EXHIBIT 4.5
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TUESDAY MORNING CORPORATION,
as Borrower
and
THE GUARANTORS PARTY HERETO
______________________
$200,000,000
CREDIT AGREEMENT
Dated as of December 29, 1997
______________________
MERRILL LYNCH & CO.,
as Arranger and Syndication Agent
and
FLEET NATIONAL BANK,
as Administrative Agent
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
Page
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Section 1. Definitions, Accounting Matters and Rules of Construction............................ 1
1.01. Certain Defined Terms.................................................................. 1
1.02. Accounting Terms and Determinations.................................................... 28
1.03. Classes and Types of Loans............................................................. 28
1.04. Rules of Construction.................................................................. 28
Section 2. Commitments, Loans, Notes, Prepayments, Replacement of Lenders and Annual Cleandown.. 29
2.01. Loans.................................................................................. 29
2.02. Borrowings............................................................................. 31
2.03. Letters of Credit...................................................................... 31
2.04. Termination and Reductions of Commitments.............................................. 35
2.05. Fees................................................................................... 36
2.06. Lending Offices........................................................................ 36
2.07. Several Obligations of Lenders......................................................... 36
2.08. Notes; Register........................................................................ 36
2.09. Optional Prepayments and Conversions or Continuations of Loans......................... 37
2.10. Mandatory Prepayments.................................................................. 37
2.11. Replacement of Lenders................................................................. 40
2.12. Annual Cleandown....................................................................... 41
Section 3. Payments of Principal and Interest................................................... 41
3.01. Repayment of Loans..................................................................... 41
3.02. Interest............................................................................... 41
Section 4. Payments; Pro Rata Treatment; Computations; Etc...................................... 42
4.01. Payments............................................................................... 42
4.02. Pro Rata Treatment..................................................................... 43
4.03. Computations........................................................................... 43
4.04. Minimum Amounts........................................................................ 43
4.05. Certain Notices........................................................................ 43
4.06. Non-Receipt of Funds by the Administrative Agent....................................... 44
4.07. Right of Setoff; Sharing of Payments, Etc.............................................. 45
Section 5. Yield Protection, Etc................................................................ 46
5.01. Additional Costs....................................................................... 46
5.02. Limitation on Types of Loans........................................................... 46
5.03. Illegality............................................................................. 47
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5.04. Treatment of Affected Loans............................................................ 47
5.05. Compensation........................................................................... 48
5.06. Net Payments........................................................................... 48
Section 6. Guarantee............................................................................ 50
6.01. The Guarantee.......................................................................... 50
6.02. Obligations Unconditional.............................................................. 51
6.03. Reinstatement.......................................................................... 52
6.04. Subrogation; Subordination............................................................. 52
6.05. Remedies............................................................................... 52
6.06. Instrument for the Payment of Money.................................................... 52
6.07. Continuing Guarantee................................................................... 52
6.08. General Limitation on Guarantee Obligations............................................ 53
Section 7. Conditions Precedent................................................................. 53
7.01. Effectiveness and Initial Extension of Credit.......................................... 53
7.02. Initial and Subsequent Extensions of Credit............................................ 60
Section 8. Representations and Warranties....................................................... 60
8.01. Corporate Existence.................................................................... 61
8.02. Financial Condition; Etc............................................................... 61
8.03. Litigation............................................................................. 61
8.04. No Breach; No Default.................................................................. 61
8.05. Action................................................................................. 62
8.06. Approvals.............................................................................. 62
8.07. ERISA.................................................................................. 62
8.08. Taxes.................................................................................. 63
8.09. Investment Company Act; Public Utility Holding Company Act; Other Restrictions......... 63
8.10. Senior Subordinated Notes.............................................................. 63
8.11. Environmental Matters.................................................................. 63
8.12. Environmental Investigations........................................................... 64
8.13. Use of Proceeds........................................................................ 64
8.14. Subsidiaries........................................................................... 64
8.15. Properties............................................................................. 64
8.16. Security Interest; Absence of Financing Statements..................................... 65
8.17. Compliance with Laws................................................................... 65
8.18. True and Complete Disclosure........................................................... 65
8.19. Solvency............................................................................... 66
Section 9. Covenants............................................................................ 66
9.01. Financial Statements, Etc.............................................................. 66
9.02. Litigation, Etc........................................................................ 69
9.03. Existence; Compliance with Law; Payment of Taxes; Inspection Rights; Performance of
Obligations; Etc.................................................................... 69
9.04. Insurance.............................................................................. 70
9.05. Limitation on Lines of Business........................................................ 70
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9.06. Limitation on Fundamental Changes; Limitation on Acquisitions; Limitation on
Dispositions........................................................................ 70
9.07. Limitation on Liens and Related Matters................................................ 73
9.08. Limitation on Indebtedness............................................................. 76
9.09. Limitation on Investments; Limitation on Creation of Subsidiaries...................... 79
9.10. Limitation on Dividend Payments........................................................ 81
9.11. Financial Covenants.................................................................... 82
9.12. Pledge of Additional Collateral........................................................ 86
9.13. Security Interests..................................................................... 86
9.14. Compliance with Environmental Laws..................................................... 87
9.15. Limitation on Prepayments of Senior Subordinated Notes, Etc............................ 87
9.16. Limitation on Transactions with Affiliates............................................. 87
9.17. Limitation on Accounting Changes; Limitation on Investment Company Status.............. 88
9.18. Limitation on Modifications of Certain Documents, Etc.................................. 88
9.19. Warehouse Financing.................................................................... 88
9.20. Limitation on Certain Restrictions Affecting Subsidiaries.............................. 89
9.21. Additional Obligors.................................................................... 90
9.22. Limitation on Designated Senior Indebtedness........................................... 90
9.22. Limitation on Change of Principal Place of Business or Corporate Name.................. 90
Section 10. Events of Default................................................................... 90
Section 11. The Administrative Agent............................................................ 93
11.01. General Provisions.................................................................... 93
11.02. Indemnification....................................................................... 94
11.03. Consents Under Other Credit Documents................................................. 95
11.04. Collateral Sub-Agents................................................................. 95
Section 12. Miscellaneous....................................................................... 95
12.01. Waiver................................................................................ 95
12.02. Notices............................................................................... 95
12.03. Expenses, Indemnification, Etc........................................................ 95
12.04. Amendments, Etc....................................................................... 97
12.05. Successors and Assigns................................................................ 99
12.06. Assignments and Participations........................................................ 99
12.07. Survival.............................................................................. 100
12.08. Captions.............................................................................. 101
12.09. Counterparts; Interpretation; Effectiveness........................................... 101
12.10. Governing Law; Submission to Jurisdiction; Waivers; Etc............................... 101
12.11. Confidentiality....................................................................... 101
12.12. Independence of Representations, Warranties and Covenants............................. 102
12.13. Severability.......................................................................... 102
Signatures....................................................................................... S-1
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ANNEX A - Commitments
SCHEDULE 1.01(a) - Applicable Margins
SCHEDULE 1.01(b) - Guarantors
SCHEDULE 1.01(c) - Refinanced Debt
SCHEDULE 1.01(d) - Specified Real Property Permitted to Be Sold
SCHEDULE 3.01(b) - Amortization Schedule
SCHEDULE 8.02 - Certain Contingent Obligations
SCHEDULE 8.03 - Litigation
SCHEDULE 8.08 - Certain Tax Matters
SCHEDULE 8.11 - Environmental Matters
SCHEDULE 8.14 - Subsidiaries of Borrower
SCHEDULE 9.07 - Certain Existing Liens
SCHEDULE 9.08 - Certain Indebtedness to Remain Outstanding
SCHEDULE 9.09 - Investments
SCHEDULE 9.16 - Existing Affiliate Agreements
EXHIBIT A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Tranche A Term Loan Note
EXHIBIT A-3 - Form of Tranche B Term Loan Note
EXHIBIT A-4 - Form of Swing Loan Note
EXHIBIT B - Form of Intercompany Note
EXHIBIT C-1 - Form of Interest Rate Certificate
EXHIBIT C-2 - Form of Borrowing Base Certificate
EXHIBIT D - Form of Security Agreement
EXHIBIT E-1 - Form of Opinion of Counsel to the Obligors
EXHIBIT E-2 - Form of Local Counsel Opinion
EXHIBIT F - Form of Notice of Assignment
EXHIBIT G - Form of Mortgage
EXHIBIT H - Form of Section 5.06 Certificate
EXHIBIT I - Form of Notice of Borrowing
EXHIBIT J - Form of Notice of Conversion/Continuation
EXHIBIT K - Form of Subordination Provisions
EXHIBIT L - Form of Joinder Agreement
EXHIBIT M - Form of Officer's Solvency Certificate
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CREDIT AGREEMENT dated as of December 29, 1997 among TUESDAY MORNING
CORPORATION, a Delaware corporation ("Borrower," which term shall include its
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successors and assigns); the Guarantors party hereto; each of the lenders that
is a signatory hereto identified under the caption "LENDERS" on the signature
pages hereto or that, pursuant to Section 12.06(b), shall become a "Lender"
hereunder (individually, a "Lender" and, collectively, the "Lenders"); MERRILL
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LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as arranger and
syndication agent (in such capacities, together with its successors in such
capacities, the "Arranger"); and FLEET NATIONAL BANK, as administrative agent
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for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
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The parties hereto agree as follows:
Section 1. Definitions, Accounting Matters and Rules of Construction
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1.01. Certain Defined Terms. As used herein, the following terms
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shall have the following meanings:
"Acquired Indebtedness" shall mean Indebtedness incurred or assumed in
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connection with an Acquisition permitted under Section 9.06(o), to the extent
the incurrence or assumption of Indebtedness in connection with such Acquisition
is not prohibited under Section 9.06(o); provided, however, that such
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Indebtedness was outstanding prior to and was not created in connection with or
in contemplation of such Acquisition.
"Acquisition" shall mean, with respect to any Person, any transaction
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or series of related transactions for the direct or indirect (a) acquisition of
all or substantially all of the Property of any other Person, or of any business
or division of any other Person, (b) acquisition of in excess of 50% of the
Equity Interests of any other Person, or otherwise causing any other Person to
become a Subsidiary of such Person, or (c) merger or consolidation or any other
combination with any other Person, other than for the purpose of Friday
Morning, Inc. or Tuesday Morning, Inc. reincorporating in Delaware with a
corporation with no assets or liabilities.
"Additional Collateral" see Section 9.12.
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"Additional Obligors" see Section 9.21.
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"Adjusted Net Income" shall mean, for any Measurement Period, the
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consolidated net income (loss) of Borrower and its Consolidated Subsidiaries
calculated on a consolidated basis in accordance with GAAP, adjusted by
excluding (to the extent taken into account in the calculation of such
consolidated net income (loss)) the effect of (a) gains or losses for such
period from Dispositions and Excluded Dispositions, other than the Disposition
of inventory and supplies in the ordinary course of business, and the tax
consequences thereof, (b) any non-recurring or extraordinary items of income or
expense for such period, (c) the portion of net income (loss) of any Person
(other than a Subsidiary) in which Borrower or any Subsidiary has an ownership
interest, except to the extent of the amount of cash dividends or other cash
distributions actually paid to Borrower or (subject to clause (e) below) any
Subsidiary during such period, (d) the net income (loss) of any Person combined
with Borrower or any Subsidiary on a "pooling of interests" basis attributable
to any period prior to the date of combination, and (e) the net income of any
Subsidiary to the extent that the declaration or payment of dividends or similar
distribution by such Subsidiary was not for the relevant period permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary or its stockholders.
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"Administrative Agent" see the introduction to this Agreement.
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"Administrative Agent's Fee Letter" shall mean the Fee Letter dated on
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or about the Closing Date, by and between Fleet National Bank and Borrower.
"Advance Date" see Section 4.06.
