of this Agreement. The
effectiveness of this Agreement and the obligation of each Lender to make any
Loan requested to be made by it from and after the Effective Date, and the
obligation of the Agent to issue and of each Lender to participate in any Letter
of Credit from and after the Effective Date, shall be subject to satisfaction of
the following conditions precedent:
(a) Documents. The delivery by the Borrower to the Agent of each of the
following, with sufficient copies for the Lenders:
(1) Copies of the Certificate of Incorporation of the Borrower
and Alliance, together with all amendments, and a certificate of good
standing, both certified by the appropriate governmental officer in
its jurisdiction of incorporation;
(2) Copies, certified by the Secretary or Assistant Secretary of
the Borrower, of its By-Laws and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of the
Loan Documents;
(3) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name and
title and bear the signature of the officers of the Borrower
authorized to sign the Loan Documents and to make borrowings
hereunder, upon which certificate the Lenders shall be entitled to
rely until informed of any change in writing by the Borrower;
(4) A certificate, signed by the chief financial officer of the
Borrower, stating that on Effective Date no Default or Unmatured
Default has occurred and is continuing;
(5) A written opinion of the Borrower's counsel, addressed to the
Lenders in form and substance acceptable to the Agent, the Lenders and
their respective counsel;
(6) Amended and restated Notes payable to the order of each of
the Lenders;
47
(7) The Security Agreement and the Alliance Security Agreement;
(8) Such other documents as the Agent or any Lender or its
counsel may have reasonably requested, including, without limitation,
all of the documents reflected on the List of Closing Documents
attached as Exhibit J to this Agreement (unless designated thereon to
be a document which was previously delivered or to be received after
the Effective Date).
(b) No Legal Impediments. No law, regulation, order, judgment or decree of
any Governmental Authority shall, and the Agent shall not have
received any notice that litigation is pending or threatened which
could (i) enjoin, prohibit or restrain this Agreement from becoming
effective, the making of the Loans and/or the issuance of Letters of
Credit on or after Effective Date or (ii) impose or result in the
imposition of a Material Adverse Effect.
(c) No Default. No Default or Unmatured Default shall have occurred and be
continuing or shall not have been waived in accordance with the terms
of the Original Credit Agreement or would result from this Agreement
becoming effective and the parties' respective performance hereunder.
(d) Representations and Warranties. All of the representations and
warranties contained in Article V and in any of the other Loan
Documents shall be true and correct in all material respects on and as
of the Effective Date.
(e) Legal Matters. All legal and regulatory matters shall be satisfactory
to the Agent and its counsel and to each Lender and their respective
counsel.
4.2 Each Advance and Letter of Credit. The Lenders shall not be required to
make any Advance, issue any Letter of Credit or purchase any participation
therein, unless on the applicable Borrowing Date, or in the case of a Letter of
Credit, the date on which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date except for amendments to the
Schedules to this Agreement made pursuant to the provisions of Section 1.3
and reflecting transactions permitted by this Agreement.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 4.2(i) and (ii) have been satisfied. Any Lender may require a duly
completed officer's certificate in substantially the form of Exhibit F hereto
and/or a duly completed compliance certificate in substantially the form of
Exhibit G hereto as a condition to making an Advance.
48
ARTICLE V: REPRESENTATIONS AND WARRANTIES
- ------------------------------------------
In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Loans and the other financial accommodations to the Borrower and
to issue the Letters of Credit described herein, the Borrower hereby represents
and warrants as follows to each Lender and the Agent as of the date hereof and
thereafter on each date as required by Section 4.2:
5.1 Organization; Corporate Powers. The Borrower and each of its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which failure to be so qualified and in good
standing will have a Material Adverse Effect, (iii) has filed and maintained
effective (unless exempt from the requirements for filing) a current Business
Activity Report with the appropriate Governmental Authority in the States in
which it is required to do so and (iv) has all requisite corporate power and
authority to own, operate and encumber its property and to conduct its business
as presently conducted and as proposed to be conducted.
5.2 Authority.
---------
(A) The Borrower and each of its Subsidiaries have or had, as applicable,
the requisite corporate power and authority (i) to execute, deliver and perform
each of the Transaction Documents to which it is a party and (ii) to file the
Transaction Documents which must be filed by it with any Governmental Authority.
(B) The execution, delivery, performance and filing, as the case may be, of
each of the Transaction Documents to which the Borrower or any of its
Subsidiaries is party, and the consummation of the transactions contemplated
thereby, have been duly approved by the respective boards of directors and, if
necessary, the shareholders of the Borrower and its Subsidiaries, and such
approvals have not been rescinded. No other corporate action or proceedings on
the part of the Borrower or its Subsidiaries are necessary to consummate such
transactions.
(C) Each of the Transaction Documents to which the Borrower or any of its
Subsidiaries is a party has been duly executed, delivered or filed, as the case
may be, by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (except as enforceability
may be limited by bankruptcy, insolvency, or similar laws affecting the
enforcement of creditor's rights generally), is in full force and effect and no
material term or condition thereof has been amended, modified or waived from the
terms and conditions contained in the Transaction Documents delivered to the
Agent pursuant to the Original Credit Agreement without the prior written
consent of the Required Lenders, and the Borrower and its Subsidiaries have,
and, to the best of the Borrower's and its Subsidiaries' knowledge, all other
parties thereto have, performed and complied with all the terms, provisions,
agreements and conditions set forth therein and required to be performed or
complied with by such parties on or before the Effective Date, and no unmatured
default, default or breach of any covenant by any such party exists thereunder.
49
5.3 No Conflict; Governmental Consents. The execution, delivery and
performance of each of the Loan Documents and other Transaction Documents to
which the Borrower or any of its Subsidiaries is a party do not and will not (i)
conflict with the certificate or articles of incorporation or by-laws of the
Borrower or any such Subsidiary, (ii) constitute a tortious interference with
any Contractual Obligation of any Person or conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a default under
any Requirement of Law (including, without limitation, any Environmental
Property Transfer Act) or Contractual Obligation of the Borrower or any such
Subsidiary, or require termination of any Contractual Obligation, except such
interference, breach, default or termination which individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect,
(iii) with respect to the Loan Documents and, to the best of the Borrower's and
its Subsidiaries' knowledge with respect to the other Transaction Documents,
result in or require the creation or imposition of any Lien whatsoever upon any
of the property or assets of the Borrower or any such Subsidiary, other than
Liens permitted by the Loan Documents, or (iv) require any approval of the
Borrower's or any such Subsidiary's shareholders except such as have been
obtained. Except as set forth on Schedule 5.3 to this Agreement, the execution,
delivery and performance of each of the Transaction Documents to which the
Borrower or any of its Subsidiaries is a party do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by any Governmental Authority, including under any Environmental
Property Transfer Act, except filings, consents or notices which have been made,
obtained or given, or which, if not made, obtained or given, individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect.
5.4 Financial Statements. The December 31, 1995 financial statements of
Holdings, the Borrower and its Subsidiaries, copies of which were delivered to
the Agent and the Lenders pursuant to the Original Credit Agreement, present the
financial condition of Holdings, the Borrower and such Subsidiaries as of such
date.
5.5 No Material Adverse Change. Since December 31, 1995, there has occurred
no change in the business, properties, condition (financial or otherwise) or
results of operations of the Borrower or the Borrower and its Subsidiaries taken
as a whole or any other event which has had or is reasonably likely to have a
Material Adverse Effect.
5.6 Taxes.
-----
(A) Tax Examinations. All deficiencies which have been asserted against the
Borrower or any of the Borrower's Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally settled
or are being contested in good faith, and as of the Closing Date, no issue has
been raised by any taxing authority in any such examination which, by
application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the Borrower's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 6.2(D), neither the Borrower
nor any of the Borrower's Subsidiaries anticipates any material tax liability
with respect to the years which have not been closed pursuant to applicable law.
50
(B) Payment of Taxes. All tax returns and reports of each of Holdings, the
Borrower and the Borrower's Subsidiaries required to be filed have been timely
filed, and all taxes, assessments, fees and other governmental charges thereupon
and upon their respective property, assets, income and franchises which are
shown in such returns or reports to be due and payable have been paid except
those items which are being contested in good faith and have been reserved for
in accordance with Agreement Accounting Principles. The Borrower has no
knowledge of any proposed tax assessment against Holdings, the Borrower or any
of the Borrower's Subsidiaries that will have or is reasonably likely to have a
Material Adverse Effect.
5.7 Litigation; Loss Contingencies and Violations. Except as set forth in
Schedules 5.7 and 5.18 to this Agreement, there is no action, suit, proceeding,
investigation known to the Borrower or arbitration before or by any Governmental
Authority or private arbitrator pending or, to the knowledge of the Borrower or
any of its Subsidiaries, threatened against the Borrower or any of its
Subsidiaries or any property of any of them (i) challenging the validity or the
enforceability of any material provision of the Transaction Documents or (ii)
which will have or is reasonably likely to have a Material Adverse Effect. There
is no material loss contingency within the meaning of Agreement Accounting
Principles which has not been reflected in the consolidating financial
statements of the Borrower and the consolidating financial statements of
Alliance prepared and delivered to Section 6.1(A)(i) for the fiscal period
during which such material loss contingency was incurred. Neither the Borrower
nor any of its Subsidiaries is (A) in violation of any applicable Requirements
of Law which violation will have or is reasonably likely to have a Material
Adverse Effect, or (B) subject to or in default with respect to any final
judgment, writ, injunction, restraining order or order of any nature, decree,
rule or regulation of any court or Governmental Authority which will have or is
reasonably likely to have a Material Adverse Effect.
5.8 Subsidiaries. Schedule 5.8 to this Agreement (i) contains a description
of the corporate structure of Holdings, the Borrower, its Subsidiaries and any
other Person in which Holdings, the Borrower or any of its Subsidiaries holds an
equity interest; and (ii) accurately sets forth (A) the correct legal name, the
jurisdiction of incorporation and the jurisdictions in which each of the
Borrower and the direct and indirect Subsidiaries of the Borrower is qualified
to transact business as a foreign corporation, (B) the authorized, issued and
outstanding shares of each class of Capital Stock of Holdings, the Borrower and
each of its Subsidiaries and the owners of such shares, and (C) a summary of the
direct and indirect partnership, joint venture, or other equity interests, if
any, of Holdings, the Borrower and each Subsidiary of the Borrower in any Person
that is not a corporation. None of the issued and outstanding Capital Stock of
the Borrower or any of its Subsidiaries is subject to any vesting, redemption,
or repurchase agreement, and there are no warrants or options outstanding with
respect to such Capital Stock. The outstanding Capital Stock of the Borrower and
each of its Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is not margin stock (as defined in Regulation U). The Borrower
has no Subsidiaries other than Alliance, all of the Capital Stock of which is
owned by the Borrower. Holdings has no Subsidiaries other than the Borrower.
5.9 ERISA. Neither the Borrower nor any of its Subsidiaries is now
maintaining or contributing to or has ever maintained or contributed to any
Benefit Plan. Neither the Borrower nor any of its Subsidiaries is now
contributing to or has ever contributed to or been obligated to contribute to
any Multiemployer Plan. Neither the Borrower nor any of its Subsidiaries
maintains or contributes
51
to any employee welfare benefit plan within the meaning of Section 3(1) of ERISA
which provides benefits to employees after termination of employment other than
as required by Section 601 of ERISA. Each Plan which is intended to be qualified
under Section 401(a) of the Code as currently in effect is so qualified, and
each trust related to any such Plan is exempt from federal income tax under
Section 501(a) of the Code as currently in effect. The Borrower and all its
Subsidiaries are in compliance in all material respects with the
responsibilities, obligations and duties imposed on them by ERISA and the Code
with respect to all Plans. Neither the Borrower nor any other member of the
Controlled Group nor, to the knowledge of the Borrower or any member of the
Controlled Group, any fiduciary of any Plan has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the Code
which could reasonably be expected to subject the Borrower to liability
individually or in the aggregate in excess of $1,000,000. Neither the Borrower
nor any member of the Controlled Group has taken or failed to take any action
which would constitute or result in a Termination Event, which action or
inaction could reasonably be expected to subject the Borrower to liability
individually or in the aggregate in excess of $1,000,000. Neither the Borrower
nor any Subsidiary is subject to any liability under Sections 4063, 4064, 4069,
4204 or 4212(c) of ERISA and no other member of the Controlled Group is subject
to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA which
could reasonably be expected to subject the Borrower to liability individually
or in the aggregate in excess of $1,000,000. Neither the Borrower nor any of its
Subsidiaries has, by reason of the transactions contemplated hereby, any
obligation to make any payment to any employee pursuant to any Plan or existing
contract or arrangement.
5.10 Accuracy of Information. The information, exhibits and reports
furnished by the Borrower and any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents, the representations and warranties of the Borrower and its
Subsidiaries contained in the Loan Documents, and all certificates and documents
delivered to the Agent and the Lenders pursuant to the terms thereof do not
contain as of the date furnished any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
5.11 Securities Activities. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (as defined in Regulation U).
5.12 Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which will have or is reasonably likely to have a Material
Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received
notice or has actual knowledge that (i) it is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it, or (ii) any condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default with respect to any such Contractual Obligation, in each
case, except where such default or defaults, if any, will not have or are not
reasonably likely to have a Material Adverse Effect.
5.13 Compliance with Laws. The Borrower and its Subsidiaries are in
compliance with all Requirements of Law applicable to them and their respective
businesses, in each case where the failure
52
to so comply individually or in the aggregate will have or is reasonably likely
to have a Material Adverse Effect.