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"Affiliate" shall mean, with respect to any Person, any other Person
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which directly or indirectly controls, or is under common control with, or is
controlled by, such Person, or, in the case of any Lender which is an investment
fund, the investment advisor thereof and any investment fund having the same
investment advisor. As used in this definition, "control" (including, with its
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correlative meanings, "controlled by" and "under common control with") shall
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mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
Notwithstanding the foregoing, solely for purposes of Section 9.16, Borrower
shall not be deemed an Affiliate of any Subsidiary and no Subsidiary shall be
deemed an Affiliate of any other Subsidiary or Borrower.
"Affiliate Transaction" see Section 9.16.
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"Agent" means either of the Arranger or the Administrative Agent.
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"Agreement" shall mean this Credit Agreement, as amended from time to
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time.
"Alternate Base Rate" shall mean for any day, a rate per annum that is
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equal to the higher of (i) the Prime Rate, or (ii) the Federal Funds Rate, plus
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0.50%.
"Alternate Base Rate Loans" shall mean Loans that bear interest at
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rates based upon the Alternate Base Rate.
"Amortization Payment" shall mean each scheduled installment of
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payments on the Term Loans as set forth in Section 3.01(b).
"Annual Retained Portion Balance" shall mean, at any date in any
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fiscal year (the "Applicable Year"), the Retained Portion for such Applicable
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Year (which is calculated based on the Excess Cash Flow from the prior fiscal
year) less the sum of (1) all Dividend Payments made in the Applicable Year on
or prior to such date pursuant to Section 9.10(c) and (2) the aggregate amount
of cash consideration paid for all Acquisitions effected on or prior to such
date pursuant to Section 9.06(s) in the Applicable Year which, together with the
aggregate amount of Investments made on or prior to such date pursuant to
Section 9.09(v) in the Applicable Year, is in excess of the Cumulative Retained
Portion Balance as of the last day of the fiscal year prior to the Applicable
Year (with respect to such Cumulative Retained Portion Balance, after giving
effect to all Acquisitions which occurred on or prior to such last day pursuant
to Section 9.06(s) and all Investments made on or prior to such last day
pursuant to Section 9.09(v)).
"Applicable Amount" see Section 2.10(a)(ix).
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"Applicable Cumulative Year" see the definition of Cumulative Retained
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Portion Balance.
"Applicable Lending Office" shall mean, for each Lender and for each
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Type of Loan, the "Lending Office" of such Lender (or of an Affiliate of such
Lender) designated for such type of Loan on the
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signature pages hereof or such other office of such Lender (or of an Affiliate
of such Lender) as such Lender may from time to time specify to the
Administrative Agent and Borrower as the office by which its Loans of such Type
are to be made and maintained.
"Applicable Margin" shall be (x) from the Closing Date to the date
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(the "Reset Date") Borrower shall have delivered to the Lenders the financial
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statements and Interest Rate Certificate required by Sections 9.01(a) and (e) in
respect of the second fiscal quarter of Borrower ended after the Closing Date,
the rates per annum for each applicable Type of Loan set forth opposite Tier I
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of Schedule 1.01(a), and (y) thereafter, when the Leverage Ratio at the end of
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the most recently ended fiscal quarter ending after the Reset Date is as set
forth in Schedule 1.01(a), the percentage per annum set forth opposite such
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Leverage Ratio in Schedule 1.01(a). Any change in the Leverage Ratio shall be
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effective to adjust the Applicable Margin as of the date of receipt by the
Administrative Agent of the Interest Rate Certificate most recently delivered
pursuant to Section 9.01(e). If Borrower fails to deliver the Interest Rate
Certificates and financial statements within the times specified in Sections
9.01(a), (b) and (e), such ratio shall be deemed to be that set forth opposite
Tier I of Schedule 1.01(a) until Borrower delivers such Interest Rate
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Certificates and financial statements.
"Applicable Revolving Credit Fee Percentage" shall mean 0.50% per
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annum; provided, however, that from and after the Reset Date, the Applicable
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Revolving Facility Fee Percentage shall be, when the Leverage Ratio at the end
of the most recent fiscal quarter ending after such date is as set forth below,
the percentage per annum set forth opposite such Leverage Ratio below:
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Tier APPLICABLE REVOLVING CREDIT
LEVERAGE RATIO FEE PERCENTAGE
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I greater than 4.50:1.0 0.500%
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II greater than 3.50:1.0 0.375%
but less than 4.50:1.0
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III greater than 3.00:1.0 0.250%
but = 3.50:1.0
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IV = 3.00:1.0 0.250%
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Any change in the Leverage Ratio shall be effective to adjust the Applicable
Revolving Credit Fee Percentage as of the date of receipt by the Administrative
Agent of the Interest Rate Certificate most recently delivered pursuant to
Section 9.01(e). If Borrower fails to deliver the Interest Rate Certificates
and financial statements within the times specified in Sections 9.01(a), (b) and
(e), such ratio shall be deemed to be that set forth opposite Tier I above until
Borrower delivers such Interest Rate Certificates and financial statements.
"Applicable Year" see the definition of Annual Retained Portion
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Balance.
"Approved Fund" shall mean, with respect to any Lender that is a fund
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that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such Lender of
by an Affiliate of such investment advisor.
"Arranger" see the introduction to this Agreement.
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"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978.
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"Benefit Arrangement" shall mean at any time an employee benefit plan
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within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" see the introduction to this Agreement.
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"Borrowing Base" shall mean, as at any date, 50% of the aggregate
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value of Eligible Inventory at said date (the "Normal Advance Rate"); provided,
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however, that if no Event of Default has occurred and is continuing, the Lenders
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will upon Borrower's request, make advances of up to sixty percent (60%) of the
value of Eligible Inventory (the "Increased Advance Rate"); provided, however,
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that the Increased Advance Rate shall be in effect only during the months of
July, August, September and October of any Fiscal Year.
"Borrowing Base Certificate" shall mean a certificate of a senior
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financial officer of Borrower, substantially in the form of Exhibit C-2 and
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appropriately completed.
"Business Day" shall mean any day (a) on which commercial banks are
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not authorized or required to close in New York City or Dallas, Texas and (b) if
such day relates to a borrowing of, a payment or prepayment of principal of or
interest on, a Continuation or Conversion of or into, or an Interest Period for,
a LIBOR Loan or a notice by Borrower with respect to any such borrowing,
payment, prepayment, Continuation, Conversion or Interest Period, that is also a
day on which dealings in Dollar deposits are carried out in the London interbank
market.
"Capital Expenditures" shall mean, for any period, any direct or
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indirect (by way of acquisition of securities of a Person or the expenditure of
cash or the incurrences of Indebtedness) expenditures in respect of the purchase
or other acquisition of fixed or capital assets, excluding (i) normal
replacement and maintenance programs properly charged to current operations,
(ii) expenditures in an amount not to exceed the Net Available Proceeds of any
Casualty Event or any Taking, Destruction or loss of title with respect to Real
Property in each case to the extent such Net Available Proceeds are not required
to be applied to the prepayment of the Loans in accordance with Section
2.10(a)(i) or Section 2.10(a)(vi), as applicable, (iii) Acquisitions permitted
by Section 9.06(p), (q) and (r); provided, however, that Acquisitions made
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pursuant to Section 9.06(p) shall be considered Capital Expenditures for the
purpose of the definition of Fixed Charges, (iv) any expenditure made with the
Net Available Proceeds of any Disposition effected pursuant to Section 9.06(g)
or (n), (v) any expenditures made with the proceeds of any Excluded Disposition,
and (vi) Investments permitted by Section 9.09.
"Capital Lease," as applied to any Person, shall mean any lease of any
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Property by that Person as lessee which, in conformity with GAAP, is required to
be classified and accounted for as a capital lease on the balance sheet of that
Person.
"Capital Lease Obligations" shall mean, for any Person, all
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obligations of such Person to pay rent or other amounts under a Capital Lease,
and, for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Casualty Event" shall mean, with respect to any Property (other than
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Real Property) of any Person, any loss of or damage to, or any condemnation or
other taking of, such Property for which such Person or any of its Subsidiaries
receives insurance proceeds or proceeds of a condemnation award or other
compensation. Casualty Event shall not include any Taking or Destruction or
loss of title to Real Property.
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"CERCLA" see Section 8.11.
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"Change of Control" shall mean any transaction or event (including,
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without limitation, an issuance, sale or exchange of Equity Interests, a merger
or consolidation, or a dissolution or liquidation) occurring on or after the
date hereof (whether or not approved by the board of directors of Borrower) as a
direct or indirect result of which (a) if such transaction or event occurs prior
to the consummation of an Initial Public Offering, the Permitted Holders fail to
own, directly or indirectly, shares of Equity Interests of Borrower representing
at least a majority (on a fully diluted basis) of the aggregate then outstanding
voting Equity Interests of Borrower or voting power of the voting Equity
Interests of Borrower at the time outstanding; (b) if such transaction or event
is an Initial Public Offering or occurs after the consummation of an Initial
Public Offering, (i) any "Person" or any "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
(other than the Permitted Holders) shall (directly or indirectly) beneficially
own in the aggregate shares of Equity Interests of Borrower having 33-1/3% or
more of the aggregate voting power of all shares of Equity Interests of Borrower
at the time outstanding; provided, however, that the foregoing shall be a Change
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of Control only if the Permitted Holders beneficially own a lesser percentage of
the aggregate voting power of all shares of Equity Interests of Borrower at the
time outstanding than such Person or group or do not have the right or ability
by voting power, contract or otherwise to elect or designate for elections at
least a majority of the board of directors of Borrower or (ii) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by such board of directors or whose nomination for election by
the shareholders of Borrower was approved by a vote of at least 66-2/3% of the
directors of Borrower then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
board of directors of Borrower then in office; or (c) if such transaction or
event occurs at any time, whether before or after the consummation of an Initial
Public Offering, any event or circumstance constituting a "change of control" or
other similar occurrence under documentation evidencing or governing any
Indebtedness of Borrower in a principal amount in excess of $5.0 million (other
than under the Credit Documents) shall occur which results in an obligation of
Borrower to prepay, purchase, offer to purchase, redeem or defease all or a
portion of such Indebtedness. For purposes of this definition, the terms
"beneficially own" and "group" shall have the respective meanings ascribed to
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them pursuant to Section 13(d) of the United States Securities Exchange Act of
1934.
"Class" see Section 1.03.
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"Closing Date" shall mean the date on which the initial extensions of
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credit are made hereunder.
"Code" shall mean the United States Internal Revenue Code of 1986, as
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amended.
"Collateral" shall mean all of the Pledged Collateral and Mortgaged
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Real Property.
"Collateral Account" see Section 4.01 of the Security Agreement.
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"Commitment Letter" shall mean that certain amended and restated
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commitment letter between Merrill Lynch Capital Corporation and Borrower dated
October 21, 1997 together with Exhibit A thereto and incorporated therein.
"Commitments" shall mean the Revolving Credit Commitments and the Term
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Loan Commitments.
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"Consolidated EBITDA" shall mean, for any Measurement Period, the sum
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(without duplication) of the amounts for such period of (i) Adjusted Net Income,
(ii) income tax expense to the extent deducted in determining Adjusted Net
Income for such period, (iii) interest expense to the extent deducted in
determining Adjusted Net Income for such period (but calculated net of interest
income on the shareholder loans outstanding as of the Closing Date), and (iv)
depreciation expense and amortization expense to the extent deducted in
determining Adjusted Net Income for such period, each such item described in
clauses (ii)-(iv) determined in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, for
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Borrower and its Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) all interest expense during such
period (whether or not actually paid during such period and net of interest
income on the shareholder loans outstanding as of the Closing Date), other than
any non-cash interest expense in respect of Indebtedness in the form of
accretion of original issue discount or pay-in-kind issuances of additional debt
in lieu of cash interest.
"Consolidated Rental Expense" shall mean, for any period, the
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aggregate amount of all rents paid or to be incurred under all leases of Real
Property of Borrower and its Consolidated Subsidiaries as lessees (net of
sublease income), calculated in accordance with GAAP.
"Consolidated Subsidiary" shall mean, for any Person, each Subsidiary
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of such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated with
the financial statements of such Person in accordance with GAAP.
"Contingent Obligation" shall mean, as to any Person, any direct or
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indirect liability of such Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
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"primary obligor"), including any obligation of such Person (i) to purchase,
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repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each of (i)-(iv), a "Guaranty Obligation"); (b)
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with respect to any Surety Instrument (other than any Letter of Credit) issued
for the account of such Person or as to which such Person is otherwise liable
for reimbursement of drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever performed or
tendered; or (d) in respect of any Swap Contract; provided, however, that the
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term Contingent Obligation shall not include endorsements of instruments for
deposit or collection or standard contractual indemnities entered into, in each
case in the ordinary course of business. The amount of any Contingent Obligation
shall (x) in the case of a Guaranty Obligation, be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and (y) in the case of
other Contingent Obligations, be equal to the maximum reasonably anticipated
liability in respect thereof.
"Continue," "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 2.09 of a LIBOR Loan from one Interest Period
to the next Interest Period.
-7-
"Convert," "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 2.09 of one Type of Loans into another Type of Loans, which
may be accompanied by the transfer by a Lender (at its sole discretion) of a
Loan from one Applicable Lending Office to another.
"Covered Taxes" see Section 5.06(a).
-------------
"Credit Documents" shall mean this Agreement, the Notes, the Letter of
----------------
Credit Documents and the Security Documents.
"Creditor" shall mean any Agent, the Issuing Lender, any Lender or any
--------
Affiliate of a Lender party to a Swap Contract with an Obligor.
"Cumulative Retained Portion Balance" shall mean, at any date in any
-----------------------------------
fiscal year (the "Applicable Cumulative Year"), the excess (if any) of (x) the
--------------------------
sum of the amounts of the Annual Retained Portion Balance as of the last day of
each fiscal year prior to the Applicable Cumulative Year, each such Annual
Retained Portion Balance to be calculated as if no Acquisitions pursuant to
Section 9.06(s) and no Investments pursuant to 9.09(v) occurred prior to the
Applicable Cumulative Year and after giving effect to all Dividends made on or
prior to such last day, plus the Retained Portion for such Applicable Cumulative
----
Year (which is calculated based on the Excess Cash Flow for the prior fiscal
year), over (y) the sum of (1) all Dividend Payments made in the Applicable
----
Cumulative Year on or prior to such date pursuant to Section 9.10(c), (2) the
aggregate amount of cash consideration paid for all Acquisitions effected since
the Closing Date and on or prior to such date pursuant to Section 9.06(s), and
(3) the aggregate amount of cash consideration paid for all Investments effected
since the Closing Date and on or prior to such date pursuant to Section 9.09(v).
"Debt Issuance" shall mean the incurrence by any Obligor of any
-------------
Indebtedness after the Closing Date (other than as permitted by Section 9.08,
except Section 9.08(h)).
"Default" shall mean an event that with notice or lapse of time or
-------
both would become an Event of Default.
"Designated Senior Management" shall mean Jerry M. Smith (President)
----------------------------
and Lloyd L. Ross (Chairman of the Board).
"Destruction" shall mean any damage to, or loss or destruction of, any
-----------
Real Property or Mortgaged Real Property. Destruction shall not include any
Casualty Event.
"Disposition" shall mean (i) any conveyance, sale, lease, assignment,
-----------
transfer or other disposition (including by way of merger or consolidation and
including any sale-leaseback transaction) of any Property (including receivables
and shares of Equity Interests of any Subsidiary or joint venture of any Person)
(whether now owned or hereafter acquired) by any Obligor or any of its
Subsidiaries to any Person, (ii) any issuance of any Equity Interests in any
Subsidiary to any Person other than Borrower or any Wholly Owned Subsidiary, and
(iii) any liquidating or other non-ordinary course dividend or distribution
received by any Obligor or any of its Subsidiaries in respect of any joint
venture or similar enterprise, excluding, however, any Excluded Disposition.
"Disposition Event" shall mean the receipt by any Obligor or any of
-----------------
its Subsidiaries of cash proceeds or cash distributions of any kind from
Property received in consideration for a Disposition.
-8-
"Disqualified Capital Stock" shall mean, with respect to any Person,
--------------------------
any Equity Interests of such Person that, 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 (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole
option of the holder thereof, in whole or in part, on or prior to December 31,
2004; provided, however, that no Equity Interests issued to management of
-------- -------
Borrower shall be deemed Disqualified Capital Stock by virtue of the fact that
they are putable to Borrower upon the occurrence of certain events disclosed to
the Lenders prior to the Closing Date.
"Dividend Payment" shall mean dividends (in cash, Property or
----------------
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
Equity Interests of any Obligor or any of its Subsidiaries, or of any Equity
Rights, but excluding (i) dividends payable in respect of shares of Equity
Interests through the issuance of additional shares of Qualified Capital Stock,
(ii) any redemption or exchange of any Equity Interests of such Obligor through
the issuance of Qualified Capital Stock of such Obligor and (iii) cash dividends
paid in respect of any fractional shares that would otherwise be issued as
dividends.
"Document" means the Merger Agreement, the Senior Subordinated Note
--------
Documents, the Exchangeable Preferred Stock Documents, and each Related
Document.
"Dollars" and "$" shall mean lawful money of the United States of
------- -
America.
"Domestic Subsidiary" shall mean any Subsidiary that is not a Foreign
-------------------
Subsidiary.
"Eligible Inventory" shall mean Inventory valued at lower of cost or
------------------
market on a "first in-first out" ("FIFO") basis or based on specific
----
identification with respect to Inventory in the warehouse that constitutes first
quality finished goods, and that: (a) is not, in the Majority Revolving Credit
Lenders' reasonable judgment, obsolete or unmerchantable (it being understood
that Borrower is in the business of buying closeout or discontinued
merchandise); (b) upon which the Administrative Agent has a first priority
perfected security interest subject only to Prior Liens; and (c) the Majority
Revolving Credit Lenders otherwise deem eligible as the basis for Revolving
Credit Loans based on such other credit and collateral considerations as the
Majority Revolving Credit Lenders may from time to time establish in their
reasonable discretion consistent with their general policies and business
judgment. Without intending to limit the Majority Revolving Credit Lenders'
discretion to establish other criteria of eligibility, no spare parts, packaging
and shipping material, supplies, slow-moving or obsolete Inventory, sample
Inventory, scratched or dented Inventory, Inventory in transit, bill and hold
Inventory, returned or defective Inventory or Inventory delivered to Borrower on
consignment shall constitute Eligible Inventory. Eligible Inventory shall not
include Inventory stored at locations other than those locations either owned by
Borrower or locations for which an appropriate UCC filing has been signed by
Borrower and delivered to the Administrative Agent for filing in the appropriate
offices for each such location to perfect the security interest in such
Inventory created by the Security Agreement. Eligible Inventory shall not
include (a) Inventory with respect to which the representations and warranties
set forth in the Security Agreement applicable to Inventory are not true and
correct in all material respects; (b) Inventory in respect of which the Security
Agreement, after giving effect to the related filings of financing statements
that have then been made, if any, does not or has ceased to create a valid and
perfected first priority lien (subject to Prior Liens) or security interest in
favor of the Lenders securing the Obligations and as to which no other Liens
exist, other than Permitted Liens; (c) Inventory located outside the United
States which is being shipped to Borrower, other than any such Inventory which
meets each of the following conditions: (1) such Inventory would otherwise
qualify as Eligible Inventory and would not be excluded by any other clause of
this definition, (2) such Inventory is in transit to Borrower on an F.O.B.-
shipping basis, and (3) such Inventory is fully paid for by Borrower and fully
-9-
insured on terms acceptable to the Agent pursuant to insurance which names the
Agent as loss payee for the benefit of the Lenders and the Agent, if it so
requests, shall have received all negotiable instruments of title issued in
connection with such shipment; provided, however, that not more than $10.0
-------- -------
million of Inventory may be included at any time pursuant to this clause (c);
and (d) Inventory located outside the United States which is not being shipped
to Borrower unless arrangements for the granting and perfection of a security
interest in such Inventory have been made in a manner acceptable to the
Administrative Agent in its sole discretion. In addition, the buying, freight
and distribution costs ("UNICAP Costs") and the product development expenses
------------
which are a component of the cost of Inventory will not be considered as part of
the value of the Inventory.
"Eligible Person" shall mean (i) a commercial bank organized under the
---------------
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100.0 million; (ii) a commercial bank organized under
the laws of any other country that is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
----
country, and having a combined capital and surplus in a dollar equivalent amount
of at least $100.0 million; provided, however, that such bank is acting through
-------- -------
a branch or agency located in the country in which it is organized or another
country that is also a member of the OECD; (iii) an insurance company, mutual
fund entity which is regularly engaged in making, purchasing or investing in
loans or securities or other financial institution organized under the laws of
the United States, any state thereof, any other country that is a member of the
OECD or a political subdivision of any such country with assets, or assets under
management, in a dollar equivalent amount of at least $100.0 million; (iv) any
Affiliate of a Lender; and (v) any other entity (other than a natural person)
which is an "accredited investor" (as defined in Regulation D under the United
States Securities Act of 1933, as amended) which extends credit or buys loans as
one of its regular businesses including, but not limited to, insurance
companies, mutual funds, and investment funds. With respect to any Lender that
is a fund that invests in loans, any other fund that invests in loans and is
managed or advised by the same investment advisor of such Lender or by an
Affiliate of such investment advisor shall be treated as a single Eligible
Person.
"Environmental Claim" shall mean, with respect to any Person, any
-------------------
written notice, claim, demand or other communication (collectively, a "claim")
-----
by any other Person alleging such Person's liability for any costs, cleanup
costs, response or corrective action costs, damages to natural resources or
other Property, personal injuries, fines or penalties arising out of or
resulting from (i) the presence, Release or threatened Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) any violation of any Environmental Law. The term
"Environmental Claim" shall include any claim by any Person seeking damages,
-------------------
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
------------------
applicable laws, rules or regulations of any Governmental Authority, any orders,
decrees, judgments or injunctions and the common law in each case as now or
hereafter in effect, relating to pollution or protection of human health, safety
or the environment, including without limitation, ambient air, indoor air, soil,
surface water, ground water, wetlands, land or subsurface strata, including,
without limitation, those relating to Releases or threatened Releases of
Hazardous Materials into the environment, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Equity Financing" shall mean Newco and Borrower's gross proceeds of
----------------
at least $115 million from (i) the issuance by Borrower to Madison Dearborn or
one or more Affiliates of Madison Dearborn of common equity of Newco and
preferred equity of Borrower having terms and conditions satisfactory to the
Arranger, (ii) the Management Rollover, and (iii) Exchangeable Preferred Stock.
-10-
"Equity Interests" shall mean, with respect to any Person, any and all
----------------
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of capital of such
Person, including, if such Person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership, whether outstanding on the date
hereof or issued after the Closing Date.
"Equity Issuance" shall mean any of (a) any issuance or sale after the
---------------
Closing Date by any Obligor or Subsidiary or any direct or indirect parent of
Borrower of (x) any Equity Interests (including any Equity Interests issued upon
exercise of any Equity Rights) or any Equity Rights, or (y) any other security
or instrument representing an Equity Interest (or the right to obtain any Equity
Interest) in the issuing or selling Person, or (b) the receipt by Borrower or
any Subsidiary after the Closing Date of any capital contribution (whether or
not evidenced by any Equity Interest issued by the recipient of such
contribution) other than from Borrower or any Subsidiary, excluding (x) any
issuance of Equity Interests (or Equity Rights) to the seller or sellers in
consideration for an Acquisition, (y) the issuance of Equity Rights to
management and consultants of Borrower (and the exercise thereof) in an amount
not to exceed 10% (on a fully diluted basis) of the outstanding common Equity
Interests of Borrower, and (z) each Excluded Issuance. For purposes of this
definition, a Person shall be deemed the "direct or indirect parent" of Borrower
only if such Person's assets consist solely of Equity Interests of Borrower or
Equity Interests of another direct of indirect parent of Borrower and if
Borrower is directly or indirectly a Wholly Owned Subsidiary of such Person;
provided, however, that in no event, for purposes of this definition, shall
- -------- -------
Madison Dearborn or any other fund managed or sponsored by Madison Dearborn be
the "direct or indirect parent" of Borrower.