5.14 Assets and Properties. The Borrower and each of its Subsidiaries has
good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it or a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any laws
or regulations of any Governmental Authority affecting such assets), and all
such assets and property are free and clear of all Liens, except Liens securing
the Secured Obligations and Liens permitted under Section 6.3(C). Substantially
all of the assets and properties owned by, leased to or used by the Borrower
and/or each such Subsidiary of the Borrower are in adequate operating condition
and repair, ordinary wear and tear excepted. Except for Liens granted to the
Agent for the benefit of the Agent and the Holders of Secured Obligations,
neither this Agreement nor any other Transaction Document, nor any transaction
contemplated under any such agreement, will affect any right, title or interest
of the Borrower or such Subsidiary in and to any of such assets in a manner that
would have or is reasonably likely to have a Material Adverse Effect.
5.15 Statutory Indebtedness Restrictions. Neither the Borrower, nor any of
its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.
5.16 Post-Retirement Benefits. As of the Closing Date the Borrower and its
Subsidiaries have no expected cost of post-retirement medical and insurance
benefits payable by the Borrower and its Subsidiaries to its employees and
former employees, as estimated by the Borrower in accordance with Financial
Accounting Standards Board Statement No. 106.
5.17 Insurance. Schedule 5.17 to this Agreement accurately sets forth as of
the Closing Date all insurance policies and programs currently in effect with
respect to the respective properties and assets and business of the Borrower and
its Subsidiaries, specifying for each such policy and program, (i) the amount
thereof, (ii) the risks insured against thereby, (iii) the name of the insurer
and each insured party thereunder, (iv) the policy or other identification
number thereof, (v) the expiration date thereof, (vi) the annual premium with
respect thereto and (vii) describes any reserves, relating to any self-insurance
program that is in effect. Such insurance policies and programs reflect coverage
that is reasonably consistent with prudent industry practice.
5.18 Contingent Obligations. Except as set forth on Schedule 5.18 to this
Agreement, neither the Borrower nor any of its Subsidiaries has any Contingent
Obligation, contingent liability, long-term lease or commitment, not reflected
in its audited financial statements delivered to the Agent on or prior to the
Original Closing Date or otherwise disclosed to the Agent and the Lenders in the
other Schedules to this Agreement, which will have or is reasonably likely to
have a Material Adverse Effect.
53
5.19 Restricted Junior Payments. Neither the Borrower nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made or set
apart any sum or properties for any Restricted Junior Payment or agreed to do
so, except as permitted pursuant to Section 6.3(F) of this Agreement.
5.20 Labor Matters.
-------------
(A) Except as listed on Schedule 5.20 to this Agreement, on the Closing
Date there are no collective bargaining agreements, other labor agreements or
Multiemployer Plans covering any of the employees of the Borrower or any of its
Subsidiaries. As of the Closing Date, no attempt to organize the employees of
the Borrower, and no labor disputes, strikes or walkouts affecting the
operations of the Borrower or any of its Subsidiaries, is pending, or, to the
Borrower's knowledge, threatened, planned or contemplated.
(B) Set forth in Schedule 5.20 to this Agreement is a list, as of the
Closing Date, of all material consulting agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase and stock option
plans, severance plans, group life insurance, hospitalization insurance or other
plans or arrangements of Holdings, the Borrower and its Subsidiaries providing
for benefits for employees of Holdings, the Borrower and its Subsidiaries.
5.21 Environmental Matters. Except as disclosed on Schedule 5.21 to this
Agreement or except as would not reasonably be likely to subject the Borrower to
liability individually or in the aggregate in excess of $1,000,000, the
operations of the Borrower and its Subsidiaries comply in all material respects
with Environmental, Health or Safety Requirements of Law and neither the
Borrower, any of its Subsidiaries nor any of their respective present property
or operations, or, to the best of, the Borrower's or any of its Subsidiaries'
knowledge, any of their respective past property or operations, are subject to
or the subject of, any investigation known to the Borrower or any of its
Subsidiaries, judicial or administrative proceeding, order, judgment, decree,
settlement or other agreement respecting (a) any material violation of
Environmental, Health or Safety Requirements of Law, (b) any remedial action or
(c) any claims or liabilities arising from the Release or threatened Release of
a Contaminant into the environment. Except as disclosed on Schedule 5.21 to this
Agreement or except as would not reasonably be likely to subject the Borrower to
liability individually or in the aggregate in excess of $1,000,000, there is not
now, nor to the best of the Borrower's or any of its Subsidiaries' knowledge has
there ever been on or in the property of the Borrower or any of its Subsidiaries
any landfill, waste pile, underground storage tanks, aboveground storage tanks,
surface impoundment or hazardous waste storage facility of any kind, any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electric transformers
or other equipment, or any asbestos containing material. Neither the Borrower
nor any of its Subsidiaries has any material Contingent Obligation in connection
with any Release or threatened Release of a Contaminant into the environment
which could reasonably be likely to subject the Borrower to liability
individually or in the aggregate in excess of $1,000,000.
ARTICLE VI: COVENANTS
- ----------------------
54
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations
(other than contingent indemnity obligations), unless the Required Lenders shall
otherwise give prior written consent:
6.1 Reporting. The Borrower shall:
(A) Financial Reporting. Furnish to the Lenders:
(i) Monthly Reports. As soon as practicable, and in any event within
twenty-five (25) days after the end of each calendar month, the
consolidated balance sheet of Holdings and its consolidated Subsidiaries as
at the end of such period and the related consolidated statements of
income, stockholders' equity and cash flow of Holdings and its consolidated
Subsidiaries for such calendar month, certified by the chief financial
officer of the Borrower on behalf of the Borrower as fairly presenting the
consolidated financial position of Holdings and its consolidated
Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the calendar months indicated in accordance with
Agreement Accounting Principles, subject to absence of footnote disclosures
and to normal year end adjustments.
(ii) Quarterly Reports. (a) As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter in each
fiscal year, the consolidated balance sheet of Holdings and its
consolidated Subsidiaries as at the end of such period and the related
consolidated statements of income, stockholders' equity and cash flow of
Holdings and its consolidated Subsidiaries for such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end of
such fiscal quarter, and a forecasted consolidated balance sheet and a
consolidated statement of earnings and cash flow of Holdings and its
consolidated Subsidiaries for and as of the end of the next succeeding
fiscal quarter and a comparison of the statement of earnings and cash flow
to the budget, certified by the chief financial officer of the Borrower on
behalf of the Borrower as fairly presenting the consolidated financial
position of Holdings and its consolidated Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in accordance with Agreement Accounting Principles, subject to
absence of footnote disclosures and to normal year end adjustments.
(b) As soon as practicable, and in any event within forty-five (45)
days after the end of the last fiscal quarter in each fiscal year, the
preliminary annual unaudited consolidated balance sheets of Holdings and
its consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income, stockholders' equity and cash
flow of Holdings and its consolidated Subsidiaries for such fiscal year,
setting forth in each case in comparative form the corresponding actual and
forecasted figures for the previous fiscal year, subject to revisions based
on the annual reports delivered pursuant to clause (iii) below, along with
consolidating schedules in form and substance sufficient to calculate the
financial covenants set forth in Section 6.4.
(iii) Annual Reports. As soon as practicable, and in any event within
ninety (90) days after the end of each fiscal year, (a) the consolidated
balance sheets of Holdings and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated
55
statements of income, stockholders' equity and cash flow of Holdings and
its consolidated Subsidiaries for such fiscal year, and in comparative form
the corresponding figures for the previous fiscal year along with
consolidating schedules in form and substance sufficient to calculate the
financial covenants set forth in Article 6.4, (b) a schedule from the
Borrower setting forth for each item in clause (a) hereof, the
corresponding figures from the consolidated financial budget for the
current fiscal year delivered pursuant to Section 6.1(A)(v), and (c) an
audit report on the items listed in clause (a) hereof of independent
certified public accountants of recognized national standing, which audit
report shall be unqualified and shall state that such financial statements
fairly present the consolidated financial position of Holdings and its
consolidated Subsidiaries as at the dates indicated and the results of
their operations and cash flow for the periods indicated in conformity with
Agreement Accounting Principles and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards. The
deliveries made pursuant to this clause (iii) shall be accompanied by (y)
any management letter prepared by the above-referenced accountants and (z)
a certificate of such accountants that, in the course of their examination
necessary for their certification of the foregoing, they have obtained no
knowledge of any Default or Unmatured Default, or if, in the opinion of
such accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(iv) Officer's Certificate. Together with each delivery of any
financial statement (a) pursuant to clauses (i), (ii) and (iii) of this
Section 6.1(A), an Officer's Certificate of the Borrower, substantially in
the form of Exhibit F attached hereto and made a part hereof, stating that
no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof and (b) pursuant to
clauses (ii) and (iii) of this Section 6.1(A), a Compliance Certificate,
substantially in the form of Exhibit G attached hereto and made a part
hereof, signed by the Borrower's chief financial officer or treasurer,
setting forth calculations for the period then ended for Section 2.5(B), if
applicable, which demonstrate compliance, when applicable, with the
provisions of Sections 6.3(F) and 6.4 and which details the current status
of lease payments required with respect to each of the Borrower's and
Alliance's leased premises where no landlord waiver agreement has been
obtained pursuant to the terms of the applicable Security Agreement..
(v) Budgets; Business Plans; Financial Projections. As soon as
practicable and in any event not later than the forty-fifth (45th) day
after the beginning of each fiscal year, a copy of the plan and forecast
(including a projected balance sheet, income statement and funds flow
statement) of Holdings, the Borrower and its Subsidiaries for such fiscal
year prepared in such detail as shall be reasonably satisfactory to the
Agent. As soon as practicable, any revisions of such plan and forecast
which represent a material amendment thereof.
(vi) Consolidating Financial Statements. Together with each delivery
of any financial statement pursuant to clause (i), (ii) or (iii) of this
Section 6.1(A), the Borrower shall deliver the corresponding consolidating
financial statements of the Borrower and each of its Subsidiaries certified
or audited, as applicable, if requested by the Agent or the Required
Lenders.
56
(B) Notice of Default. Promptly upon any of the chief executive officer,
chief operating officer, chief financial officer, treasurer or controller of the
Borrower obtaining knowledge (i) of any condition or event which constitutes a
Default or Unmatured Default, or becoming aware that any Lender or Agent has
given any written notice with respect to a claimed Default or Unmatured Default
under this Agreement, or (ii) that any Person has given any written notice to
the Borrower or any Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 7.1(e), deliver to the Agent and the Lenders an Officer's Certificate
specifying (A) the nature and period of existence of any such claimed default,
Default, Unmatured Default, condition or event, (B) the notice given or action
taken by such Person in connection therewith, and (C) what action the Borrower
has taken, is taking and proposes to take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Borrower or any of its
Subsidiaries or any property of the Borrower or any of its Subsidiaries not
previously disclosed pursuant to Section 5.7, which action, suit, proceeding,
governmental investigation or arbitration exposes, or in the case of multiple
actions, suits, proceedings, governmental investigations or arbitrations arising
out of the same general allegations or circumstances which expose, in the
Borrower's reasonable judgment, the Borrower or any of its Subsidiaries to
liability in an amount aggregating $1,000,000 or more (exclusive of claims
covered by insurance policies of the Borrower or any of its Subsidiaries unless
the insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims and exclusive of claims covered by the
indemnity of a financially responsible indemnitor in favor of Borrowers or any
of its Subsidiaries (unless the indemnitor has disclaimed or reserved the right
to disclaim coverage thereof)), give written notice thereof to the Agent and the
Lenders and provide such other information as may be reasonably available to
enable each Lender and the Agent and its counsel to evaluate such matters; and
(ii) in addition to the requirements set forth in clause (i) of this Section
6.1(C), upon request of the Agent or the Required Lenders, promptly give written
notice of the status of any action, suit, proceeding, governmental investigation
or arbitration covered by a report delivered pursuant to clause (i) above and
provide such other information as may be reasonably available to it that would
not violate any attorney-client privilege by disclosure to the Lenders to enable
each Lender and the Agent and its counsel to evaluate such matters.
(D) Insurance. As soon as practicable and in any event within ninety (90)
days of the end of each fiscal year commencing with fiscal year ending December
31, 1996, deliver to the Agent and the Lenders (i) a report in form and
substance reasonably satisfactory to the Agent and the Lenders outlining all
material insurance coverage maintained as of the date of such report by the
Borrower and its Subsidiaries and the duration of such coverage and (ii) an
insurance broker's statement that all premiums with respect to such coverage
have been paid when due.
(E) ERISA Notices. Deliver or cause to be delivered to the Agent and the
Lenders, at the Borrower's expense, the following information and notices as
soon as reasonably possible, and in any event:
57
(i) (a) within ten (10) Business Days after the Borrower knows or
has reason to know that a Termination Event has occurred, a written
statement of the chief financial officer of the Borrower describing such
Termination Event and the action, if any, which the Borrower has taken, is
taking or proposes to take with respect thereto, and when known, any action
taken or threatened by the IRS, DOL or PBGC with respect thereto and (b)
within ten (10) Business Days after any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred which
could reasonably be expected to subject the Borrower to liability
individually or in the aggregate in excess of $1,000,000, a written
statement of the chief financial officer of the Borrower describing such
Termination Event and the action, if any, which the member of the
Controlled Group has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL or
PBGC with respect thereto;
(ii) within ten (10) Business Days after the Borrower or any of its
Subsidiaries knows or has reason to know that an assessment of a prohibited
transaction excise tax under Section 4975 of the Code has occurred, a
statement of the chief financial officer of the Borrower describing such
transaction and the action which the Borrower or any of its Subsidiaries
has taken, is taking or proposes to take with respect thereto;
(iii) within ten (10) Business Days after the establishment of any
Benefit Plan or the commencement of, or obligation to commence,
contributions to any Benefit Plan or Multiemployer Plan to which the
Borrower or any of its Subsidiaries was not previously contributing,
notification of such establishment, commencement or obligation to commence
and the amount of such contributions;
(iv) within ten (10) Business Days after the Borrower or any of its
Subsidiaries receives notice of any unfavorable determination letter from
the IRS regarding the qualification of a Plan under Section 401(a) of the
Code, copies of each such letter; and
(v) within ten (10) Business Days after the establishment of any
foreign employee benefit plan or the commencement of, or obligation to
commence, contributions to any foreign employee benefit plan to which the
Borrower or any Subsidiary was not previously contributing, notification of
such establishment, commencement or obligation to commence and the amount
of such contributions.