"Equity Rights" shall mean, with respect to any Person, any
-------------
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including any stockholders' or voting trust agreements)
for the issuance, sale, registration or voting of, or outstanding securities
convertible into, any additional shares of Equity Interests of any class of such
Person.
"ERISA" shall mean the United States Employee Retirement Income
-----
Security Act of 1974, as amended.
"ERISA Group" shall mean Borrower, any Subsidiary and all members of a
-----------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Code.
"Event of Default" see Section 10.
----------------
"Excess Cash Flow" shall mean, for any period of calculation, (a) the
----------------
sum of (i) Consolidated EBITDA adjusted by adding back the cash portion of all
extraordinary or non-recurring items of income (other than from Dispositions and
Excluded Dispositions) to the extent excluded in calculating Adjusted Net Income
and by deducting the cash portion of all extraordinary or non-recurring items of
expense to the extent excluded in calculating Adjusted Net Income for such
period, and (ii) net decreases in Working Capital for such period minus (b) the
-----
sum of (i) Fixed Charges for such period (including after giving effect to the
Amortization Payment to occur in January of the next fiscal year), and (ii) net
increases in Working Capital for such period.
"Exchangeable Preferred Stock" shall mean the senior exchangeable
----------------------------
preferred stock of Borrower issued pursuant to the Exchangeable Preferred Stock
Documents, including any senior exchangeable preferred stock issued in exchange
therefor pursuant to any registration rights agreement entered into in
connection with the issuance thereof.
-11-
"Exchangeable Preferred Stock Documents" shall mean the certificate of
--------------------------------------
designation and exchange indenture identified in the offering memorandum dated
December [_], 1997 relating to the Exchangeable Preferred Stock and all
documents relating thereto (including the registration rights agreement relating
thereto), as any such documents may be amended and in effect from time to time
in accordance with its terms and this Agreement.
"Excluded Dispositions" shall mean (i) Dispositions for fair market
---------------------
value resulting in no more than $500,000 in proceeds in any fiscal year; (ii) an
exchange of equipment or inventory for like equipment or inventory, provided
that the Person effecting such exchange receives substantially equivalent value
in such exchange for the Property disposed of; (iii) any transaction permitted
by Section 9.06 (other than clauses (g) and (n) thereof), any Lien permitted by
Section 9.07, any Investment permitted by Section 9.09 and any Dividend Payment
permitted by Section 9.10; (iv) any issuance of Equity Interests by any
Subsidiary to directors to qualify directors if required by applicable law if
resulting in de minimis proceeds; and (v) the sale of inventory in the ordinary
-- -------
course of business.
"Excluded Issuance" shall mean any issuance or sale of Qualified
-----------------
Capital Stock of Borrower (or any direct or indirect parent of Borrower) to
Madison Dearborn or any of its Affiliates (other than Borrower or any
Subsidiary).
"Existing Affiliate Agreements" see Section 9.16.
-----------------------------
"Existing Debt Repayment" shall mean the repayment of all Indebtedness
-----------------------
and cancellation of all commitments to make extensions of credit under the
Refinanced Debt.
"Existing Warehouse Facility" shall mean Borrower's warehouse facility
---------------------------
as existing on the date of this Agreement and located in Dallas, Texas and as
identified in Exhibit G hereto.
---------
"Federal Funds Rate" shall mean, for any day, the rate per annum
------------------
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, however, that (a) if the day for which such
-------- -------
rate is to be determined is not a Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day and (b) if such rate is not
so published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate quoted to the Administrative Agent on such Business
Day on such transactions by three federal funds brokers of recognized standing,
as determined by the Administrative Agent.
"Fee Letter" shall mean the amended and restated Fee Letter dated as
----------
of October 21, 1997 by and between Merrill Lynch Capital Corporation and
Borrower.
"Fee Letters" shall mean the Administrative Agent's Fee Letter and the
-----------
Fee Letter.
"Fixed Charges" shall mean for any period of calculation, the sum of
-------------
(i) Consolidated Interest Expense of Borrower and its Consolidated Subsidiaries,
(ii) the sum of all scheduled principal payments on any Indebtedness (other than
Indebtedness under clauses (f) or (n) of Section 9.08) of Borrower, and, other
than for purposes of Section 9.11(c), voluntary prepayments of Indebtedness
(other than Revolving Credit Loans unless and to the extent accompanied by a
permanent reduction of Revolving Credit Commitments or any other revolving
credit unless and to the extent accompanied by a permanent reduction of
commitments thereunder and
-12-
other than Indebtedness under clauses (f) or (n) of Section 9.08), in each case
to the extent made from internally generated funds of Borrower and the
Subsidiaries, (iii) other than for purposes of Section 9.11(c), federal, state
and local income tax expense actually paid, (iv) other than for purposes of
Section 9.11(c), actual Capital Expenditures to the extent made from internally
generated funds of Borrower and the Subsidiaries, and (v) solely for purposes of
9.11(c), Consolidated Rental Expense. For purposes of this definition,
internally generated funds shall exclude the proceeds of Dispositions and Debt
Issuances and Equity Issuances (without regard to the exclusions from the
definitions thereof).
"Foreign Plan" see Section 8.07.
------------
"Foreign Subsidiary" shall mean any direct or indirect Subsidiary
------------------
organized outside of the United States as defined in Section 7701(a)(9) of the
Code (or any successor provision).
"Funding Date" shall mean the date of the making of any extension of
------------
credit hereunder (including the Closing Date).
"GAAP" shall mean generally accepted accounting principles set forth
----
as of the relevant date in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.
"Governmental Authority" shall mean any government or political
----------------------
subdivision of the United States or any other country or any agency, authority,
board, bureau, central bank, commission, department or instrumentality thereof
or therein, including, without limitation, any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to such government or political subdivision.
"Guarantee" shall mean the guarantee of each Guarantor pursuant to
---------
Section 6.
"Guaranteed Obligations" see Section 6.01.
----------------------
"Guarantors" shall mean each Subsidiary listed on Schedule 1.01(b),
---------- ----------------
and each direct and indirect Subsidiary that guarantees the payment of the
Obligations of Borrower hereunder pursuant to Section 9.21 and the other Credit
Documents.
"Guaranty Obligation" see the definition of Contingent Obligation.
-------------------
"Hazardous Material" shall mean any pollutant, contaminant, toxic,
------------------
hazardous or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound or substance including, without
limitation, petroleum including crude oil or any fraction thereof, or any
petroleum product, subject to regulation under any Environmental Law.
"Increased Advance Rate" see the definition of Borrowing Base.
----------------------
"Increased Facility Amount" shall mean an increase in the Revolving
-------------------------
Credit Commitments (whether by the Lenders or New Lenders) of up to $25 million,
which increase shall not require the consent of any Lender (other than any
Lender agreeing to make available the increase in the Revolving Credit
-13-
Commitments), if no Default or Event of Default has occurred and is continuing
and the date of such increase is not prior to the one year anniversary of the
Closing Date.
"Indebtedness" shall mean, for any Person, without duplication, (a)
------------
all indebtedness for borrowed money of such Person; (b) all obligations issued,
undertaken or assumed by such Person as the deferred purchase price of Property
or services (other than trade payables and accrued expenses not overdue by more
than 90 days incurred in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations of such Person with
respect to Surety Instruments (such as, for example, unpaid reimbursement
obligations in respect of a drawing under a letter of credit); (d) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of Property or businesses; (e) all indebtedness of such Person
created or arising under any conditional sale or other title retention
agreement, in either case with respect to Property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such Property); (f)
all Capital Lease Obligations of such Person; (g) all net obligations of such
Person with respect to Swap Contracts (such obligations to be equal at any time
to the aggregate net amount that would have been payable by such Person at the
most recent fiscal quarter end in connection with the termination of such Swap
Contracts at such fiscal quarter end); (h) all amounts required to be paid by
such Person as a guaranteed payment to partners, including any mandatory
redemption of shares or interests; (i) all indebtedness of other Persons
referred to in clauses (a) through (h) above secured by (or for which the holder
of such indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in Property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness; and (j) all Contingent Obligations
of such Person in respect of indebtedness or obligations of others of the kinds
referred to in clauses (a) through (i) above. Indebtedness shall not include (i)
accounts extended by suppliers in the ordinary course on normal trade terms in
connection with the purchase of goods and services, (ii) obligations under
operating leases (as well as contingent obligations in respect thereof) or (iii)
wages, salaries, accrued vacations or deferred compensation. The Indebtedness of
any Person shall include any Indebtedness of any partnership in which such
Person is the general partner.
"Indemnitee" see Section 12.03.
----------
"Initial Public Offering" shall mean a primary underwritten public
-----------------------
offering of the common stock of Borrower, other than any public offering or sale
pursuant to a registration statement on Form S-8 or a comparable form.
"Intercompany Note" shall mean a promissory note substantially in the
-----------------
form of Exhibit B.
---------
"Interest Coverage Ratio" shall mean, for any Measurement Period, the
-----------------------
ratio of (x) Consolidated EBITDA plus Consolidated Rental Expense for such
period to (y) Consolidated Interest Expense plus Consolidated Rental Expense for
such period.
"Interest Period" shall mean, with respect to any LIBOR Loan, each
---------------
period commencing on the date such LIBOR Loan is made or Converted from an
Alternate Base Rate Loan or the last day of the next preceding Interest Period
for such LIBOR Loan and (subject to the requirements of Sections 2.01(a),
2.01(b), 2.01(c) and 2.09) ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as Borrower may select
as provided in Section 4.05, except that each Interest Period that commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) if any Interest Period for any Revolving
Credit Loan would
-14-
otherwise end after the Revolving Credit Commitment Termination Date, such
Interest Period shall end on the Revolving Credit Commitment Termination Date;
(ii) no Interest Period for any Term Loan may commence before and end after any
Principal Payment Date, unless, after giving effect thereto, the aggregate
principal amount of the Term Loans having Interest Periods that end after such
Principal Payment Date shall be equal to or less than the aggregate principal
amount of the Term Loans scheduled to be outstanding after giving effect to the
payments of principal required to be made on such Principal Payment Date; (iii)
each Interest Period that would otherwise end on a day that is not a Business
Day shall end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iv) notwithstanding clauses (i) and (ii) above, no Interest
Period shall have a duration of less than one month and, if the Interest Period
for any LIBOR Loan would otherwise be a shorter period, such Loan shall not be
available hereunder as a LIBOR Loan for such period.
"Interest Rate Certificate" shall mean an Officer's Certificate
-------------------------
substantially in the form of Exhibit C, delivered pursuant to Section 9.01(e),
---------
demonstrating in reasonable detail the calculation of the Leverage Ratio as of
the last day of the Measurement Period then last ended on or immediately prior
to the date such certificate is required to be delivered.
"Interest Rate Protection Agreement" shall mean, for any Person, an
----------------------------------
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
"Inventory" shall mean all of Borrower's now owned and hereafter
---------
acquired inventory, goods, merchandise, and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work-in-process, finished goods, returned and
repossessed goods, and materials and supplies of any kind, nature or description
which are or might be used or consumed in Borrower's business or used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of such inventory, goods, merchandise and such other personal
property, and all documents of title or other documents representing them.