For purposes of this Section 6.1(E), the Borrower and any member of the
Controlled Group shall be deemed to know all facts known by the Administrator of
any Plan of which the Borrower or any member of the Controlled Group is the plan
sponsor.
(F) Labor Matters. Notify the Agent and the Lenders in writing, promptly
upon the Borrower's learning thereof, of (i) any material labor dispute to which
the Borrower or any of its Subsidiaries may become a party, including, without
limitation, any strikes, lockouts or other disputes relating to such Persons'
plants and other facilities and (ii) any Worker Adjustment and Retraining
Notification Act liability incurred with respect to the closing of any plant or
other facility of the Borrower or any of its Subsidiaries.
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(G) Other Indebtedness. Deliver to the Agent (i) a copy of each regular
report, notice or communication regarding potential or actual defaults
(including any accompanying officers' certificate) delivered by or on behalf of
the Borrower to the holders of funded Indebtedness pursuant to the terms of the
agreements governing such Indebtedness, such delivery to be made at the same
time and by the same means as such notice or other communication is delivered to
such holders, and (ii) a copy of each notice or other communication received by
the Borrower from the from the holders of funded Indebtedness pursuant to the
terms of such Indebtedness, such delivery to be made promptly after such notice
or other communication is received by the Borrower.
(H) Environmental Notices. As soon as possible and in any event within ten
(10) days after receipt by the Borrower, a copy of (i) any notice or claim to
the effect that the Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of the Release by the Borrower, any of its Subsidiaries,
or any other Person of any Contaminant into the environment, and (ii) any notice
alleging any violation of any Environmental, Health or Safety Requirements of
Law by the Borrower or any of its Subsidiaries if, in either case, such notice
or claim relates to an event which could reasonably be expected to subject the
Borrower to liability individually or in the aggregate in excess of $1,000,000.
(I) Borrowing Base Certificate. As soon as practicable, and in any event
within twenty (20) days after the close of each calendar month (and more often
if requested by the Agent or the Required Lenders), the Borrower shall provide
the Agent and the Lenders with a Borrowing Base Certificate, together with such
supporting documents as the Agent deems desirable, all certified as being true
and correct by the chief financial officer or treasurer of the Borrower. The
Borrower may update the Borrowing Base Certificate and supporting documents more
frequently than monthly and the most recently delivered Borrowing Base
Certificate shall be the applicable Borrowing Base Certificate for purposes of
determining the Borrowing Base at any time.
(J) SEC Filings and Notices. Promptly upon the filing thereof or receipt
thereof, deliver copies to the Agent of all registration statements and annual,
quarterly, monthly or other reports (including 8-Ks) which Holdings, the
Borrower or any of its Subsidiaries files with the Securities and Exchange
Commission (other than routine reports which are required to be filed concerning
the management of employee benefit plans, including, without limitation, stock
purchases or the exercise of stock options made under any such employee benefit
plan) and all notifications received from the Securities and Exchange Commission
by Holdings, the Borrower or their Subsidiaries pursuant to the Securities
Exchange Act and the rules promulgated thereunder.
(K) Other Publicly Available Information. Promptly upon the furnishing
thereof or the making available thereof, copies of all financial statements,
reports and notices, if any, sent or made available generally by Holdings or the
Borrower to its securities holders or filed with the Securities and Exchange
Commission by Holdings or the Borrower, all press releases made available
generally by Holdings or the Borrower or any of their Subsidiaries to the public
concerning material developments in the business of Holdings, the Borrower or
any such Subsidiary.
(L) Other Information. Promptly upon receiving a request therefor from the
Agent, prepare and deliver to the Agent and the Lenders such other information
with respect to Holdings, the Borrower, any of its Subsidiaries, or the
Collateral, including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof or any Asset Sale (and the use of
the Net Cash Proceeds thereof), as from time to time may be reasonably requested
by the Agent.
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6.2 Affirmative Covenants.
(A) Corporate Existence, Etc. The Borrower shall, and shall cause each of
its Subsidiaries to, at all times maintain its corporate existence and preserve
and keep, or cause to be preserved and kept, in full force and effect its rights
and franchises material to its businesses.
(B) Corporate Powers; Conduct of Business. The Borrower shall, and shall
cause each of its Subsidiaries to qualify and remain qualified to do business in
each jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so qualified will have or is reasonably
likely to have a Material Adverse Effect. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted.
(C) Compliance with Laws, Etc. The Borrower shall, and shall cause its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all Permits necessary for
its operations and maintain such Permits in good standing, unless failure to
comply or obtain could not reasonably be anticipated to have a Material Adverse
Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Borrower shall
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or assets
or in respect of any of its franchises, business, income or property before any
penalty or interest accrues thereon, and (ii) all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or may become a Lien (other
than a Lien permitted by Section 6.3(C) upon any of the Borrower's or such
Subsidiary's property or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause (i) above or claims
referred to in clause (ii) above (and interest, penalties or fines relating
thereto) need be paid if being contested in good faith by appropriate
proceedings diligently instituted and conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with Agreement
Accounting Principles shall have been made therefor. The Borrower will not, nor
will it permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person other than Holdings.
(E) Insurance. The Borrower shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force
and effect the insurance policies and programs listed on Schedule 5.17 to this
Agreement or substantially similar policies and programs or other policies and
programs as reflect coverage that is reasonably consistent with prudent industry
practice. The Borrower shall deliver to the Agent endorsements (y) to all "All
Risk" physical damage insurance policies on all of the Borrower's and its
Subsidiaries' tangible real and personal property and assets and business
interruption insurance policies naming the Agent loss payee, in form and
substance acceptable to the Agent showing loss payable to the Agent (Form 438
BFU or its equivalent) and extra expense and business interruption endorsements
and such endorsement, or an independent instrument furnished to the Agent, shall
provide that the insurance companies will give the Agent at least thirty (30)
days' prior written notice before any such policy or policies of insurance shall
be altered or
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canceled and that no act or default of the Borrower or any of its Subsidiaries
or any other Person shall affect the right of the Agent to recover under such
policy or policies of insurance in case of loss or damage and (z) to all general
liability and other liability policies of the Borrower and its Subsidiaries
naming the Agent an additional insured. In the event the Borrower or any of its
Subsidiaries, at any time or times hereafter shall fail to obtain or maintain
any of the policies or insurance required herein or to pay any premium in whole
or in part relating thereto, then the Agent, without waiving or releasing any
Obligations or resulting Default hereunder, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which the Agent deems advisable. All sums so disbursed by the Agent shall
constitute part of the Obligations, payable as provided in this Agreement.
(F) Inspection of Property; Books and Records; Discussions. The Borrower
shall permit, and cause each of its Subsidiaries to permit, any authorized
representative(s) designated by either the Agent or any Lender to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries, to
examine, audit, check and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any correspondence and
other data relating to their respective businesses or the transactions
contemplated hereby (including, without limitation, in connection with
environmental compliance, hazard or liability), and to discuss their affairs,
finances and accounts with their officers and independent certified public
accountants, all upon reasonable notice and at such reasonable times during
normal business hours, as often as may be reasonably requested. The Borrower
shall keep and maintain, and cause its Subsidiaries to keep and maintain, in all
material respects, proper books of record and account in which entries in
conformity with Agreement Accounting Principles shall be made of all dealings
and transactions in relation to their respective businesses and activities,
including, without limitation, transactions and other dealings with respect to
the Collateral. If a Default has occurred and is continuing, the Borrower, upon
the Agent's request, shall turn over any such records to the Agent or its
representatives.
(G) Insurance and Condemnation Proceeds. The Borrower hereby directs (and,
if applicable, shall cause its Subsidiaries to direct) all insurers under
policies of property damage, boiler and machinery and business interruption
insurance and payors of any condemnation claim or award relating to the property
to pay all proceeds payable under such policies or with respect to such claim or
award for any loss with respect to the Collateral directly to the Agent, for the
benefit of the Agent and the Holders of the Secured Obligations; provided,
however, in the event that such proceeds or award are less than $2,000,000 in
the aggregate or $1,000,000 for any particular service center or other location
("EXCLUDED PROCEEDS"), unless a Default shall have occurred and be continuing,
the Agent shall remit such Excluded Proceeds to the Borrower which the Borrower
hereby covenants and agrees it shall use to restore, rebuild or replace the
property subject to any such insurance payment or condemnation award as soon as
practicable after receipt thereof. Each such policy shall contain a long-form
loss-payable endorsement naming the Agent as loss payee, which endorsement shall
be in form and substance acceptable to the Agent. The Agent shall, upon receipt
of such proceeds (other than Excluded Proceeds) and at the Borrower's direction,
either apply the same to the principal amount of the Loans outstanding at the
time of such receipt and create a corresponding reserve against Revolving Credit
Availability in an amount equal to such application (the "Decision Reserve") or
hold them as cash collateral for the Secured Obligations. For up to 150 days
from the date of any loss (the "Decision Period"), the Borrower may notify the
Agent that it intends to restore, rebuild or replace
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the property subject to any insurance payment or condemnation award and shall,
as soon as practicable thereafter, provide the Agent detailed information,
including a construction schedule and cost estimates. Should a Default occur at
any time during the Decision Period, should the Borrower notify the Agent that
it has decided not to rebuild or replace such property during the Decision
Period, or should the Borrower fail to notify the Agent of the Borrower's
decision during the Decision Period, then the amounts held as cash collateral
pursuant to this Section 6.2(G) or as the Decision Reserve shall upon the
Required Lenders' direction be applied as a mandatory prepayment of the Term
Loans pursuant to Section 2.5(B). Proceeds held as cash collateral pursuant to
this Section 6.2(G) or constituting the Decision Reserve shall be disbursed as
payments for restoration, rebuilding or replacement of such property become due;
provided, however, should a Default occur after the Borrower has notified the
Agent that it intends to rebuild or replace the property, the Decision Reserve
or amounts held as cash collateral may, or shall, upon the Required Lenders'
direction, be applied as a mandatory prepayment of the Term Loans pursuant to
Section 2.5(B). In the event the Decision Reserve is to be applied as a
mandatory prepayment to the Term Loans, the Borrower shall be deemed to have
requested Revolving Loans in an amount equal to the Decision Reserve, and such
Loans shall be made regardless of any failure of the Borrower to meet the
conditions precedent set forth in Article IV. Upon completion of the
restoration, rebuilding or replacement of such property, the unused proceeds
shall constitute Net Cash Proceeds of an Asset Sale and shall be applied as a
mandatory prepayment of the Term Loans pursuant to Section 2.5(B).
(H) ERISA Compliance. The Borrower shall, and shall cause each of its
Subsidiaries to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Code, all other applicable
laws, and the regulations and interpretations thereunder and the respective
requirements of the governing documents for such Plans.
(I) Maintenance of Property. The Borrower shall cause all property used or
useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Borrower from
discontinuing the operation or maintenance of any of such property if such
discontinuance is, in the judgment of the Borrower, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Agent or the Lenders.
(J) Environmental Compliance. The Borrower and its Subsidiaries shall
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to have a Material
Adverse Effect.
(K) Use of Proceeds. The Borrower will use the proceeds of the Revolving
Loans to provide funds for the working capital needs of the Borrower and
Alliance and other general corporate purposes and to repay outstanding Loans.
The Borrower will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "margin stock" (as defined in
Regulation U) or to make any Acquisition.
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(L) Interest Rate Agreements. The Borrower has previously entered into,
shall at all times hereafter maintain and shall enter into such additional
Interest Rate Agreements on terms and with counterparties determined by the
Borrower and reasonably acceptable to the Agent by which the Borrower is
protected against increases in interest rates from and after the date of such
contracts as to a notional amount which is not at any time less than twenty-five
percent (25%) of the outstanding principal amount of the Term Loans. In the
event a Lender elects to enter into any Interest Rate Agreement with the
Borrower, the obligations of the Borrower with respect to such Interest Rate
Agreement shall be Secured Obligations secured by the Collateral.
(M) Collection Account Arrangements.
(i) All collections of the Borrower's and Alliance's Receivables
included in the Collateral and other proceeds of its Collateral shall be
deposited in (a) a deposit account constituting a permitted Investment under
Section 6.3(D)(v) or (b) a Collection Account of the Borrower or Alliance, as
applicable, which is subject to a Collection Account Agreement or pursuant to
another similar arrangement for the collection of such amounts established by
the Borrower or Alliance, as applicable, and Agent and shall be transferred by
the Borrower and Alliance (1) at such frequency (but not less frequently than
weekly) as agreed to between the Agent and the Borrower to a concentration
account maintained by the Borrower and/or Alliance, as applicable, with the
Agent or otherwise subject to a Collection Account Agreement for any such
account not subject to a Collection Account Agreement or (2) in accordance with
the terms of the applicable Collection Account Agreement. Schedule 6.2(M) sets
forth all of the deposit accounts currently maintained by the Borrower and/or
Alliance and in connection with each such deposit account the Borrower and/or
Alliance, as applicable, has entered into lock-box services agreements. The
Borrower or Alliance shall hereafter maintain lock-box services agreements with
banks which are either parties to Collection Account Agreements or with which
the Borrower and/or Appliance as applicable has established deposit account
sweep arrangements pursuant to which funds on deposit are transferred to a
concentration account maintained by the Borrower and/or Alliance, as applicable,
with the Agent or a concentration account which is the subject of a Collection
Account Agreement and to which lock-boxes Account Debtors shall directly remit
all payments on the Receivables of the Borrower or Alliance, as applicable. Any
of the foregoing collections received by the Borrower or Alliance and not so
deposited, shall be deemed to have been received by the Borrower or Alliance, as
applicable, as the Agent's trustee and, upon such Person's receipt thereof, such
Person shall immediately transfer all such amounts into a Collection Account of
such Person in their original form (together with all necessary endorsements).