"Investment" shall mean, for any Person: (a) the acquisition (whether
----------
for cash, Property, services or securities or otherwise) of Equity Interests,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person; (b) the making of any deposit with, or advance,
loan or other extension of credit to, any other Person (including the purchase
of Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person); (c) any
capital contribution to (by means of any transfer of cash or other Property to
others or any payment for Property or services for the account or use of others)
any other Person; (d) the entering into, or direct or indirect incurrence, of
any Contingent Obligation with respect to Indebtedness or other liability of any
other Person; (e) the entering into of any Swap Contract; or (f) any agreement
to make any Investment (including any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
sale).
"Issuing Lender" shall mean Fleet National Bank, or any of its
--------------
Affiliates, or such other Lender or Lenders selected by the Administrative Agent
reasonably satisfactory to Borrower, as the issuer of Letters of Credit under
Section 2.03, together with its successors and assigns in such capacity.
"Lease" shall mean any lease, sublease, franchise agreement, license,
-----
occupancy or concession agreement.
"Lender" and "Lenders" see the introduction to this Agreement.
------ -------
-15-
"Letter of Credit" see Section 2.03.
----------------
"Letter of Credit Documents" shall mean, with respect to any Letter of
--------------------------
Credit, collectively, any other agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such Letter of
Credit) governing or providing for (a) the rights and obligations of the parties
concerned or at risk with respect to such Letter of Credit or (b) any collateral
security for any of such obligations, each as the same may be modified and
supplemented and in effect from time to time.
"Letter of Credit Interest" shall mean, for each Revolving Credit
-------------------------
Lender, such Lender's participation interest (or, in the case of the Issuing
Lender, the Issuing Lender's retained interest) in the Issuing Lender's
liability under Letters of Credit and such Lender's rights and interests in
Reimbursement Obligations and fees, interest and other amounts payable in
connection with Letters of Credit and Reimbursement Obligations.
"Letter of Credit Liability" shall mean, without duplication, at any
--------------------------
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit, plus (b) the aggregate unpaid principal amount
----
of all Reimbursement Obligations of Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit.
"Leverage Ratio" shall mean, at any date, the ratio of (x) Total Debt
--------------
at such date to (y) Consolidated EBITDA for the Measurement Period ended on such
date, or, if such date is not the end of a fiscal quarter, the Measurement
Period ended immediately prior to such date.
"LIBOR Base Rate" shall mean, with respect to any LIBOR Loan for any
---------------
Interest Period therefor, the rate per annum determined by the Administrative
--- -----
Agent to be the arithmetic mean (rounded to the nearest 1/100th of 1%) of the
offered rates for deposits in Dollars with a term comparable to such Interest
Period that appears on the Telerate British Bankers Assoc. Interest Settlement
Rates Page (as defined below) at approximately 11:00 a.m., London, England time,
on the second full Business Day preceding the first day of such Interest Period;
provided, however, that if there shall at any time no longer exist a Telerate
- -------- -------
British Bankers Assoc. Interest Settlement Rates Page, "LIBOR Rate" shall mean,
----------
with respect to each day during each Interest Period pertaining to LIBOR Loans
comprising part of the same Borrowing, the rate per annum equal to the rate at
--- -----
which the Administrative Agent is offered deposits in Dollars at approximately
11:00 a.m., London, England time, two Business Days prior to the first day of
such Interest Period in the London interbank market for delivery on the first
day of such Interest Period for the number of days comprised therein and in an
amount comparable to its portion of the amount of such LIBOR Loan to be
outstanding during such Interest Period. "Telerate British Bankers Assoc.
------------------------------
Interest Settlement Rates Page" shall mean the display designated as Page 3750
- ------------------------------
on the Telerate System Incorporated Service (or such other page as may replace
such page on such service for the purpose of displaying the rates at which
Dollar deposits are offered by leading banks in the London interbank deposit
market).
"LIBOR Loans" shall mean Loans that bear interest at rates based on
-----------
rates referred to in the definition of "LIBOR Base Rate" in this Section 1.01.
"LIBOR Rate" shall mean, for any LIBOR Loan for any Interest Period
----------
therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100
--- -----
of 1%) determined by the Administrative Agent to be equal to the LIBOR Base Rate
for such Loan for such Interest Period divided by 1 minus the Reserve
Requirement (if any) for such Loan for such Interest Period.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
----
pledge, claim, charge, security interest or encumbrance of any kind, or any
other type of preferential arrangement in respect of such
-16-
Property, including any easement, right-of-way or other encumbrance on title to
Real Property, other than ordinary course rights of set-off of depositary banks.
For purposes of the Credit Documents, a Person shall be deemed to own subject to
a Lien any Property that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement (other than an operating lease) relating to such
Property.
"Loans" shall mean the Revolving Credit Loans, the Swing Loans and the
-----
Term Loans.
"Losses" of any Person shall mean the losses, liabilities, claims
------
(including those based upon negligence, strict or absolute liability and
liability in tort), damages, reasonable expenses, obligations, penalties,
actions, judgments, encumbrances, liens, penalties, fines, suits, reasonable and
documented costs or disbursements of any kind or nature whatsoever (including
reasonable fees and expenses of counsel in connection with any Proceeding
commenced or threatened in writing, whether or not such Person shall be
designated a party thereto) at any time (including following the payment of the
Obligations) incurred by, imposed on or asserted against such Person.
"Madison Dearborn" shall mean Madison Dearborn Partners, Inc. and
----------------
Madison Dearborn Capital Partners II, L.P., or either of them.
"Majority Lenders" shall mean (i) at any time prior to the Closing
----------------
Date, Lenders holding at least a majority of the aggregate amount of the
Commitments, and (ii) at any time after the Closing Date, Lenders holding at
least a majority of the sum of (without duplication) (a) the aggregate principal
amount of outstanding Loans (other than Swing Loans), plus (b) the aggregate
----
amount of all Letter of Credit Liabilities, plus (c) the aggregate Unutilized
----
Revolving Credit Commitments then in effect, plus (d) the aggregate amount of
----
Swing Loans then outstanding (which, for each Revolving Credit Lender, shall be
deemed such Lender's pro rata share (based on the Revolving Credit Commitments)
--- ----
of the aggregate principal amount of Swing Loans then outstanding).
"Majority Revolving Credit Lenders" shall mean (i) at any time prior
---------------------------------
to the Closing Date, Lenders holding at least a majority of the aggregate amount
of the Revolving Credit Commitments and (ii) at any time after the Closing Date,
Lenders holding at least a majority of the sum of (without duplication) (a) the
aggregate principal amount of outstanding Revolving Credit Loans, plus (b) the
----
aggregate amount of all Letter of Credit Liabilities, plus (c) the aggregate
----
Unutilized Revolving Credit Commitments then in effect.
"Majority Term Lenders" shall mean (i) at any time prior to the
---------------------
Closing Date, Lenders holding at least a majority of the Term Loan Commitments,
and (ii) at any time after the Closing Date, Lenders holding at least a majority
of the sum of the aggregate principal amount of outstanding Term Loans.
"Majority Tranche A Term Loan Lenders" shall mean (i) at any time
------------------------------------
prior to the Closing Date, Lenders holding at least a majority of the Tranche A
Term Loan Commitments, and (ii) at any time after the Closing Date, Lenders
holding at least a majority of the aggregate principal amount of outstanding
Tranche A Term Loans.
"Majority Tranche B Term Loan Lenders" shall mean (i) at any time
------------------------------------
prior to the Closing Date, Lenders holding at least a majority of the Tranche B
Term Loan Commitments and (ii) at any time after the Closing Date, Lenders
holding at least a majority of the aggregate principal amount of outstanding
Tranche B Term Loans.
-17-
"Management Rollover" shall mean the equity interest in Borrower held
-------------------
by management of Borrower after giving effect to the Merger.
"Margin Stock" shall mean margin stock within the meaning of
------------
Regulations G, T, U and X.
"Material Adverse Change" shall mean a material adverse change or any
-----------------------
condition or event that could reasonably be expected to result in a material
adverse change in the business, assets, liabilities (contingent or otherwise),
operations, condition (financial or otherwise), solvency, properties or material
agreements or, prior to the Closing Date, prospects, of Borrower, individually
or together with the Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean any of (a) a material adverse
-----------------------
effect or any condition or event that could reasonably be expected to result in
a material adverse effect on the business, assets, liabilities (contingent or
otherwise), operations, condition (financial or otherwise), solvency, properties
or material agreements or, prior to the Closing Date, prospects of Borrower,
individually or together with the Subsidiaries taken as a whole, (b) a material
adverse effect on the ability of the Obligors to consummate in a timely manner
the Transactions or to perform their obligations under any Credit Document or
(c) an adverse effect on the legality, binding effect or enforceability of any
material provision of any Credit Document or affecting any material rights and
remedies of the Lenders thereunder.
"Material Plan" means at any time a Plan or Plans having aggregate
-------------
Unfunded Liabilities in excess of $2.0 million as of the end of its last annual
valuation period.
"Measurement Period" shall mean the most recent four full fiscal
------------------
quarters of Borrower for which financial statements have been provided pursuant
to Section 9.01.
"Merger" shall mean the Merger of Newco with and into Borrower, with
------
Borrower as the surviving corporation.
"Merger Agreement" shall mean the Merger Agreement dated as of
----------------
September 12, 1997 by and among Madison Dearborn Partners II, L.P., a Delaware
limited partnership and an Affiliate of Madison Dearborn, Newco and Borrower, as
amended and in effect from time to time in accordance with its terms and this
Agreement.
"Mortgage" shall mean an agreement creating and evidencing a Lien on a
--------
Mortgaged Real Property, which shall be substantially in the form of Exhibit G,
---------
containing such schedules and including such additional provisions and other
deviations from such Exhibit as shall be necessary to conform such document to
applicable or local law or as shall be customary under local law, as the same
may at any time be amended, modified or supplemented in accordance with the
terms thereof and hereof.
"Mortgaged Real Property" shall mean each Real Property which shall be
-----------------------
subject to a Mortgage delivered on the Closing Date or thereafter pursuant to
Section 9.12.
"Multiemployer Plan" shall mean at any time an employee pension
------------------
benefit plan within the meaning of Section 4001(a)(3) of ERISA (i) to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions, (ii) to which any member of the ERISA Group has within the
preceding five plan years made contributions, including for these purposes any
Person which ceased to be a member of the ERISA Group during such five year
period, or (iii) with respect to which Borrower or a Subsidiary could incur
liability.
-18-
"NAIC" shall mean the National Association of Insurance Commissioners.
----
"Net Available Proceeds" shall mean:
----------------------
(I) in the case of any Disposition Event, the amount of Net Cash
Payments received by any Obligor or any of its Subsidiaries in connection
with such Disposition Event less deductions for amounts applied to
Indebtedness secured by Liens on the asset sold, taxes (including income
taxes) and costs of sale;
(II) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by any Obligor or any of its Subsidiaries in respect of such Casualty Event
net of (A) reasonable expenses incurred by such Obligor and its
Subsidiaries in connection therewith, (B) repayments of Indebtedness to the
extent secured by a Lien on such Property and (C) any income and transfer
taxes payable by any Obligor or any of its Subsidiaries in respect of such
Casualty Event;
(III) in the case of any Equity Issuance or any Debt Issuance, the
aggregate amount of all cash received by any Obligor and its Subsidiaries
in respect thereof net of all reasonable investment banking fees, discounts
and commissions, legal fees, consulting fees, accountants' fees,
underwriting discounts and commissions and other customary fees and
expenses, actually incurred and satisfactorily documented in connection
therewith;
(IV) in the case of any Taking or Destruction, the Net Award or
Net Proceeds, as applicable, resulting therefrom; and
(V) with respect to any loss of title to all or any portion of
any Mortgaged Real Property or Real Property, any title insurance proceeds
resulting therefrom less the amount of any expenses (including, without
limitation, taxes) incurred in litigating, arbitrating, compromising or
settling any claim arising out of such loss of title.