(ii) Following the Collection Account Blockage Date and during the
continuance of a Default giving rise thereto, all payments received by the
Agent, all collections of Receivables included in the Collateral received by the
Agent, and all proceeds of other Collateral received by the Agent, whether
through payment or otherwise, will be the sole property of the Agent for the
benefit of the Holders of Secured Obligations and will be deemed received by the
Agent for application to the Obligations pursuant to the terms of this
Agreement.
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(iii) The Borrower agrees to pay to Agent any and all fees, costs and
expenses which Agent incurs in connection with establishing and maintaining
the Collection Accounts, concentration accounts and depositing for
collection by Agent any check or item of payment received and/or delivered,
and the Borrower agrees to reimburse Agent for any amounts paid to any bank
party to a Collection Account Agreement arising out of Agent's
indemnification of such bank against damages incurred by the bank in the
operation of a Collection Account or other payments required to be made
under the Collection Account Agreement, all of which shall constitute
additional Obligations hereunder and shall be secured by the Collateral.
(N) Separate Corporate Existence. The Borrower shall take all reasonable
steps (including, without limitation, all steps which the Agent may from time to
time reasonably request) to maintain its and its Subsidiaries' identity as
separate legal entities from Holdings and to make it apparent to third parties
that each of the Borrower and such Subsidiaries are each an entity with assets
and liabilities distinct from those of Holdings and any of Holdings' Affiliates
(other than the Borrower and its Subsidiaries) (each of Holdings and such other
Persons are referred to in this Section 6.2(M), as the "PARENT ENTITY"). Without
limiting the generality of the foregoing, the Borrower shall:
(i) require that all full-time employees of the Borrower and each of
its Subsidiaries identify themselves as such and not as employees of any
Parent Entity;
(ii) compensate all employees, consultants, investment bankers,
accountants, lawyers and agents directly, from the Borrower's or such
Subsidiary's applicable bank accounts, for services provided to the
Borrower or such Subsidiary by such employees, consultants, investment
bankers and agents and, if any employee, consultant, investment banker or
agent of the Borrower or any of its Subsidiaries is also an employee,
consultant, investment banker or agent of any Parent Entity, allocate the
compensation of such employee, consultant, investment banker or agent
among the Borrower or its Subsidiaries, on the one hand as applicable, and
the applicable Parent Entity or Parent Entities, on the other hand as
applicable, on the basis of actual use of the services so rendered to the
extent practicable and, to the extent such allocation is not practical, on
a basis reasonably related to actual use of such services;
(iii) allocate all overhead expenses (including, without limitation,
telephone and other utility charges and lease and office expenses) for
items shared among the Borrower or its Subsidiaries, on the one hand as
applicable, and the applicable Parent Entity or Parent Entities, on the
other hand as applicable, on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on a
basis reasonably related to actual use;
(iv) cause the Borrower and each of its Subsidiaries to be named as
an insured on the insurance policy covering its property, or enter into an
agreement with the holder of such policy whereby in the event of a loss in
connection with such property, proceeds are paid to the Borrower or
applicable Subsidiary;
(v) maintain the Borrower's and its Subsidiaries' books and records
complete and separate from those of each Parent Entity;
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(vi) ensure that any of the Borrower's or any Parent Entity's
consolidated financial statements or other public information for the
Borrower and its Affiliates or any Parent Entity and its Affiliates on a
consolidated basis contain appropriate disclosures concerning the
Borrowers' separate existence;
(vii) not maintain bank accounts or other depository accounts to
which any Parent Entity is an account party, into which any Parent Entity
makes deposits or from which any Parent Entity has the power to make
withdrawals;
(viii) not permit any Parent Entity to pay any of the Borrower's
operating expenses (except when paid and charged pursuant to an allocation
based upon actual use, to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably related to actual
use); and
(ix) not pay dividends or make distributions, loans or other
advances to any Parent Entity except to the extent duly authorized by its
board of directors and in accordance with applicable corporation law and
otherwise as permitted by this Agreement.
6.3 Negative Covenants.
(A) Indebtedness. Neither Holdings, the Borrower nor any of its
Subsidiaries shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
except:
(i) with respect to Holdings:
(a) the Holdings Subordinated Debt;
(b) Indebtedness in respect of taxes;
(c) Indebtedness incurred for ordinary administrative
expenses, franchise taxes, accounting expenses and legal expenses of
Holdings which Indebtedness shall not exceed an aggregate of $40,000
in any fiscal year and Indebtedness incurred for reasonable and
customary expenses in connection with the initial public offering of
Holdings' stock; and
(d) other Indebtedness in an aggregate outstanding principal
amount which does not at any time exceed $5,000,000;
(ii) with respect to the Borrower and its Subsidiaries:
(a) the Obligations;
(b) Permitted Existing Indebtedness, and any extension,
renewal, refunding or refinancing thereof, provided that any such
extension, renewal, refunding or refinancing is in an aggregate
principal amount not greater than the principal amount of and
interest, fees and
65
expenses accrued on, such Permitted Existing Indebtedness outstanding at
the time thereof and is on terms (including, without limitation, maturity,
amortization, interest rate, premiums, fees, covenants, events of default,
and remedies) not materially less favorable to the Borrower or materially
adverse to the Lenders than the terms of such Permitted Existing
Indebtedness;
(c) Subordinated Indebtedness the terms (including, without
limitation, maturity, amortization, interest rate, premiums, fees,
covenants, events of default, and remedies) of which are acceptable to the
Required Lenders when issued, but not any increase in the principal amount
thereof and not any refinancing, modification, refunding or extension of
maturity thereof, in whole or in part, unless such refinancing,
modification, refunding or extension is not materially less favorable to
the Borrower, including, without limitation, with respect to amount,
maturity, amortization, interest rate, premiums, fees, covenants,
subordination terms, events of default and remedies;
(d) Indebtedness in respect of taxes, assessments, governmental
charges and claims for labor, materials or supplies, to the extent that
payment thereof is not required pursuant to Section 6.2(D);
(e) Indebtedness constituting Contingent Obligations permitted by
Section 6.3(E);
(f) Indebtedness arising from intercompany loans from any Subsidiary
to the Borrower or any other such Subsidiary;
(g) Indebtedness in respect of profit sharing plans to the extent
permitted under Section 6.3(D)(ii);
(h) Indebtedness in respect of Interest Rate Agreements permitted
under Section 6.3(R);
(i) Indebtedness with respect to warranties and indemnities made
under any agreements for Asset Sales permitted under Section 6.3(B);
(j) secured purchase money Indebtedness (including Capitalized
Leases) incurred by the Borrower after the Original Closing Date to finance
the acquisition of fixed assets, if (1) at the time of such incurrence, no
Default or Unmatured Default has occurred and is continuing or would result
from such incurrence, (2) such Indebtedness has a scheduled maturity and is
not due on demand, (3) such Indebtedness does not exceed $1,000,000 in the
aggregate outstanding at any time, and (4) any Lien securing such
Indebtedness is permitted under Section 6.3(C);
(k) Indebtedness with respect to surety, appeal and performance bonds
obtained by the Borrower or any Subsidiary in the ordinary course of
business;
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(l) unsecured Indebtedness and other liabilities incurred in the
ordinary course of business and consistent with past practice, but not
incurred through the borrowing of money or the obtaining of credit (other
than customary trade terms); and
(m) unsecured subordinated Indebtedness to Holdings (the
"SUBORDINATED INTERCOMPANY INDEBTEDNESS") in the original principal amount
of $21,000,000, the terms (including, without limitation, maturity,
amortization, interest rate, premiums, fees, covenants, events of default,
and remedies) of which are acceptable to the Lenders when issued, but not
any increase in the principal amount thereof (other than as a result of the
simultaneous loan by Holdings to the Borrower in an amount not to exceed
the amount of interest paid by the Borrower to Holdings on the date of such
loan, which loan shall be on the same terms as the original Subordinated
Intercompany Indebtedness in respect of which such interest was paid
provided the aggregate outstanding amount of principal shall not at any
time exceed $33,825,000) and not any refinancing, modification, refunding
or extension of maturity thereof, in whole or in part, unless such
refinancing, modification, refunding or extension is not materially less
favorable to the Borrower, including, without limitation, with respect to
amount, maturity, amortization, interest rate, premiums, fees, covenants,
subordination terms, events of default and remedies and which Subordinated
Intercompany Indebtedness shall be subject to a subordination agreement
(the "HOLDINGS SUBORDINATION AGREEMENT") in substantially the form attached
hereto as Exhibit K; and
(iii) with respect to Alliance, Indebtedness arising from intercompany
loans borrowed from the Borrower ("INTERCOMPANY LOANS") provided:
(a) such Intercompany Loans shall be evidenced by a demand
intercompany note in substantially the form of Exhibit H attached hereto
which has been endorsed to the Agent for the benefit of itself and the
Holders of Secured Obligations ("INTERCOMPANY NOTE");
(b) all such Intercompany Loans shall be secured by a lien on all of
the assets of Alliance pursuant to a security agreement in substantially
the form of Exhibit I attached hereto ("INTERCOMPANY SECURITY AGREEMENT")
and which lien shall be subject to the subordination provisions contained
in Section 9.14 below;
(c) the Borrower shall have filed such financing statements naming
Alliance as debtor, the Borrower as secured party and the Agent as the
assignee of the secured party as shall be necessary to perfect the security
interests in and Liens on and against the Collateral granted or purported
to be granted pursuant to the Intercompany Security Agreement;
(d) Alliance and the Borrower shall perform any and all other steps
reasonably requested by Agent to perfect, maintain and protect the security
interests in and Liens on and against the Collateral granted or purported
to be granted pursuant to the Intercompany Security Agreement; and
(e) The aggregate maximum amount of outstanding Intercompany Loans
under this Section 6.1(A)(iii) shall not at any time exceed $4,000,000.
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(B) Sales of Assets. Neither the Borrower nor any of its Subsidiaries
shall sell, assign, transfer, lease, convey or otherwise dispose of any
property, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition of obsolete Equipment in the ordinary course of
business;
(iii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets if such transaction (a) is for all cash
consideration with respect to any Collateral which is sold, (b) for not
less than fair market value, (c) which, when combined with all such other
sales, assignments, transfers, conveyances or other dispositions in the
immediately preceding twelve-month period represents the disposition of not
greater than ten percent (10%) of the Borrower's consolidated (y) assets or
(z) revenues and (d) if, after giving effect to such sale, property having
an aggregate fair market value in excess of $4,000,000 has been sold by the
Borrower or any of its Subsidiaries pursuant to this Section 6.2(B)(iii)
since the Original Closing Date, the Borrower, prior to such sale, provides
the Agent with reasonable projections or other evidence reasonably
satisfactory to the Agent that such sale will not or is not reasonably
likely to have a Material Adverse Effect; and
(iv) the disposition of Inventory and Equipment (other than pursuant
to clauses (i), (ii) and/or (iii) above) with an aggregate book value for
all such sales which have occurred since the Closing Date not exceeding
$500,000 (the "PERMITTED INVENTORY AND EQUIPMENT SALES").
(C) Liens. Neither the Borrower nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of their respective property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens (including the interest of a lessor under a
Capitalized Lease and Liens to which any property is subject at the time of
the Borrower's acquisition thereof) securing Indebtedness permitted under
Section 6.3(A); provided that such Liens shall not apply to any property of
the Borrower or its Subsidiaries other than that purchased or subject to
such Capitalized Lease; and
(v) Liens created under the Intercompany Security Agreement.
In addition, neither the Borrower nor any Subsidiary of the Borrower shall
become a party to any agreement, note, indenture or other instrument, or take
any other action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of the Agent for the benefit of itself
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and the Holders of Secured Obligations, as additional collateral for the
Obligations; provided that any agreement, note, indenture or other instrument in
connection with secured purchase money indebtedness (including Leases) may
prohibit the creation of a Lien in favor of the Agent for the benefit of itself
and the Holders of the Secured Obligations on the items of property obtained
with the proceeds of such purchase money indebtedness.
(D) Investments. Except to the extent permitted pursuant to paragraph (G)
below, neither the Borrower nor any of its Subsidiaries shall directly or
indirectly make or own any Investment except:
(i) Investments in Cash Equivalents;
(ii) Permitted Existing Investments in an amount not greater than the
amount thereof on the Closing Date;
(iii) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(iv) Investments consisting of loans to management of the Borrower in
an aggregate outstanding principal amount at any time not to exceed
$200,000 minus the aggregate outstanding amount of Permitted Existing
Investments;
(v) Investments consisting of (a) bank accounts maintained by the
Borrower and its Subsidiaries with financial institutions provided not
more than $15,000 shall be maintained in any such account at any one time
and not more than $200,000 shall be maintained in all such accounts at any
time; and (b) Collection Accounts maintained by the Borrower and its
Subsidiaries in compliance with the provisions of Section 6.2(M);
(vi) Investments with any other Persons which do not exceed $500,000
in the aggregate at any time; and
(vii) Investments consisting of Intercompany Loans permitted by
Section 6.3(A)(iii).