"Net Award" shall mean the proceeds, award or payment received by any
---------
Obligor or any of its Subsidiaries in respect of any Taking, together with any
interest thereon, less the amount of any reasonable expenses (including, without
limitation, any taxes) incurred in litigating, arbitrating, compromising or
settling any claim arising out of any such Taking including repayments of any
Indebtedness secured by a Prior Lien.
"Net Cash Payments" shall mean, with respect to any Disposition Event,
-----------------
the aggregate amount of all cash payments (including any cash payments received
by way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise, but only as and
when received) received by any Obligor or any of its Subsidiaries directly or
indirectly in connection with such Disposition Event; provided, however, that
-------- -------
Net Cash Payments shall be net (without duplication) of (i) the amount of all
reasonable fees and expenses paid by any Obligor or any of its Subsidiaries in
connection with such Disposition Event (the "Relevant Disposition"); (ii) any
--------------------
taxes paid or estimated to be payable by any Obligor and its Subsidiaries as a
result of the Relevant Disposition; (iii) any repayments by any Obligor or any
of its Subsidiaries of Indebtedness to the extent that (a) such Indebtedness is
secured by a Lien on the Property that is the subject of the Relevant
Disposition and (b) the transferee of (or holder of a Lien on) such Property
requires that such Indebtedness be repaid as a condition to the purchase of such
Property; and (iv) amounts required to be paid to any Person (other than any
Obligor or any of its Subsidiaries) owning a beneficial interest in the assets
subject to such Relevant Disposition.
-19-
"Net Proceeds" shall mean the proceeds of any insurance or other
------------
payment received by any Obligor or any of its Subsidiaries in connection with
any Destruction including repayments of any Indebtedness secured by a Prior
Lien, together with any interest earned thereon, less payoff of liens, less the
amount of any reasonable expenses (including, without limitation, any taxes)
incurred in litigating, arbitrating, compromising or settling any claim arising
out of such Destruction and less the amount of any other reasonable expenses
incurred as a result of such Destruction.
"New Lenders" shall mean any financial institutions reasonably
-----------
acceptable to the Arranger and the Administrative Agent who provide any or all
of the Increased Facility Amount.
"New Warehouse Facility" shall mean Borrower's warehouse facility
----------------------
constructed or acquired with New Warehouse Financing.
"New Warehouse Financing" see Section 9.08(i).
-----------------------
"Newco" shall mean Tuesday Morning Acquisition Corp., a Delaware
-----
corporation and an Affiliate of Madison Dearborn.
"Non-U.S. Lender" see Section 5.06(b).
---------------
"Normal Advance Rate" see the definition of Borrowing Base.
-------------------
"Notes" shall mean the Revolving Credit Notes, the Term Loan Notes and
-----
the Swing Loan Note.
"Notice of Assignment" shall mean a notice of assignment pursuant to
--------------------
Section 12.06 substantially in the form of Exhibit F.
---------
"Obligations" shall mean all amounts, direct or indirect, contingent
-----------
or absolute, of every type or description, and at any time existing, owing to
any Creditor pursuant to the terms of any Credit Document or secured by any of
the Security Documents.
"Obligors" shall mean Borrower and the Guarantors.
--------
"Officer's Certificate" shall mean, as applied to any corporation, a
---------------------
certificate executed on behalf of such corporation by its Chief Executive
Officer, or one of its Vice Presidents or its Chief Financial Officer in his or
her official (and not individual) capacity and without personal liability and
which certificate, if given with respect to the compliance with a condition
precedent to the making of any Loan or the taking of any other action hereunder,
shall include (i) a statement that the officer making or giving such Officer's
Certificate has read such condition and any definitions or other provisions
contained in this Agreement relating thereto, and (ii) a statement as to
whether, in the opinion of the signer (in his or her official, but not
individual, capacity), such condition has been complied with.
"Original Lenders" shall mean the Lenders named on the signature pages
----------------
hereof who were Lenders at the Closing Date.
"Other Taxes" see Section 5.06(c).
-----------
"Participant" see Section 12.06(c).
-----------
-20-
"Payor" see Section 4.06.
-----
"PBGC" shall mean the United States Pension Benefit Guaranty
----
Corporation or any successor thereto.
"Permitted Holders" shall mean Madison Dearborn and any of its
-----------------
Affiliates controlled by Madison Dearborn.
"Permitted Investments" shall mean, for any Person: (a) direct
---------------------
obligations of the United States of America, or of any agency thereof, or
obligations guaranteed as to principal and interest by the United States of
America, or by any agency thereof, in either case maturing not more than one
year from the date of acquisition thereof by such Person; (b) time deposits,
certificates of deposit, bankers' acceptances (including eurodollar deposits)
issued by any bank or trust company organized or licensed under the laws of the
United States of America or any state thereof and having capital, surplus and
undivided profits of at least $500.0 million and a deposit rating of investment
grade; (c) commercial paper rated A-1 or better by Standard & Poor's Corporation
or P-1 or better by Moody's Investors Service, Inc., respectively, maturing not
more than 270 days from the date of acquisition thereof by such Person; and (d)
money market mutual funds that invest primarily in the foregoing items.
"Permitted Liens" see Section 9.07.
---------------
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Plan" shall mean at any time an employee pension benefit plan (other
----
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code and either is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or with respect to which Borrower or a Subsidiary
could incur liability.
"Pledged Collateral" shall have the meaning set forth in the Security
------------------
Agreement.
"Prime Rate" shall mean for any day, a rate per annum that is equal to
---------- --- -----
the corporate base rate of interest announced by Administrative Agent from time
to time, changing when and as said corporate base rate changes. The corporate
base rate is not necessarily the lowest rate charged by the Administrative Agent
to its customers.
"Principal Office" shall mean the principal office of the
----------------
Administrative Agent, located on the date hereof at 1 Federal Street, Boston,
Massachusetts 02110.
"Principal Payment Date" shall mean (i) the date which is 15 days
----------------------
after each Quarterly Date commencing with October 15, 1998 through and including
the Quarterly Date immediately prior to the date which is the seventh
anniversary of the Closing Date, (ii) with respect to the Tranche A Term Loans,
the fifth anniversary of the Closing Date, and (iii) with respect to the Tranche
B Term Loans, the seventh anniversary of the Closing Date.
"Prior Liens" shall mean Liens which, pursuant to the provisions of
-----------
any Security Document, are or may be superior to the Lien of such Security
Document.
-21-
"Proceeding" shall mean any claim, counterclaim, action, judgment,
----------
suit, hearing, governmental investigation, arbitration or proceeding, including
by or before any Governmental Authority and whether judicial or administrative.
"Proceeds Transaction" see Section 9.19.
--------------------
"Property" shall mean any right or interest in or to property or
--------
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests of any Person.
"Qualified Capital Stock" shall mean with respect to any Person any
-----------------------
Equity Interest of such Person that is not Disqualified Capital Stock.
"Quarter" shall mean each three month period ending on March 31, June
-------
30, September 30 and December 31.
"Quarterly Dates" shall mean the last Business Day of March, June,
---------------
September and December in each year, commencing with the last Business Day of
December 1997.
"Real Property" shall mean all right, title and interest of Borrower
-------------
or any Subsidiary (including, without limitation, any leasehold estate) in and
to a parcel of real property owned or operated by Borrower or any Subsidiary
together with, in each case, all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and rights incidental
to the ownership, lease or operation thereof.
"Refinanced Debt" shall mean the Indebtedness and commitments to make
---------------
extensions of credit of Borrower and the Subsidiaries under the existing debt
instruments and credit facilities listed on Schedule 1.01(c).
----------------
"refinancing" see Section 9.08(p).
-----------
"Register" see Section 2.08.
--------
"Regulation D" shall mean Regulation D (12 C.F.R. Part 204) of the
------------
Board of Governors of the United States Federal Reserve System.
"Regulations G, T, U and X" shall mean, respectively, Regulation G (12
-------------------------
C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) and Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
United States Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
-----------------
after the date hereof in any law or regulations (including Regulation D) of any
Governmental Authority or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks or other
financial institutions including such Lender of or under any law or regulations
of any Governmental Authority (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority or any other regulatory agency with proper
authority, including non-governmental agencies or bodies, charged with the
interpretation or administration thereof or by the NAIC.
-22-
"Reimbursement Obligations" shall mean, at any time, the obligations
-------------------------
of Borrower then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Lender in respect of any drawings under a Letter of Credit.
"Related Document" shall mean any agreement, document or instrument
----------------
entered into by any Obligor in connection with any Document, as any such
agreement, document or instrument is amended and in effect from time to time in
accordance with its terms and this Agreement.
"Related Parties" see Section 11.01.
---------------
"Release" shall mean any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration of any
Hazardous Material into the environment.
"Relevant Parties" and "Relevant Party" see Section 10(b).
---------------- --------------
"Remaining Amount" see Section 9.06(j).
----------------
"Replaced Lender" see Section 2.11.
---------------
"Replacement Indebtedness" see Section 9.08(j).
------------------------
"Replacement Lender" see Section 2.11.
------------------
"Required Payment" see Section 4.06.
----------------
"Requirement of Law" shall mean as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, 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.
"Reserve Requirement" shall mean, for any Interest Period for any
-------------------
LIBOR Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the United States Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D). LIBOR
Loans shall be deemed to constitute Eurocurrency liabilities and to be subject
to such reserve requirements without benefit of or credit for proration,
exceptions or offsets which may be available from time to time to any Lender
under Regulation D.
"Reset Date" see the definition of "Applicable Margin."
----------
"Responsible Officer" shall mean the chief executive officer of
-------------------
Borrower and the president of Borrower (if not the chief executive officer) and,
with respect to financial matters, the chief financial officer of Borrower.
"Restoration" see each Mortgage.
-----------
"Retained Portion" see Section 2.10(a)(v).
----------------
-23-
"Revolving Credit Commitment" shall mean, for each Revolving Credit
---------------------------
Lender, the obligation of such Lender to make Revolving Credit Loans in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set opposite the name of such Lender on Annex A under the caption
-------
"Revolving Credit Commitment" (as the same may be reduced from time to time
pursuant to Section 2.04 or changed pursuant to Section 12.06(b)). The initial
aggregate principal amount of the Revolving Credit Commitments is $90.0 million.
"Revolving Credit Commitment Percentage" shall mean, with respect to
--------------------------------------
any Revolving Credit Lender, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the aggregate amount of the Revolving Credit
Commitments of all of the Lenders.
"Revolving Credit Commitment Termination Date" shall mean the date
--------------------------------------------
which is the fifth anniversary of the Closing Date.
"Revolving Credit Commitments" shall mean the aggregate sum of the
----------------------------
Revolving Credit Commitment of all of the Revolving Credit Lenders, including
the Increased Facility Amount, if any.
"Revolving Credit Lenders" shall mean (a) on the date hereof, the
------------------------
Lenders having Revolving Credit Commitments on the signature pages hereof and
(b) thereafter, the Lenders from time to time holding Revolving Credit Loans and
Revolving Credit Commitments after giving effect to any assignments thereof
permitted by Section 12.06(b).
"Revolving Credit Loans" see Section 2.01(a).
----------------------
"Revolving Credit Notes" shall mean the promissory notes provided for
----------------------
by Section 2.08(a) and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Section 5.06 Certificate" see Section 5.06(b).
------------------------
"Security Agreement" shall mean a Security Agreement substantially in
------------------
the form of Exhibit D among the Obligors and the Administrative Agent, as the
---------
same may be amended, modified or supplemented in accordance with the terms
thereof and hereof.
"Security Documents" shall mean the Security Agreement, the Mortgage,
------------------
and all Uniform Commercial Code financing statements required by this Agreement,
the Security Agreement or any Mortgage to be filed with respect to the security
interests in Property and fixtures created pursuant to the Security Agreement or
any Mortgage and any other document or instrument utilized to pledge as
Collateral for the Obligations any property or assets of whatever kind or
nature.
"Senior Debt Leverage Ratio" shall mean, at any date, the ratio of (x)
--------------------------
Total Senior Debt at such date to (y) Consolidated EBITDA for the Measurement
Period ended on or immediately prior to such date.