(E) Contingent Obligations. Neither the Borrower nor any of its
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, except:
(i) recourse obligations resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(ii) Permitted Existing Contingent Obligations and any extensions,
renewals or replacements thereof, provided that any such extension, renewal
or replacement is not greater than the Indebtedness under, and shall be on
terms no less favorable to the Borrower or such Subsidiary than the terms
of, the Permitted Existing Contingent Obligation being extended, renewed or
replaced;
69
(iii) obligations, warranties, and indemnities, not relating to
Indebtedness of any Person, which have been or are undertaken or made in
the ordinary course of business and not for the benefit of or in favor of
an Affiliate of the Borrower or such Subsidiary;
(iv) Contingent Obligations arising under the Transaction Documents;
(v) additional Contingent Obligations which do not exceed $100,000 in
the aggregate at any time;
(vi) Contingent Obligations with respect to surety, appeal and
performance bonds obtained by the Borrower or any Subsidiary in the
ordinary course of business; and
(vii) Contingent Obligations consisting of the guarantee of
Indebtedness of Holdings ("UPSTREAM GUARANTEE") provided:
(A) the Indebtedness guaranteed is for a sum certain;
(B) such Upstream Guarantee shall be with respect to Indebtedness
the principal amount of which does not exceed the amount which the
Borrower would be permitted to pay at the time such Upstream Guarantee
is entered into as a dividend under Section 6.3(F)(i) below; and
(C) the aggregate amount of Indebtedness guaranteed is deducted
from any calculations of dividends and interest distributions
permitted under Section 6.3(F)(i) for so long as such Upstream
Guarantee is outstanding.
(F) Restricted Junior Payments. Neither the Borrower nor any of its
Subsidiaries shall declare or make any Restricted Junior Payment, except:
(i) the Borrower may make (a) mandatory payments of interest due on
the Subordinated Intercompany Indebtedness ("SUBORDINATED INTEREST
PAYMENTS") and (b) other distributions (the "HOLDINGS' DIVIDENDS") to
Holdings in any fiscal year, from funds legally available for such purpose,
provided the aggregate amount of (1) Subordinated Interest Payments, plus
(2) Holdings' Dividends minus the aggregate amount of additional
Subordinated Intercompany Indebtedness loaned by Holdings to the Borrower
on the date of any such distribution does not exceed in the aggregate; (A)
50% of the net earnings (or loss) after taxes of Borrower and its
consolidated Subsidiaries on a consolidated basis for the period from
January 1, 1996 to the end of the most recently completed fiscal year for
which the audited financial statements have been delivered pursuant to
Section 6.1(A)(i) taken as a single accounting period determined in
conformity with Agreement Accounting Principles minus (B) the aggregate
amount of Contingent Obligations which are the subject of an Upstream
Guarantee;
(ii) the Borrower may make distributions to Holdings in any fiscal
year, from funds legally available for such purpose, in an amount not to
exceed the amount calculated pursuant
70
to Schedule 6.3(F)(ii) minus any amounts paid directly by the Borrower to
any Governmental Authority with respect to the consolidated group's tax
liability;
(iii) (a) mandatory payments of interest, principal or premium, if
any, due on the Subordinated Indebtedness as permitted under Section
6.3(A)(ii)(c), unless such payments are prohibited by the terms of such
Indebtedness or the subordination agreements related thereto and (b)
distributions to Holdings from funds legally available for such purpose, in
an amount equal to mandatory payments of principal and interest, if any,
due on the Orcal Notes unless such payments are prohibited by the terms of
such Indebtedness or the subordination provisions related thereto provided
such distributions shall not be permitted to be made prior to the date upon
which Holdings must make such payments to the holder(s) of the Orcal Notes
and for which adequate provisions must be made for insuring that such
payments on the Orcal Notes are made by Holdings through a disbursement
direction agreement for direct funding or some similar alternative
arrangement acceptable to the Agent; and
(iv) cash dividends or distributions on the Capital Stock of the
Borrower to fund actual out-of-pocket ordinary administrative expenses,
franchise taxes, accounting expenses and legal expenses of Holdings which
dividends shall not exceed $40,000 in any fiscal year;
provided, however, that:
(1) the Restricted Junior Payments described in clauses (i) through
(iv) above shall not be permitted if either a Default or an Unmatured
Default shall have occurred and be continuing at the date of declaration or
payment thereof or would result therefrom;
(2) the amount of Restricted Junior Payments permitted to be made
pursuant to clause (i) above shall be determined after the Agent's and the
Lenders' receipt of the audited financial statements to be delivered
pursuant to Section 6.1(a)(iii) (and the related Officer's Certificate
pursuant to Section 6.1(A)(iv)) for the immediately preceding fiscal year
and no earnings or income for any period shall be included in such
calculation until receipt of the above-reference audited financial
statements for such period;
(3) the Restricted Junior Payments described in clause (iii)(b) above
shall not be permitted to be made until after the Agent's and the Lenders'
receipt of: (1) the audited financial statements to be delivered pursuant
to Section 6.1(a)(iii) (and the related Officer's Certificate pursuant to
Section 6.1(A)(iv)) for the immediately preceding fiscal year; (2) the
unaudited quarterly financial statements to be delivered pursuant to
Section 6.1(a)(ii) (and the related Officer's Certificate pursuant to
Section 6.1(A)(iv)) for the immediately preceding fiscal quarter and (3)
the unaudited monthly financial statements to be delivered pursuant to
Section 6.1(A)(i) (and the related Officer's Certificate pursuant to
Section 6.1(A)(iv)) for the immediately preceding fiscal month (other than
in connection with the annual principal payment to be made under such
clause (iii)(b)), all of which financial statements shall reflect that no
Default or Unmatured Default shall exist prior to or after taking into
account the effect of any such payment; and
71
(4) In addition to the requirements set forth in clause (i) above,
Restricted Junior Payments described in clause (i) above shall not be
permitted to be made unless (A) the aggregate amount of such Restricted
Junior Payments described in clause (i) consisting of Holdings' Dividends
and Subordinated Interest Payments is not greater than the aggregate amount
of ADDITIONAL Subordinated Intercompany Indebtedness loaned by Holdings to
the Borrower on the date of such distributions; or (B) if the aggregate
amount of such Restricted Junior Payments described in clause (i)
consisting of Holdings' Dividends and Subordinated Interest Payments
exceeds the aggregate amount of ADDITIONAL Subordinated Intercompany
Indebtedness loaned by Holdings to the Borrower on the date of such
distributions (such excess being herein, the "NET DISTRIBUTION"):
(I) in addition to the audited financial statements required
pursuant to clause (2) above, the Agent and the Lenders shall have
received the unaudited quarterly financial statements to be delivered
pursuant to Section 6.1(A)(ii) (and the related Officer's Certificate
pursuant to Section 6.1(A)(iv)) for the fiscal quarter ending
immediately preceding the proposed date of such ; and
(II) the Borrower shall have demonstrated to the satisfaction of
the Agent and the Lenders that if the proposed Net Distribution had
been paid as of the end of the immediately preceding fiscal quarter,
the Fixed Charge Coverage Ratio as of the end of such quarter would
not be less than 1.25 to 1.00.
(G) Conduct of Business; Subsidiaries; Acquisitions. Neither the Borrower
nor any of its Subsidiaries shall engage in any business other than the
businesses engaged in by the Borrower or its Subsidiaries on the date hereof and
any business or activities which are substantially similar, related or
incidental thereto. Holdings shall not engage, either directly or indirectly
(except through the Borrower) in any operating business enterprise but shall
solely own the Capital Stock of the Borrower. Holdings shall not create,
capitalize or acquire any Subsidiary (other than the Borrower) after the date
hereof. The Borrower shall not create, capitalize or acquire any Subsidiary
after the date hereof. Neither the Borrower nor Alliance shall enter into any
transaction or series of transactions in which it acquires all or any
significant portion of the assets of another Person unless such purchase meets
the following requirements (each such purchase constituting a "PERMITTED
ACQUISITION"):
(1) no Default or Unmatured Default shall have occurred and be
continuing or would result from such transaction or transactions or the
incurrence of any Indebtedness in connection therewith;
(2) prior to each such purchase, the Borrower shall deliver to the
Agent and the Lenders a certificate from one of the Borrower's financial
officers demonstrating to the satisfaction of the Agent and the Required
Lenders that after giving effect to such transaction or transactions and
the incurrence of any Indebtedness permitted by Section 6.3(A) in
connection therewith on a pro forma basis as if such acquisition and such
incurrence of Indebtedness had occurred on the first day of the twelve-
month period ending on the last day of the Borrower's most recently
completed fiscal quarter, the Borrower would have been in
72
compliance with all provisions of Section 6.4 at all times during such
twelve-month period; and
(3) the purchase is consummated pursuant to a negotiated acquisition
agreement on a non-hostile basis and involves the purchase of a business
line similar, related or incidental to that of the Borrower and its
Subsidiaries as of the Closing Date.
(H) Transactions with Shareholders and Affiliates. Neither the Borrower
nor any of its Subsidiaries shall directly or indirectly (i) pay any management
fees or other similar fees or compensation to Holdings, CHS, any other holder or
holders of the Borrower's equity securities or any of their Affiliates, other
than wages, salaries and bonuses of employees who are also stockholders of the
Borrower in the ordinary course and consistent with past practices or (ii)
except in connection with the documents executed in connection with the "Orcal
Acquisition" (as defined in the Original Credit Agreement), enter into or permit
to exist any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with
Holdings, CHS, any other holder or holders of any of the Borrower's equity
securities or any of their Affiliates (which is not a Subsidiary of the
Borrower), on terms that are less favorable to the Borrower or any of its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate.
(I) Restriction on Fundamental Changes. Neither the Borrower nor any of
its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's or any such
Subsidiary's business or property, whether now or hereafter acquired, except
transactions permitted under Sections 6.3(B) or 6.3(G).
(J) Sales and Leasebacks. Neither the Borrower nor any of its Subsidiaries
shall become liable, directly, by assumption or by Contingent Obligation, with
respect to any lease, whether an Operating Lease or a Capitalized Lease, of any
property (whether real or personal or mixed) (i) which it or one of its
Subsidiaries sold or transferred or is to sell or transfer to any other Person,
or (ii) which it or one of its Subsidiaries intends to use for substantially the
same purposes as any other property which has been or is to be sold or
transferred by it or one of its Subsidiaries to any other Person in connection
with such lease, unless in either case the sale involved is not prohibited under
Section 6.3(B) and the lease involved is not prohibited under Section 6.3(A).
(K) Margin Regulations. Neither the Borrower nor any of its Subsidiaries,
shall use all or any portion of the proceeds of any credit extended under this
Agreement to purchase or carry Margin Stock.
(L) ERISA. The Borrower shall not engage, or permit any of its
Subsidiaries to engage, in any prohibited transaction described in Sections 406
of ERISA or 4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the DOL.
73
(M) Issuance of Capital Stock. Neither the Borrower nor any of its
Subsidiaries shall issue any Capital Stock.
(N) Corporate Documents. Neither the Borrower nor any of its Subsidiaries
shall amend, modify or otherwise change any of the terms or provisions in any of
their respective corporate documents (other than the by-laws and, in the case of
by-laws, any of the material terms or provisions thereof) as in effect on the
date hereof in any manner adverse to the interests of the Lenders without the
prior written consent of the Required Lenders (which consent shall not be
unreasonably withheld).
(O) Other Indebtedness. (i) Except as permitted in Section 6.3(S), the
Borrower shall not amend, supplement or otherwise modify the terms of any
Indebtedness (other than the Obligations) permitted under Section 6.3(A) in any
way that would be materially less advantageous to the Borrower or materially
adverse to the Lenders, including, without limitation, with respect to amount,
maturity, amortization, interest rate, premiums, fees, covenants, events of
default and remedies. Except for payments made in the ordinary course with
respect to the Borrower's trade indebtedness and except as permitted in Section
6.3(F)(iii), neither the Borrower nor any of its Subsidiaries shall purchase,
redeem, prepay or repay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness (other than the Obligations)
permitted under Section 6.3(A).
(ii) Holdings shall not amend, supplement or otherwise modify the
Holdings Subordinated Debt (as in effect as of the date of issuance thereof) in
any way that would be materially less advantageous to Holdings or materially
adverse to the Lenders, including, without limitation, with respect to amount,
maturity, amortization, interest rate, premiums, fees, covenants, events of
default, remedies, dividends and subordination provisions.
(P) Fiscal Year. Neither the Borrower nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the 12-month period ending on December 31 of each calendar
year.
(Q) Subsidiary Covenants. The Borrower will not, and will not permit any
Subsidiary to, create or otherwise become effective any consensual encumbrance
or restriction of any kind on the ability of any Subsidiary to pay dividends or
make any other distribution on its stock, or make any other Restricted Junior
Payment, pay any Indebtedness or other Obligation owed to the Borrower or any
other Subsidiary, make loans or advances or other Investments in the Borrower or
any other Subsidiary, or sell, transfer or otherwise convey any of its property
to the Borrower or any other Subsidiary.
(R) Rate Hedging Obligations. The Borrower shall not and shall not permit
any of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap, leveraged derivative or similar agreements
other than interest rate, foreign currency or commodity exchange, swap, collar,
cap or similar agreements entered into by the Borrower pursuant to Section
6.2(L) hereof or pursuant to which the Borrower has hedged its actual interest
rate, foreign currency or commodity exposure (such hedging agreements are
sometimes referred to herein as "Interest Rate Agreements").
74
(S) Subordinated Indebtedness. The Borrower shall not amend, supplement or
modify the terms of any Permitted Subordinated Indebtedness, or make any payment
required as a result of an amendment or change thereto other than amendments,
supplements or modifications which (i) decrease the rate of interest payable on
the Permitted Subordinated Indebtedness, (ii) provide for the payment in kind in
lieu of cash of any portion of the interest on the Permitted Subordinated
Indebtedness, (iii) provide for the extension of the maturity date with respect
to any principal or interest payment to be made under instruments evidencing
Permitted Subordinated Indebtedness, (iv) provide more flexibility to the
Borrower in connection with any financial covenants, (v) waives any defaults
existing in connection with the Permitted Subordinated Indebtedness, and (vi) do
not adversely affect in any respect the interests of the Agent or the Holders of
the Secured Obligations.
6.4 Financial Covenants. The Borrower shall comply, and shall cause
Holdings and its consolidated Subsidiaries to comply, with the following:
(A) Defined Terms for Financial Covenants. The following terms used in
this Agreement shall have the following meanings (such meanings to be
applicable, except to the extent otherwise indicated in a definition of a
particular term, both to the singular and the plural forms of the terms
defined):
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases and Permitted Purchase Money Indebtedness) by Holdings and
its consolidated Subsidiaries during that period that, in conformity with
Agreement Accounting Principles, are required to be included in or reflected by
the property, plant, equipment or similar fixed asset accounts reflected in the
consolidated balance sheet of Holdings and its consolidated Subsidiaries other
than with respect to the acquisition of fixed assets in connection with any
Acquisitions.
"EBITA" means, for any period, on a consolidated basis for Holdings and its
consolidated Subsidiaries, the sum, without duplication, of the amounts for such
period of (i) Net Income, plus (ii) charges against income for foreign, federal,
state and local taxes, plus (iii) Interest Expense, plus (iv) Non-Cash Interest
Expense plus (v) Fees, plus (vi) amortization expense, including, without
limitation, amortization of goodwill and other intangible assets, plus (vii)
other non-cash charges classified as long-term deferrals in accordance with
Agreement Accounting Principles, minus (viii) interest income, minus (ix)
extraordinary gains (and any unusual gains arising in or outside of the ordinary
course of business not included in extraordinary gains determined in accordance
with Agreement Accounting Principles which have been included in the
determination of Net Income).
"FEES" means fees (including agency and unused commitment fees) and
discounts with respect to (i) Letters of Credit and (ii) Indebtedness evidenced
by this Agreement.
"INTEREST EXPENSE" means, for any period, total consolidated interest
expense of Holdings and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases), but excluding Non-Cash
Interest Expense and Fees, all as determined in conformity with Agreement
Accounting Principles. For purposes of determining compliance with the
requirements of
75
clause (4) of Section 6.3(F) with respect to any proposed Net Distribution, the
amount of such Net Distribution shall be treated as Interest Expense.
"NET INCOME" means, for any period, the net earnings (or loss) after taxes
of Holdings and its consolidated Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
Agreement Accounting Principles.
"NON-CASH INTEREST EXPENSE" means, for any period, that portion of the
consolidated interest expense of Holdings and its consolidated Subsidiaries
which is not payable in cash, including, without limitation (i) amortization of
discount and (ii) accrued interest on the Holdings Subordinated Notes, all as
determined in accordance with Agreement Accounting principles.
"RENTALS" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property having an original term
(including any required renewals or any renewals at the option of the lessor or
lessee) of one year or more but does not include any amounts payable under
Capitalized Leases of such Person.
(B) Interest Expense Coverage Ratio. Maintain a ratio (the "INTEREST
EXPENSE COVERAGE RATIO") of (i) EBITA to (ii) Interest Expense for the
applicable period of at least 2.00 to 1.00 for the fiscal quarter ended
March 31, 1995 and for each fiscal quarter thereafter until the Termination
Date. In each case the Interest Coverage Ratio shall be determined as of the
last day of each fiscal quarter for the four-quarter period ending on such day.
(C) Fixed Charge Coverage Ratio. Maintain a ratio of: (i) the sum,
without duplication, of the amounts of (a) EBITA, plus (b) depreciation expense,
plus (c) Rentals, minus (d) Capital Expenditures to (ii) the sum, without
duplication, of the amounts of (a) Interest Expense, plus (b) Fees, plus (c)
Rentals, plus (d) the aggregate of the Restricted Junior Payments consisting of
tax related payments paid pursuant to Section 6.3(F)(ii) and any amounts paid
directly by the Borrower to any Governmental Authority with respect to the
consolidated group's tax liability, plus (e) scheduled amortization of the
principal portion of the Term Loans and scheduled amortization of the principal
portion of all other Indebtedness of Holdings and its Subsidiaries during such
period, plus (f) all payments in the nature of dividends, distributions, return
of capital or other similar payments made by Holdings to holders of its equity
securities (the intent hereof being to capture all payments which if made by the
Borrower would be classified as Restricted Junior Payments), plus (g) Net
Distributions of at least (1) 1.15 to 1.00 for each fiscal quarter for the
period commencing with the fiscal quarter ended March 31, 1996 through the
fiscal quarter ending June 30, 1997 and (2) 1.20 to 1.00 for each fiscal quarter
thereafter until the Termination Date. In each case the Fixed Charge Coverage
Ratio shall be determined as of the last day of each fiscal quarter for the
four-quarter period ending on such day;
(D) Maximum Leverage Ratio. Not permit the ratio ("LEVERAGE RATIO") of
(i) the sum, without duplication, of (y) Indebtedness of Holdings and its
consolidated subsidiaries for borrowed money (excluding from such calculation
Indebtedness of Holdings in connection with the Holdings Subordinated Notes)
plus (z) the maximum fixed repurchase price of any Redeemable Stock of
76
Holdings to the extent that payment thereof may be funded as a permissible
Restricted Junior Payment under the terms of Section 6.3(F) to (ii) the sum,
without duplication, of (a) EBITA plus (b) depreciation expenses minus (c)
Capital Expenditures, of not greater than the 4.00 to 1.00 for the fiscal
quarter ended March 31, 1996 and for each fiscal quarter thereafter until the
Termination Date. The Leverage Ratio shall be calculated, in each case,
determined as of the last day of each fiscal quarter based upon (A) (i) with
respect to Revolving Loans, the average of the outstanding amounts as of the
last day of each quarter for the four quarters in the period then ended and (ii)
with respect to the Term Loans and other Indebtedness, the outstanding amount as
of the end of the quarter then ended; and (B) for EBITA and depreciation, the
average for the four-quarter period ending on such day and (C) for Capital
Expenditures the amount spent during such four-quarter period.
ARTICLE VII: DEFAULTS
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7.1 Defaults. Each of the following occurrences shall constitute a
Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall (i) fail to pay
when due any of the Obligations consisting of principal with respect to the
Loans or (ii) shall fail to pay within three (3) Business Days of the date when
due any of the other Obligations under this Agreement or the other Loan
Documents.
(b) Breach of Certain Covenants. The Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on the Borrower under:
(i) Sections 6.1(C), 6.1(D), 6.1(E), 6.1(F), 6.1(G), 6.1(H), 6.1(I),
6.1(K), 6.2(B) or 6.2(F) and such failure shall continue unremedied for
fifteen (15) days;
(ii) Section 6.1(A), 6.1(B) or 6.1(J) and such failure shall continue
unremedied for five (5) Business Days; or
(iii) Section 6.3 or 6.4(B), 6.4(C), 6.4(D), 6.4(E) or 6.4(F).
(c) Breach of Representation or Warranty. Any representation or warranty
made or deemed made by the Borrower to the Agent, any Lender or any Issuing Bank
herein or by Holdings, the Borrower or any of its Subsidiaries in any of the
other Loan Documents or in any statement or certificate at any time given by any
such Person pursuant to any of the Loan Documents shall be false or misleading
in any material respect on the date as of which made (or deemed made).
(d) Other Defaults. The Borrower shall default in the performance of or
compliance with any term contained in this Agreement (other than as covered by
paragraphs (a), (b) or (c) of this Section 7.1), or Holdings, the Borrower or
any of its Subsidiaries shall default in the performance of or compliance with
any term contained in any of the other Loan Documents, and such default shall
continue for thirty (30) days after the occurrence thereof.
77
(e) Default as to Other Indebtedness; Operating Leases. The Borrower or
any of its Subsidiaries shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) with
respect to any Indebtedness (other than the Obligations), the outstanding
principal amount of which Indebtedness is in excess of $1,000,000; or any
breach, default or event of default shall occur, or any other condition shall
exist under any instrument, agreement or indenture pertaining to any such
Indebtedness, if the effect thereof is to cause an acceleration, mandatory
redemption, a requirement that the Borrower offer to purchase such Indebtedness
or other required repurchase of such Indebtedness, or permit the holder(s) of
such Indebtedness to accelerate the maturity of any such Indebtedness or require
a redemption or other repurchase of such Indebtedness; or any such Indebtedness
shall be otherwise declared to be due and payable (by acceleration or otherwise)
or required to be prepaid, redeemed or otherwise repurchased by the Borrower or
any of its Subsidiaries (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
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(i) An involuntary case shall be commenced against Holdings, the
Borrower or any of the Borrower's Subsidiaries and the petition shall not
be dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of Holdings, the
Borrower or any of the Borrower's Subsidiaries in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted under
any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Holdings, the
Borrower or any of the Borrower's Subsidiaries or over all or a substantial
part of the property of Holdings, the Borrower or any of the Borrower's
Subsidiaries shall be entered; or an interim receiver, trustee or other
custodian of Holdings, the Borrower or any of the Borrower's Subsidiaries
or of all or a substantial part of the property of Holdings, the Borrower
or any of the Borrower's Subsidiaries shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of
the property of Holdings, the Borrower or any of the Borrower's
Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Holdings, the
Borrower or any of the Borrower's Subsidiaries shall (i) commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (ii) consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, (iii) consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property, (iv) make any assignment for the benefit of creditors or
(v) take any corporate action to authorize any of the foregoing.
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(h) Judgments and Attachments. Any money judgment(s) (other than a money
judgment covered by insurance as to which the insurance company has not
disclaimed or reserved the right to disclaim coverage), writ or warrant of
attachment, or similar process against the Borrower or any of its Subsidiaries
or any of their respective assets involving in any single case or in the
aggregate an amount in excess of $1,000,000 is (are) entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days or
in any event later than fifteen (15) days prior to the date of any proposed sale
thereunder.
(i) Dissolution. Any order, judgment or decree shall be entered against
the Borrower decreeing its involuntary dissolution or split up and such order
shall remain undischarged and unstayed for a period in excess of sixty (60)
days; or the Borrower shall otherwise dissolve or cease to exist except as
specifically permitted by this Agreement.
(j) Loan Documents; Failure of Security. At any time, for any reason,
(i) any Loan Document as a whole that materially affects the ability of the
Agent, or any of the Lenders to enforce the Obligations or enforce their rights
against the Collateral ceases to be in full force and effect or Holdings, the
Borrower or any of the Borrower's Subsidiaries party thereto seeks to repudiate
its obligations thereunder and the Liens intended to be created thereby are, or
Holdings, the Borrower or any such Subsidiary seeks to render such Liens,
invalid and unperfected, or (ii) Liens on Collateral with a fair market value in
excess of $1,000,000 in favor of the Agent contemplated by the Loan Documents
shall, at any time, for any reason, be invalidated or otherwise cease to be in
full force and effect, or such Liens shall not have the priority contemplated by
this Agreement or the Loan Documents.
(k) Termination Event. Any Termination Event occurs which the Required
Lenders believe is reasonably likely to subject the Borrower to liability in
excess of $1,000,000.
(l) Waiver Application. The plan administrator of any Benefit Plan
applies under Section 412(d) of the Code for a waiver of the minimum funding
standards of Section 412(a) of the Code and the Agent believes that the
substantial business hardship upon which the application for the waiver is based
is reasonably likely to subject the Borrower to liability in excess of
$1,000,000.
(m) Change of Control. A Change of Control shall occur.
(n) Interest Rate Agreements. Nonpayment by the Borrower of any
obligation under the any Interest Rate Agreements entered into with any Lender
or the breach by the Borrower of any term, provision or condition contained in
any such Interest Rate Agreements.
(o) Environmental Matters. The Borrower or any of its Subsidiaries shall
be the subject of any proceeding or investigation pertaining to (i) the Release
by the Borrower or any of its Subsidiaries of any Contaminant into the
environment, (ii) the liability of the Borrower or any of its Subsidiaries
arising from the Release by any other Person of any Contaminant into the
environment, or (iii) any violation of any Environmental, Health or Safety
Requirements of Law which by the Borrower or any of its Subsidiaries, where,
such Release, liability or violation individually or when aggregated with
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all other such Releases, liabilities and violations has or is reasonably likely
to have a Material Adverse Effect.
(p) Guarantor Revocation. Any guarantor of the Obligations shall
terminate or revoke any of its obligations under the applicable guarantee
agreement or breach any of the terms of such guarantee agreement.
(q) Failure of Subordination. The subordination provisions of the
documents and instruments evidencing any Permitted Subordinated Indebtedness
shall, at any time, be invalidated or otherwise cease to be in full force and
effect.
A Default shall be deemed "continuing" until cured or until waived in
writing in accordance with Section 8.3.
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
- ------------------------------------------------------------------------
REMEDIES
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8.1 Termination of Commitments; Acceleration. If any Default described
in Section 7.1(f) or 7.1(g) occurs with respect to the Borrower, the obligations
of the Lenders to make Loans hereunder and the obligation of the Agent to issue
Letters of Credit hereunder shall automatically terminate and the Obligations
shall immediately become due and payable without any election or action on the
part of the Agent or any Lender. If any other Default occurs, the Required
Lenders may terminate or suspend the obligations of the Lenders to make Loans
hereunder and the obligation of the Agent to issue Letters of Credit hereunder,
or declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.