"Senior Subordinated Financing" shall mean the issuance by Borrower of
-----------------------------
Senior Subordinated Notes pursuant to the Senior Subordinated Note Documents for
gross cash proceeds of $100 million.
"Senior Subordinated Notes" shall mean the unsecured senior
-------------------------
subordinated notes issued pursuant to the Senior Subordinated Financing,
including the senior subordinated notes issued pursuant to a
-24-
registered exchange offer therefor made pursuant to the registration rights
agreement entered into in connection with the issuance thereof on the Closing
Date.
"Senior Subordinated Note Documents" shall mean the Indenture dated
----------------------------------
December [_], 1997 pursuant to which the Senior Subordinated Notes were issued
and all documents relating thereto, as any such agreement or document may be
amended and in effect from time to time in accordance with its terms and this
Agreement.
"Solvent" and "Solvency" shall mean, for any Person on a particular
------- --------
date, that on such date (a) the fair value of the Property of such Person on a
going concern basis is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present fair
salable value of the Property of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and does
not believe that it will, incur debts and liabilities beyond such Person's
ability to pay as such debts and liabilities mature, (d) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's Property would constitute an
unreasonably small capital and (e) such Person is able to pay its debts as they
become due and payable.
"Specified Real Property" shall mean the parcel of land located in
-----------------------
Frankford Marsh, Texas described on Schedule 1.01(d) and owned by Borrower, to
----------------
be sold pursuant to a written agreement as in effect on the Closing Date.
"State and Local Real Property Disclosure Requirements" shall mean any
-----------------------------------------------------
state or local laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"Subordinated Debt" shall mean Indebtedness of Borrower which is
-----------------
subordinated to the Obligations on terms and conditions and pursuant to
documentation satisfactory to the Arranger (which shall include the Senior
Subordinated Notes); provided, however, that no Indebtedness will be deemed to
-------- -------
be subordinate merely by virtue of lack of a security interest in any
collateral.
"Subordination Provisions" see Section 10(m).
------------------------
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. Unless the context clearly requires otherwise, all references to
any Subsidiary shall mean a Subsidiary of Borrower.
"Subsidiary Guarantee" shall mean the Guarantee of each Subsidiary
--------------------
Guarantor.
-25-
"Subsidiary Guarantors" shall mean each of the direct and indirect
---------------------
Domestic Subsidiaries of Borrower listed on Schedule 1.01(b) and each other
direct and indirect Domestic Subsidiary that guarantees the payment of the
Obligations of Borrower hereunder pursuant to Section 9.21 and the other Credit
Documents.
"Supermajority Lenders" shall mean (i) at any time prior to the
---------------------
Closing Date, Lenders holding at least two-thirds of the aggregate amount of the
Commitments and (ii) at any time after the Closing Date, Lenders holding at
least two-thirds of the sum of (without duplication) (a) the aggregate principal
amount of outstanding Loans (other than Swing Loans), plus (b) the aggregate
----
amount of all Letter of Credit Liabilities, plus (c) the aggregate unused amount
----
of Revolving Credit Commitments then in effect, plus (d) the aggregate amount of
----
Swing Loans then outstanding (which, for each Revolving Credit Lender, shall be
deemed such Lender's pro rata share (based on the Revolving Credit Commitments)
--- ----
of the aggregate principal amount of Swing Loans then outstanding).
"Supermajority Lenders of the Affected Class" shall mean (i) at any
-------------------------------------------
time prior to the Closing Date, Lenders holding at least two-thirds of the
aggregate amount of the Commitments of the applicable tranche of Term Loan
Commitments which would be affected by any modification, supplement or waiver
contemplated by clause (e) or (f) to the proviso to Section 12.04(i), and (ii)
at any time after the Closing Date, Lenders holding at least two-thirds of the
sum of the aggregate amount of the outstanding Loans of the applicable tranche
of Term Loans which would be affected by any modification, supplement or waiver
contemplated by clause (e) or (f) to the proviso to Section 12.04(i).
"Surety Instruments" shall mean all letters of credit (including
------------------
standby and commercial), bankers' acceptances, bank guarantees, surety bonds and
similar instruments.
"Survey" shall mean a survey of any Mortgaged Real Property (and all
------
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state, province or country where such Mortgaged Real
Property is located, (ii) dated (or redated) not earlier than six months prior
to the date of delivery thereof unless there shall have occurred within the six
months prior to such date of delivery any exterior construction on the site of
such Mortgaged Real Property, in which event such survey shall be dated (or
redated) after the completion of such construction or, if such construction
shall not have been completed as of such date of delivery, not earlier than 20
days prior to such date of delivery, (iii) certified by the surveyor (in a
manner reasonably acceptable to the Administrative Agent) to the Administrative
Agent and the Title Company and (iv) complying in all respects with the minimum
detail requirements of the American Land Title Association as such requirements
are in effect on the date of preparation of such survey.
"Swap Contract" means any agreement (including any master agreement
-------------
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, foreign exchange agreement, rate cap,
collar or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or any other similar agreement (including
any option to enter into any of the foregoing).
"Swing Loan Commitment" shall mean the obligation of Fleet National
---------------------
Bank to make or continue Swing Loans hereunder in an aggregate principal amount
up to but not exceeding $1,000,000, as the same may be reduced or terminated
pursuant to Section 2.04 or Section 10, it being understood that the Swing Loan
Commitment is part of the Revolving Credit Commitment of the Swing Loan Lender,
rather than a separate, independent commitment.
-26-
"Swing Loan Lender" shall mean Fleet National Bank, and its successors
-----------------
and assigns in such capacity.
"Swing Loan Maturity Date" shall mean the Revolving Credit Commitment
------------------------
Termination Date.
"Swing Loan Note" shall mean the promissory note made by Borrower
---------------
evidencing the Swing Loans, in the form of Exhibit A-4.
-----------
"Swing Loans" see Section 2.01(e).
-----------
"Taking" shall mean any taking of any Mortgaged Real Property or Real
------
Property of any Obligor or any of its Subsidiaries or any part thereof, in or by
condemnation or other eminent domain proceedings pursuant to any law, general or
special, or by reason of the temporary requisition of the use or occupancy of
any Mortgaged Real Property or Real Property of any Obligor or any of its
Subsidiaries or any part thereof, by any Governmental Authority, civil or
military. Taking shall not include any Casualty Event.
"Tax Benefit" see Section 5.06(a).
-----------
"Term Loan Commitments" shall mean the Tranche A Term Loan Commitments
---------------------
and the Tranche B Term Loan Commitments, collectively.
"Term Loan Facility" shall mean the credit facility comprising the
------------------
Term Loan Commitments.
"Term Loan Lenders" shall mean the Tranche A Term Loan Lenders and the
-----------------
Tranche B Term Loan Lenders, collectively.
"Term Loan Notes" shall mean the Tranche A Term Loan Notes and the
---------------
Tranche B Term Loan Notes, collectively.
"Term Loan Portion" see Section 9.06(j).
-----------------
"Term Loan Tranches" shall mean the Term Loans outstanding under the
------------------
Tranche A Term Loans and the Tranche B Term Loans, collectively, and "Term Loan
---------
Tranche" shall mean any of them.
- -------
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B
----------
Term Loans, collectively.
"Title Company" shall mean Chicago Title Insurance Company or such
-------------
other title insurance or abstract company as shall be mutually agreeable to
Borrower and the Administrative Agent.
"Total Debt" shall mean at any date, the aggregate amount of (i)
----------
Indebtedness (other than Revolving Credit Loans, Swing Loans and Letter of
Credit Liabilities except as provided in clause (ii) and other than Indebtedness
under clauses (f) or (n) of Section 9.08), plus (ii) the average of the month
----
end aggregate total amount of Revolving Credit Loans and Swing Loans over the
Measurement Period ended on or immediately prior to such date of Borrower and
the Subsidiaries as of such date determined on a consolidated basis in
accordance with GAAP.
"Total Senior Debt" shall mean, at any date, the aggregate amount of
-----------------
(i) Indebtedness (other than Revolving Credit Loans, Swing Loans and Letter of
Credit Liabilities except as provided in clause (ii) and
-27-
other than Indebtedness under clauses (f) or (n) of Section 9.08), plus (ii) the
----
average of the month end aggregate total amount of the sum of Revolving Credit
Loans and Swing Loans over the Measurement Period ended on or immediately prior
to such date of Borrower and the Subsidiaries as of such date, other than
Subordinated Debt, determined on a consolidated basis in accordance with GAAP.
"Tranche A Term Loan Commitment" shall mean, for each Tranche A Term
------------------------------
Loan Lender, the obligation of such Lender to make a Tranche A Term Loan in an
amount up to but not exceeding the amount set opposite the name of such Lender
on Annex A under the caption "Tranche A Term Loan Commitment" (as the same may
-------
be changed pursuant to Section 12.06(b)). The initial aggregate principal
amount of the Tranche A Term Loan Commitments is $40.0 million.
"Tranche A Term Loan Commitments" shall mean the aggregate sum of the
-------------------------------
Tranche A Term Loan Commitment of all the Lenders.
"Tranche A Term Loan Lenders" shall mean (a) on the date hereof, the
---------------------------
Lenders having Tranche A Term Loan Commitments on the signature pages hereof,
and (b) thereafter, the Lenders from time to time holding Tranche A Term Loans
and Tranche A Term Loan Commitments after giving effect to any assignments
thereof permitted by Section 12.06(b).
"Tranche A Term Loan Notes" shall mean the promissory notes provided
-------------------------
for by Section 2.08(b)(i) and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Tranche A Term Loans" shall mean the loans provided for by Section
--------------------
2.01(b), which may be Alternate Base Rate Loans and/or LIBOR Loans.
"Tranche B Term Loan Commitment" shall mean, for each Tranche B Term
------------------------------
Loan Lender, the obligation of such Lender to make a Tranche B Term Loan in an
amount up to but not exceeding the amount set opposite the name of such Lender
on Annex A under the caption "Tranche B Term Loan Commitment" (as the same may
-------
be changed pursuant to Section 12.06(b)). The initial aggregate principal
amount of the Tranche B Term Loan Commitments is $70.0 million.
"Tranche B Term Loan Commitments" shall mean the aggregate sum of the
-------------------------------
Tranche B Term Loan Commitment of all the Lenders.
"Tranche B Term Loan Lenders" shall mean (a) on the date hereof, the
---------------------------
Lenders having Tranche B Term Loan Commitments on the signature pages hereof,
and (b) thereafter, the Lenders from time to time holding Tranche B Term Loans
and Tranche B Term Loan Commitments after giving effect to any assignments
thereof permitted by Section 12.06(b).
"Tranche B Term Loan Notes" shall mean the promissory notes provided
-------------------------
for by Section 2.08(b)(ii) and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Tranche B Term Loans" shall mean the loans provided for by Section
--------------------
2.01(c), which may be Alternate Base Rate Loans and/or LIBOR Loans.
-28-
"Transactions" shall mean the Merger, the Equity Financing, the Senior
------------
Subordinated Financing, the Management Rollover and the Existing Debt Repayment
and the borrowings hereunder on the Closing Date.
"Type" see Section 1.03.
----
"UCC" shall mean the Uniform Commercial Code as in effect in the
---
applicable state of jurisdiction.
"Unfunded Liabilities" shall mean, with respect to any Plan at any
--------------------
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title I
of ERISA (excluding any accrued but unpaid contributions), all determined as of
the then most recent valuation date for such Plan.
"Unutilized Revolving Credit Commitment" shall mean, for any Revolving
--------------------------------------
Credit Lender, at any time, the excess of such Lender's Revolving Credit
Commitment at such time over the sum of (i) the aggregate outstanding principal
amount of Revolving Credit Loans made by such Lender, (ii) such Lender's
Revolving Credit Commitment Percentage of the aggregate amount of Letter of
Credit Liabilities at such time, and (iii) with respect to the Swing Loan Lender
only, the aggregate principal amount of Swing Loans then outstanding.