8.2 Defaulting Lender. In the event that any Lender fails to fund its
Pro Rata Share of any Advance requested or deemed requested by the Borrower
which such Lender is obligated to fund under the terms of this Agreement (the
funded portion of such Advance being hereinafter referred to as a "Non Pro Rata
Loan"), until the earlier of such Lender's cure of such failure and the
termination of the Revolving Loan Commitments, the proceeds of all amounts
thereafter repaid to the Agent by the Borrower and otherwise required to be
applied to such Lender's share of all other Obligations pursuant to the terms of
this Agreement shall be advanced to the Borrower by the Agent on behalf of such
Lender to cure, in full or in part, such failure by such Lender, but shall
nevertheless be deemed to have been paid to such Lender in satisfaction of such
other Obligations. Notwithstanding anything in this Agreement to the contrary:
(i) the foregoing provisions of this Section 8.2 shall apply only
with respect to the proceeds of payments of Obligations and shall not
affect the conversion or continuation of Loans pursuant to Section 2.11;
(ii) any such Lender shall be deemed to have cured its failure to
fund its Pro Rata Share of any Advance at such time as an amount equal to
such Lender's original Pro Rata
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Share of the requested principal portion of such Advance is fully funded to
the Borrower, whether made by such Lender itself or by operation of the
terms of this Section 8.2, and whether or not the Non Pro Rata Loan with
respect thereto has been repaid, converted or continued;
(iii) amounts advanced to the Borrower to cure, in full or in part,
any such Lender's failure to fund its Pro Rata Share of any Advance ("Cure
Loans") shall bear interest at the rate applicable to Floating Rate Loans
in effect from time to time, and for all other purposes of this Agreement
shall be treated as if they were Floating Rate Loans;
(iv) regardless of whether or not a Default has occurred or is
continuing, and notwithstanding the instructions of the Borrower as to its
desired application, all repayments of principal which, in accordance with
the other terms of this Agreement, would be applied to the outstanding
Floating Rate Loans shall be applied first, ratably to all Floating Rate
Loans constituting Non Pro Rata Loans, second, ratably to Floating Rate
Loans other than those constituting Non Pro Rata Loans or Cure Loans and,
third, ratably to Floating Rate Loans constituting Cure Loans;
(v) for so long as and until the earlier of any such Lender's cure
of the failure to fund its Pro Rata Share of any Advance and the
termination of the Revolving Loan Commitments, the term "Required Lenders"
for purposes of this Agreement shall mean Lenders (excluding all Lenders
whose failure to fund their respective Pro Rata Shares of such Advance have
not been so cured) whose Pro Rata Shares represent equal to or greater than
sixty-six and two thirds percent (66-2/3%) of the aggregate Pro Rata Shares
of such Lenders; and
(vi) for so long as and until any such Lender's failure to fund its
Pro Rata Share of any Advance is cured in accordance with Section 8.2(ii),
(A) such Lender shall not be entitled to any commitment fees with respect
to its Revolving Loan Commitment and (B) such Lender shall not be entitled
to any letter of credit fees, which commitment fees and letter of credit
fees shall accrue in favor of the Lenders which have funded their
respective Pro Rata Share of such requested Advance, shall be allocated
among such performing Lenders ratably based upon their relative Revolving
Loan Commitments, and shall be calculated based upon the average amount by
which the aggregate Revolving Loan Commitments of such performing Lenders
exceeds the sum of (I) the outstanding principal amount of the Loans owing
to such performing Lenders, plus (II) the outstanding Reimbursement
Obligations owing to such performing Lenders, plus (III) the aggregate
participation interests of such performing Lenders arising pursuant to
Section 2.21 with respect to undrawn and outstanding Letters of Credit.
8.3 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
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(i) Postpone or extend the Revolving Credit Termination Date, the
Term Loan Termination Date or any other date fixed for any payment of
principal of, or interest on, the Loans, the Reimbursement Obligations or
any fees or other amounts payable to such Lender (except with respect to
any modifications of the provisions relating to prepayments of Loans and
other Obligations).
(ii) Reduce the principal amount of any Loans or L/C Obligations, or
reduce the rate or extend the time of payment of interest or fees thereon.
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Revolving Loan Commitment of any
Lender hereunder (except with respect to an increase in the amount, or
other modification to the terms or components, of the Borrowing Base).
(v) Permit the Borrower to assign its rights under this Agreement.
(vi) Amend this Section 8.3.
(vii) Release all or substantially all of the Collateral.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3(B) without obtaining the consent of any
of the Lenders.
8.4 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan or the issuance of a Letter of Credit notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan or issuance of such Letter of Credit shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.3, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
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ARTICLE IX: GENERAL PROVISIONS
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9.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Notes and
the making of the Loans herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower and the Agent shall not be obligated to issue any Letter of Credit for
the account of the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
9.3 Performance of Obligations. The Borrower agrees that the Agent may,
but shall have no obligation to (i) at any time, pay or discharge taxes, liens,
security interests or other encumbrances levied or placed on or threatened
against any Collateral and (ii) after the occurrence and during the continuance
of a Default make any other payment or perform any act required of the Borrower
under any Loan Document or take any other action which the Agent in its
discretion deems necessary or desirable to protect or preserve the Collateral,
including, without limitation, any action to (y) effect any repairs or obtain
any insurance called for by the terms of any of the Loan Documents and to pay
all or any part of the premiums therefor and the costs thereof and (z) pay any
rents payable by the Borrower which are more than 30 days past due, or as to
which the landlord has given notice of termination, under any lease. The Agent
shall use its best efforts to give the Borrower notice of any action taken under
this Section 9.3 prior to the taking of such action or promptly thereafter
provided the failure to give such notice shall not affect the Borrower's
obligations in respect thereof. The Borrower agrees to pay the Agent, upon
demand, the principal amount of all funds advanced by the Agent under this
Section 9.3, together with interest thereon at the rate from time to time
applicable to Floating Rate Loans from the date of such advance until the
outstanding principal balance thereof is paid in full. If the Borrower fails to
make payment in respect of any such advance under this Section 9.3 within one
(1) Business Day after the date the Borrower receives written demand therefor
from the Agent, the Agent shall promptly notify each Lender and each Lender
agrees that it shall thereupon make available to the Agent, in dollars in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
such advance. If such funds are not made available to the Agent by such Lender
within one (1) Business Day after the Agent's demand therefor, the Agent will be
entitled to recover any such amount from such Lender together with interest
thereon at the Effective Federal Funds Rate for each day during the period
commencing on the date of such demand and ending on the date such amount is
received. The failure of any Lender to make available to the Agent its Pro Rata
Share of any such unreimbursed advance under this Section 9.3 shall neither
relieve any other Lender of its obligation hereunder to make available to the
Agent such other Lender's Pro Rata Share of such advance on the date such
payment is to be made nor increase the obligation of any other Lender to make
such payment to the Agent. All outstanding principal of, and interest on,
advances made under this Section 9.3 shall constitute Obligations secured by the
Collateral until paid in full by the Borrower.
9.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
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9.5 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
9.7 Expenses; Indemnification.
-------------------------
(A) Expenses. The Borrower shall reimburse the Agent for any reasonable
costs, internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agent,
which attorneys and paralegals may be employees of the Agent) paid or incurred
by the Agent in connection with the preparation, negotiation, execution,
delivery, syndication, review, amendment, modification, and administration of
the Loan Documents. The Borrower also agrees to reimburse the Agent and the
Lenders for any costs, internal charges and out-of-pocket expenses (including
attorneys' and paralegals' fees and time charges of attorneys and paralegals for
the Agent and the Lenders, which attorneys and paralegals may be employees of
the Agent or the Lenders) paid or incurred by the Agent or any Lender in
connection with the collection of the Obligations and enforcement of the Loan
Documents. In addition to expenses set forth above, the Borrower agrees to
reimburse the Agent, promptly after the Agent's request therefor, for each
audit, collateral analysis or other business analysis performed by or for the
benefit of the Lenders in connection with this Agreement or the other Loan
Documents in an amount equal to the Agent's then customary charges for each
person employed to perform such audit or analysis, plus all costs and expenses
(including without limitation, travel expenses) incurred by the Agent in the
performance of such audit or analysis. Agent shall provide the Borrower with a
detailed statement of all reimbursements requested under this Section.
(B) Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Agent and each and all of the Lenders and each
of their respective Affiliates, and each of such Agent's, Lender's, or
Affiliate's respective officers, directors, employees, attorneys and agents
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article IV) (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses damages, penalties, actions, judgments, suits,
claims, costs, expenses of any kind or nature whatsoever (including, without
limitation, the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated a party thereto), imposed
on, incurred by, or asserted against such Indemnitees in any manner relating to
or arising out of:
(i) this Agreement, the other Loan Documents or any of the
Transaction Documents, or any act, event or transaction related or
attendant thereto, the making of the Loans, and the issuance of and
participation in Letters of Credit hereunder, the management of such
Loans
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or Letters of Credit, the use or intended use of the proceeds of the
Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Transaction Documents; or
(ii) any liabilities, obligations, responsibilities, losses, damages,
personal injury, death, punitive damages, economic damages, consequential
damages, treble damages, intentional, willful or wanton injury, damage or
threat to the environment, natural resources or public health or welfare,
costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of investigation, feasibility or remedial action
studies), fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future
relating to violation of any Environmental, Health or Safety Requirements
of Law arising from or in connection with the past, present or future
operations of Holdings, the Borrower, its Subsidiaries or any of their
respective predecessors in interest, or, the past, present or future
environmental, health or safety condition of any respective property of the
Borrower or its Subsidiaries, the presence of asbestos-containing materials
at any respective property of the Borrower or its Subsidiaries or the
Release or threatened Release of any Contaminant into the environment
(collectively, the "Indemnified Matters");
provided, however, the Borrower shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Matters caused solely by or resulting
solely from (y) a dispute among the Lenders or a dispute between any Lender and
the Agent, or (z) the willful misconduct or Gross Negligence of such Indemnitee
or breach of contract by such Indemnitee with respect to the Loan Documents, in
each case, as determined by the final non-appealed judgment of a court of
competent jurisdiction. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees. In addition, no settlement shall be entered into
by Holdings, the Borrower or any if its Subsidiaries with respect to any claim,
litigation, arbitration or other proceeding relating to or arising out of the
transaction evidenced by this Agreement, the other Loan Documents or in
connection with any Permitted Acquisition (whether or not the Agent or any
Lender or any Indemnitee is a party thereto) unless such settlement releases all
Indemnitees from any and all liability with respect thereto.
(C) Waiver of Certain Claims. The Borrower further agrees to assert no
claim against any of the Indemnitees on any theory of liability for
consequential, special, indirect, exemplary or punitive damages.
(D) Survival of Agreements. The obligations and agreements of the
Borrower under this Section 9.7 shall survive the termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
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9.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.11 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations.
9.12 GOVERNING LAW. THE AGENT HEREBY ACCEPTS THIS AGREEMENT, ON BEHALF
OF ITSELF AND THE LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO
IT THERE. ANY DISPUTE BETWEEN THE BORROWER AND THE AGENT, ANY LENDER, OR ANY
OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS.
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
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(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES
HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE AGENT, ANY LENDER
OR ANY HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE
BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1)
OBTAIN PERSONAL JURISDICTION OVER THE
86
BORROWER OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PERSON. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED
A PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, IRREVOCABLY
APPOINTS THE PRENTICE HALL CORPORATION SYSTEM, INC., THE BORROWER'S REGISTERED
AGENT, WHOSE ADDRESS IS 33 NORTH LASALLE STREET, SUITE 1925, CHICAGO, ILLINOIS
60602, AS THE BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS
ISSUED BY ANY COURT. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, THE REAL
PROPERTY COLLATERAL) OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
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(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY
HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF
THIS SECTION 9.13, WITH ITS COUNSEL.
9.14 Subordination of Intercompany Indebtedness. The Borrower agrees that
any and all claims of the Borrower against Alliance, any endorser or any other
guarantor of all or any part of the Secured Obligations, or against any of its
properties, including without limitation pursuant to the Intercompany Note or
Intercompany Security Agreement executed pursuant to Section 6.3(A)(iii), shall
be subordinate and subject in right of payment to the prior payment, in full and
in cash, of all Secured Obligations. Notwithstanding any right of the Borrower
to ask, demand, sue for, take or receive any payment from Alliance all rights,
liens and security interests of the Borrower, whether now or hereafter arising
and howsoever existing, in any assets of Alliance (whether constituting part of
Collateral given to any Holder of Secured Obligations or the Agent to secure
payment of all or any part of the Secured Obligations or otherwise) shall be and
are subordinated to the rights of the Holders of Secured Obligations and the
Agent in those assets. The Borrower shall have no right to possession of any
such asset or to foreclose upon any such asset, whether by judicial action or
otherwise, unless and until all of the Secured Obligations (other than
contingent indemnity obligations) shall have been fully paid and satisfied and
all financing arrangements among the Borrowers and the Holders of Secured
Obligations have been terminated. If all or any part of the assets of Alliance,
or the proceeds thereof, are subject to any distribution, division or
application to the creditors of Alliance, whether partial or complete, voluntary
or involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of Alliance is dissolved or if substantially all
of the assets of Alliance are sold, then, and in any such event, any payment or
distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to any
indebtedness of Alliance to the Borrower, including the Intercompany Loans
("INTERCOMPANY INDEBTEDNESS") shall be paid or delivered directly to the Agent
for application on any of the Secured Obligations, due or to become due, until
such Secured Obligations (other than contingent indemnity obligations) shall
have first been fully paid and satisfied. The Borrower irrevocably authorizes
and empowers the Agent to demand, sue for, collect and receive every such
payment or distribution and give acquittance therefor and to make and present
for and on behalf of the Borrower such proofs of claim and take such other
action, in the Agent's own name or in the name of the Borrower or otherwise, as
the Agent may deem necessary or advisable for the enforcement of this Section
9.14. The Agent may vote such proofs of claim in any such proceeding, receive
and collect any and all dividends or other payments or disbursements made
thereon in whatever form the same may be paid or issued and apply the same on
account of any of the Secured Obligations. Should any payment, distribution,
security or instrument or proceeds thereof be received by the Borrower upon or
with respect to the Intercompany Indebtedness prior to the satisfaction of all
of the Secured Obligations (other than contingent indemnity obligations) and the
termination of all financing arrangements among the Borrowers and the Holders of
Secured Obligations, the Borrower shall receive and hold the same in trust, as
trustee, for the benefit of the Holders of Secured Obligations and shall
forthwith deliver the same to the Agent, for the benefit of the Holders of
Secured Obligations, in precisely the form received (except for the endorsement
or assignment of the Borrower where necessary), for application to any of the
Secured Obligations, due or not due, and, until so delivered, the same shall be
held in trust by the Borrower as the property of the Holders of Secured
Obligations. If the Borrower fails to make any such
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endorsement or assignment to the Agent, the Agent or any of its officers or
employees are irrevocably authorized to make the same. The Borrower agrees that
until the Secured Obligations (other than the contingent indemnity obligations)
have been paid in full (in cash) and satisfied and all financing arrangements
among the Borrowers and the Holders of Secured Obligations have been terminated,
the Borrower will not assign or transfer to any Person (other than the Agent)
any claim the Borrower has or may have against Alliance.
9.15 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and each of the other Loan
Documents. In the event an ambiguity or question of intent or interpretation
arises, this Agreement and the other Loan Documents shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement or the other Loan Documents.
ARTICLE X: THE AGENT
10.1 Appointment. The First National Bank of Chicago is appointed by the
Lenders as the Agent hereunder and under each other Loan Document, and each of
the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
X. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement and that the Agent is
merely acting as the representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders' contractual representative, the Agent (i) does not
assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of
the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code
and (iii) is acting as an independent contractor, the rights and duties of which
are limited to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders agrees to assert no claim against the Agent on
any agency theory or any other theory of liability for breach of fiduciary duty,
all of which claims each Lender waives.
10.2 Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties or fiduciary duties to the Lenders, or any
obligation to the Lenders to take any action hereunder or under any of the other
Loan Documents except any action specifically provided by the Loan Documents
required to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is found in a final judgment by a court of
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competent jurisdiction to have arisen solely from (i) the Gross Negligence or
willful misconduct of such Person or (ii) breach of contract by such Person with
respect to the Loan Documents.
10.4 No Responsibility for Loans, Creditworthiness, Collateral, Recitals,
Etc. Neither the Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(i) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of any obligor under any Loan Document; (iii) the
satisfaction of any condition specified in Article IV, except receipt of items
required to be delivered solely to the Agent; (iv) the existence or possible
existence of a Default or Unmatured Default or (v) the validity, effectiveness
or genuineness of any Loan Document or any other instrument or writing furnished
in connection therewith. The Agent shall not be responsible to any Lender for
any recitals, statements, representations or warranties herein or in any of the
other Loan Documents, for the perfection or priority of any of the Liens on any
of the Collateral, or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions contemplated thereby, or for
the financial condition of any guarantor of any or all of the Obligations,
Holdings, the Borrower or any of their respective Subsidiaries.
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorney-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Revolving Loan Commitment (i) for any amounts not reimbursed by the
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Borrower for which the Agent is entitled to reimbursement by the Borrower under
the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents including as a result of a
dispute among the Lenders or between any Lender and the Agent and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, including as a result of a
dispute among the Lenders or between any Lender and the Agent, provided that no
Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the Gross Negligence or willful
misconduct of the Agent.
10.9 Rights as a Lender. With respect to its Revolving Loan Commitment,
Loans made by it and the Notes issued to it, the Agent shall have the same
rights and powers hereunder and under any other Loan Document as any Lender and
may exercise the same as through it were not the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent may accept deposits from, lend money to,
enter into Interest Rate Agreements and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person.
10.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by Holdings and the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Lender also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the other Loan
Documents.
10.11 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, and the Agent may be
removed at any time with or without cause by written notice received by the
Agent from the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of the Borrower and
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty days after the retiring Agent's giving notice of resignation, then
the retiring Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Notwithstanding anything herein to the contrary, so long as no
Default has occurred and is continuing, each such successor Agent shall be
subject to approval by the Borrower, which approval shall not be unreasonably
withheld. Such successor Agent shall be a commercial bank having capital and
retained earnings of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent
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shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article X shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder and under the other Loan Documents.
10.12 Collateral Documents. Each Lender hereby authorizes the Agent to
enter into each of the Collateral Documents to which it is a party and to take
all action contemplated by such documents. Each Lender agrees that no Lender
shall have the right individually to seek to realize upon the security granted
by any Collateral Document, it being understood and agreed that such rights and
remedies may be exercised solely by the Agent for the benefit of the Holders of
Secured Obligations upon the terms of the Collateral Documents.
ARTICLE XI: SETOFF; RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if any Default occurs and is continuing, any
indebtedness from any Lender to the Borrower (including all account balances,
whether provisional or final and whether or not collected or available) may be
offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be due.
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Sections 3.1, 3.2 or 3.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligation or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to the obligations owing to them. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
11.3 Application of Payments. Subject to the provisions of Section 8.2,
the Agent shall, unless otherwise specified at the direction of the Required
Lenders which direction shall be consistent with the last sentence of this
Section 11.3, apply all payments and prepayments in respect of any Obligations
and all proceeds of Collateral in the following order:
(A) first, to pay interest on and then principal of any portion of
the Loans which the Agent may have advanced on behalf of any Lender for which
the Agent has not then been reimbursed by such Lender or the Borrower;
(B) second, to pay interest on and then principal of any advance made
under Section 9.3 for which the Agent has not then been paid by the Borrower or
reimbursed by the Lenders;
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(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agent;
(D) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and the issuer(s) of
Letters of Credit;
(E) fifth, to pay interest due in respect of Loans and L/C Obligations;
(F) sixth, to the ratable payment or prepayment of principal outstanding
on Loans, Reimbursement Obligations and Rate Hedging Obligations in such order
as the Agent may determine in its sole discretion;
(G) seventh, to provide required cash collateral if any pursuant to
Section 2.24; and
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior to
the occurrence of a Default) by the Borrower, all principal payments in respect
of Loans shall be applied first, to the outstanding Revolving Loans and, second,
to the outstanding Term Loans, in each case, first, to repay outstanding
Floating Rate Loans, and then to repay outstanding Eurodollar Loans with those
Eurodollar Loans which have earlier expiring Interest Periods being repaid prior
to those which have later expiring Interest Periods. The order of priority set
forth in this Section 11.3 and the related provisions of this Agreement are set
forth solely to determine the rights and priorities of the Agent, the Lenders,
the issuer(s) of Letters of Credit and other Holders of Secured Obligations as
among themselves. The order of priority set forth in clauses (D) through (H) of
this Section 11.3 may at any time and from time to time be changed by the
Required Lenders without necessity of notice to or consent of or approval by the
Borrower, or any other Person. The order of priority set forth in clauses (A)
through (C) of this Section 11.3 may be changed only with the prior written
consent of the Agent.
11.4 Relations Among Lenders.
(a) Except with respect to the exercise of set-off rights of any
Lender in accordance with Section 11.1, the proceeds of which are applied in
accordance with this Agreement, and except as set forth in the following
sentence, each Lender agrees that it will not take any action, nor institute any
actions or proceedings, against the Borrower or any other obligor hereunder or
with respect to any Collateral or Loan Document, without the prior written
consent of the Required Lenders or, as may be provided in this Agreement or the
other Loan Documents, at the direction of the Agent.
(b) The Lenders are not partners or co-venturers, and no Lender shall
be liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Agent) authorized to act for, any other Lender. Notwithstanding
the foregoing, and subject to Section 11.2, any Lender shall have the right to
enforce on an unsecured basis the payment of the principal of and interest on
any Loan made by it after the date such principal or interest has become due and
payable pursuant to the terms of this Agreement.
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ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan Documents
shall be binding upon and inure to the benefit of the Borrower and the Lenders
and their respective successors and assigns, except that (i) the Borrower shall
not have the right to assign its rights or obligations under the Loan Documents
and (ii) any assignment by any Lender must be made in compliance with Section
12.3 hereof. Notwithstanding clause (ii) of this Section, any Lender may at any
time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent may treat the payee of any Note
as the owner thereof for all purposes hereof unless and until such payee
complies with Section 12.3 hereof in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed with
the Agent. Any assignee or transferee of a Note agrees by acceptance thereof to
be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor.
12.2 Participations.
(A) Permitted Participants; Effect. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any Note held by such Lender, any Revolving Loan
Commitment of such Lender, any L/C Interest of such Lender or any other interest
of such Lender under the Loan Documents on a pro-rata or non pro-rata basis;
provided that the amount of such participation shall not be for less than
$5,000,000 (provided such amount may be reduced after the occurrence of a
Default without the consent of the Borrower by the Agent and the Required
Lenders). In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents except that,
for purposes of Article III hereof, the Participants shall be entitled to the
same rights as if they were Lenders.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Commitment in which such Participant has an
interest which forgives principal, interest or fees or reduces the interest rate
or fees payable pursuant to the terms of this Agreement with respect to any such
Loan or Revolving Loan Commitment, postpones any date fixed for any regularly-
scheduled payment of principal of, or interest or fees on, any such Loan or
Revolving Loan Commitment, or releases all or substantially all of the
Collateral, if any, securing any such Loan.
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(C) Benefit of Setoff. The Borrower agrees that each Participant shall be
deemed to have the right of setoff provided in Section 11.1 hereof in respect to
its participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 11.1 hereof with respect to the amount of
participating interests sold to each Participant except to the extent such
Participant exercises its right of set off. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of setoff provided in
Section 11.1 hereof, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 11.2 as if each Participant were a Lender.
12.3 Assignments.
(A) Permitted Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or a portion of its rights and
obligations under this Agreement (including, without limitation, its Revolving
Loan Commitment, all Loans owing to it, all of its participation interests in
existing Letters of Credit, and its obligation to participate in additional
Letters of Credit hereunder) in accordance with the provisions of this Section
12.3. Each assignment shall be of a constant, and not a varying, ratable
percentage of all of the assigning Lender's rights and obligations under this
Agreement. Such assignment shall be substantially in the form of Exhibit E
hereto and shall not be permitted hereunder unless such assignment is either for
all of such Lender's rights and obligations under the Loan Documents or involves
loans and commitments in an aggregate amount of at least $5,000,000 (provided
such amount may be reduced after the occurrence of a Default without the consent
of the Borrower by the Agent and the Required Lenders). The consent of the Agent
shall be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof. Such consent shall be
substantially in the form attached as Appendix I to Exhibit E hereto and shall
not be unreasonably withheld.
(B) Effect; Effective Date. Upon (i) delivery to the Agent of a notice of
assignment, substantially in the form attached as Appendix II to Exhibit E
hereto (a "Notice of Assignment"), together with any consents required by
Section 12.3.(A) hereof, and (ii) payment of a$3,500 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of Assignment
shall contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Revolving Loan Commitment, Loans
and L/C Obligations under the applicable assignment agreement are "plan assets"
as defined under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser, if not already a Lender,
shall for all purposes be a Lender party to this Agreement and any other Loan
Documents executed by the Lenders and shall have all the rights and obligations
of a Lender under the Loan Documents, to the same extent as if it were an
original party hereto, and no further consent or action by the Borrower, the
Lenders or the Agent shall be required to release the transferor Lender with
respect to the percentage of the Aggregate Revolving Loan Commitment, Loans and
Letter of Credit participations assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 12.3(B),
the transferor Lender, the Agent and the
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Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their Revolving Loan Commitment and their Term Loans, as adjusted
pursuant to such assignment.
(C) The Register. The Agent shall maintain at its address referred to in
Section 13.1 a copy of each assignment delivered to and accepted by it pursuant
to this Section 12.3 and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Revolving Loan Commitment of and
principal amount of the Loans owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of another Lender
pursuant to an assignment under this Section 12.3. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower and each of its Subsidiaries, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
12.4 Confidentiality. Subject to Section 12.5, the Agent and the Lenders
shall hold all nonpublic information obtained pursuant to the requirements of
this Agreement and identified as such by the Borrower in accordance with such
Person's customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any event
may make disclosure reasonably required by a prospective "Transferee" (as
defined in Section 12.5) in connection with the contemplated participation or
assignment or as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process and shall require any such
Transferee to agree (and require any of its Transferees to agree) to comply with
this Section 12.4. In no event shall the Agent or any Lender be obligated or
required to return any materials furnished by the Borrower; provided, however,
each prospective Transferee shall be required to agree that if it does not
become a participant or assignee it shall return all materials furnished to it
by or on behalf of the Borrower in connection with this Agreement.
12.5 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the Holdings, the Borrower and its Subsidiaries and the Collateral;
provided that, prior to any such disclosure, such prospective Transferee shall
agree to preserve in accordance with Section 12.4 the confidentiality of any
confidential information described therein.
ARTICLE XIII: NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or
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facsimile, shall be deemed given when transmitted (answerback confirmed in the
case of telexes); or, if by courier, one (1) business day after deposit with a
reputable overnight carrier service with all charges paid or provided for.
13.2 Change of Address. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XIV: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party as notified the Agent by telex or telephone, that it has taken
such action.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
SOUTH CENTRAL POOL SUPPLY, INC.
By:_____________________________________________
Title:__________________________________________
Address:
128 Northpark Boulevard
Covington, LA 70433-5070
Attention: Maurice VanDyke
Facsimile: 504/892-1657
Confirmation: 504/892-5521
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By:_____________________________________________
Title:__________________________________________
Address:
The First National Bank of Chicago, as Agent
One First National Plaza
Suite 0173
Chicago, Illinois 60670
Attention: J. Garland Smith
Telephone No.: 312/732-2735
Facsimile No.: 312/732-1117
97
LASALLE NATIONAL BANK, as a Lender
By:_____________________________________________
Title:__________________________________________
Address:
120 South LaSalle Street
Suite 210
Chicago, Illinois 60603
Attention: James C. Tucker
Telephone No.: 312-904-4970
Facsimile No.: 312-904-6189
HIBERNIA BANK, as a Lender
By:_____________________________________________
Title:__________________________________________
Address:
313 Carondelet Street
6th Floor
New Orleans, LA 70130
Attention: Steve C. Hemperley
Telephone No.: 504-533-2895
Facsimile No.: 504-533-2060
SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT
98