"Wholly Owned Subsidiary" shall mean, with respect to any Person, any
-----------------------
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares or shares required to be held by foreign nationals)
are directly or indirectly owned or controlled by such Person or one or more
Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person. Unless the context clearly requires
otherwise, all references to any Wholly Owned Subsidiary shall mean a Wholly
Owned Subsidiary of Borrower.
"Working Capital" shall mean an amount determined for Borrower and the
---------------
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) equal to the sum of all current assets (other than cash)
less the sum of all current liabilities (other than the current portion of long-
term Indebtedness and the repayments of the Revolving Credit Loans required
pursuant to Section 2.12).
"Yearly Period" shall mean each full period of four Quarters
-------------
commencing with the Closing Date.
1.02. Accounting Terms and Determinations. Except as otherwise
-----------------------------------
provided in this Agreement, all computations and determinations as to accounting
or financial matters shall be made in accordance with GAAP, and all accounting
or financial terms shall have the meanings ascribed to such terms by GAAP as in
effect on the date hereof. All financial statements to be delivered pursuant to
this Agreement shall be prepared in accordance with GAAP. All financial
covenants are to be calculated in accordance with GAAP as in effect on the date
hereof unless such modifications are agreed to by the parties hereto.
1.03. Classes and Types of Loans. Loans hereunder are distinguished
--------------------------
by "Class" and by "Type". The "Class" of a Loan (or of a Commitment to make a
-----
Loan) refers to whether such Loan is a Revolving Credit Loan, Swing Loan,
Tranche A Term Loan or Tranche B Term Loan, each of which constitutes a Class.
The "Type" of a Loan refers to whether such Loan is an Alternate Base Rate Loan
----
or a LIBOR Loan, each of which constitutes a Type. Loans may be identified by
both Class and Type.
-29-
1.04. Rules of Construction. (A) In this Agreement and each other
---------------------
Credit Document, unless the context clearly requires otherwise (or such other
Credit Document clearly provides otherwise), references to (i) the plural
include the singular, the singular the plural and the part the whole; (ii)
Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; (iii) agreements (including this Agreement), promissory notes and
other contractual instruments include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments, assignments
or other modifications thereto are not prohibited by their terms or the terms of
any Credit Document; (iv) statutes and related regulations include any
amendments of same and any successor statutes and regulations; and (v) time
shall be a reference to New York City time. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
(B) In this Agreement and each other Credit Document, unless the
context clearly requires otherwise (or such other Credit Document clearly
provides otherwise), (i) "amend" shall mean "amend, amend and restate,
-----
supplement or modify"; and "amended" and "amendment" shall have meanings
------- ---------
correlative to the foregoing; (ii) in the computation of periods of time from a
specified date to a later specified date, "from" shall mean "from and
----
including"; "to" and "until" shall mean "to but excluding"; and "through" shall
-- ----- -------
mean "to and including"; (iii) "hereof," "herein" and "hereunder" (and similar
------ ------ ---------
terms) in this Agreement or any other Credit Document refer to this Agreement or
such other Credit Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Credit Document; (iv)
"including" (and similar terms) shall mean "including without limitation" (and
---------
similarly for similar terms); (v) "or" has the inclusive meaning represented by
--
the phrase "and/or"; (vi) "satisfactory to" any Creditor shall mean in form,
---------------
scope and substance and on terms and conditions satisfactory to such Creditor;
and (vii) references to "the date hereof" shall mean the date first set forth
---------------
above.
(C) In this Agreement unless the context clearly requires otherwise,
any reference to (i) an Annex, Exhibit or Schedule is to an Annex, Exhibit or
Schedule, as the case may be, attached to this Agreement and constituting a part
hereof, and (ii) a Section or other subdivision is to a Section or such other
subdivision of this Agreement.
(D) No doctrine of construction of ambiguities in agreements or
instruments against the interests of the party controlling the drafting thereof
shall apply to any Credit Document.
Section 2. Commitments, Loans, Notes, Prepayments,
Replacement of Lenders and Annual Cleandown.
-------------------------------------------
2.01. Loans.
-----
(A) Revolving Credit Loans. (I) Each Revolving Credit Lender
----------------------
severally agrees, on the terms and conditions of this Agreement, to make
revolving credit loans (the "Revolving Credit Loans") to Borrower in Dollars
----------------------
during the period from and including the Closing Date to but not including the
Revolving Credit Commitment Termination Date in an aggregate principal amount at
any one time outstanding not exceeding the amount of the Revolving Credit
Commitment of such Lender as in effect from time to time; provided, however,
-------- -------
that in no event shall the sum of the aggregate principal amount of (without
duplication) all Revolving Credit Loans then outstanding, plus the aggregate
----
principal amount of Swing Loans then outstanding, plus the aggregate amount of
----
all Letter of Credit Liabilities at any time exceed the lesser of (i) the
aggregate amount of the Revolving Credit Commitments as in effect at such time
and (ii) the Borrowing Base as in effect at such time. Subject to the terms and
conditions of this Agreement, during such period Borrower may borrow, repay and
reborrow the amount of the Revolving Credit Commitments by means of Alternate
Base Rate Loans and LIBOR
-30-
Loans and may Convert Revolving Credit Loans of one Type into Revolving Credit
Loans of another Type (as provided in Section 2.09) or Continue Revolving Credit
Loans of one Type as Revolving Credit Loans of the same Type (as provided in
Section 2.09).
(II) Borrower may at any time on or after the first anniversary of the
Closing Date request that one or more Revolving Credit Lenders provide all or a
portion of the Increased Facility Amount. No Revolving Credit Lender shall have
any obligation to make available any such increase in the Revolving Credit
Commitments. To the extent existing Revolving Credit Lenders decline to make
available all of the Increased Facility Amount, Borrower may approach New
Lenders to provide such increase provided that the conditions to obtaining the
Increased Facility Amount have been satisfied; provided, however, that any such
-------- -------
New Lenders, upon the making of a Revolving Credit Commitment pursuant to the
Increased Facility Amount, shall be treated as Revolving Credit Lenders for all
purposes of this Agreement. If and to the extent agreed to be extended by any
Revolving Credit Lender or New Lender, the Increased Facility Amount shall
become part of the Revolving Credit Commitments.
(B) Tranche A Term Loans. Each Tranche A Term Loan Lender severally
--------------------
agrees, on the terms and conditions of this Agreement, to make a single term
loan to Borrower in Dollars on the Closing Date in a principal amount equal to
the Tranche A Term Loan Commitment of such Lender, such loan to be used to
finance the Merger and the Existing Debt Repayment (including fees and
expenses). Thereafter Borrower may Convert Tranche A Term Loans of one Type
into Tranche A Term Loans of another Type (as provided in Section 2.09) or
Continue Tranche A Term Loans of one Type as Tranche A Term Loans of the same
Type (as provided in Section 2.09).
Tranche A Term Loans that are repaid or prepaid may not be reborrowed.
(C) Tranche B Term Loans. Each Tranche B Term Loan Lender severally
--------------------
agrees, on the terms and conditions of this Agreement, to make a single term
loan to Borrower in Dollars on the Closing Date in a principal amount equal to
the Tranche B Term Loan Commitment of such Lender, such loan to be used to
finance the Merger and the Existing Debt Repayment (including fees and
expenses). Thereafter Borrower may Convert Tranche B Term Loans of one Type
into Tranche B Term Loans of another Type (as provided in Section 2.09) or
Continue Tranche B Term Loans of one Type as Tranche B Term Loans of the same
Type (as provided in Section 2.09).
Tranche B Term Loans that are repaid or prepaid may not be reborrowed.
(D) Limit on LIBOR Loans. No more than eight separate Interest
--------------------
Periods in respect of LIBOR Loans of any Class may be outstanding at any one
time. No LIBOR Loans shall be made on the Closing Date.
(E) Swing Loans. Subject to the terms and conditions of this
-----------
Agreement, upon request of Borrower, the Swing Loan Lender agrees to make one or
more swing loans to Borrower from time to time from and including the Closing
Date, to but excluding the Swing Loan Maturity Date, up to but not exceeding the
amount of the Swing Loan Lender's Swing Loan Commitment as then in effect.
(Such swing loans referred to in this Section 2.01(e) now or hereafter made by
the Swing Loan Lender to Borrower from and including and after the Closing Date
are hereinafter collectively called the "Swing Loans".) Prior to the Swing Loan
-----------
Maturity Date, Borrower may borrow, repay and reborrow Swing Loans up to the
Swing Loan Commitment in accordance with the terms of this Agreement. The Swing
Loan Lender shall not make any Swing Loans on or after the Swing Loan Maturity
Date. Notwithstanding anything to the contrary contained in this Section
2.01(e) or elsewhere in this Agreement, the Swing Loan Lender shall not,
pursuant to this Section 2.01(e) or otherwise, make any Swing
-31-
Loan to or for the account of Borrower, and Borrower shall not be entitled to
borrow, pursuant to this Section 2.01(e), if, after giving full effect to the
requested Swing Loan, the aggregate outstanding amount of Revolving Credit
Loans, plus the aggregate outstanding amount of Swing Loans, plus the aggregate
---- ----
outstanding Letter of Credit Liabilities would exceed the lesser of (i) the
aggregate amount of the Revolving Credit Commitments as in effect at such time
and (ii) the Borrowing Base as in effect at such time. Notwithstanding anything
herein or elsewhere to the contrary, the Swing Loans will be made and maintained
only as Alternate Base Rate Loans. The Swing Loan Lender shall not make any
Swing Loan after receiving a written notice from Borrower or the Majority
Revolving Credit Lenders stating that a Default or an Event of Default exists
and is continuing until such time as the Swing Loan Lender shall have received
written notice of (i) rescission of all such notices from the party or parties
originally delivering such notice, (ii) the waiver of such Default or Event of
Default by the Majority Lenders, or (iii) the Agent's good faith determination
that such Default or Event of Default has ceased to exist. Swing Loans shall be
made and repaid in minimum amounts of $50,000 and integral multiples of $10,000
above such amount.
Upon the occurrence of a Default, each Revolving Credit Lender shall
be deemed to have purchased (and each Revolving Credit Lender hereby irrevocably
agrees to purchase on a pro rata basis (based upon each Revolving Credit
--- ----
Lender's Revolving Credit Commitment)) an irrevocable risk participation in all
outstanding Swing Loans, together with all accrued interest thereon, without any
further action by or on behalf of the Swing Loan Lender, any other Lender,
Borrower or any other Person. Upon one Business Day's notice from the Swing
Loan Lender, each other Revolving Credit Lender shall deliver to the Swing Loan
Lender an amount equal to its respective participation in such Swing Loan (as
determined pursuant to the immediately preceding sentence) in cash. In order to
evidence such participation, each Revolving Credit Lender agrees to enter into a
participation agreement at the request of the Swing Loan Lender in form and
substance satisfactory to the Swing Loan Lender and the Revolving Credit Lender.
If any Revolving Credit Lender fails to make available to the Swing Loan Lender
the amount of such Revolving Credit Lender's participation as provided in this
paragraph, the Swing Loan Lender shall be entitled to recover such amount on
demand from such Revolving Credit Lender, together with interest thereon at the
Federal Funds Rate until such amount is paid in full in cash. In the event the
Swing Loan Lender receives a payment from Borrower or any other Obligor of any
amount in which the Revolving Credit Lenders have purchased participations as
provided in this paragraph, the Swing Loan Lender shall distribute (after first
applying any such payment to any fees, costs and expenses of the Revolving
Credit Lenders) to each Revolving Credit Lender its pro rata share of such
--- ----
payment. Anything contained in this Agreement or otherwise to the contrary
notwithstanding, (A) each Revolving Credit Lender's obligation to purchase a
participation in each unpaid Swing Loan shall be absolute and unconditional and
shall not be affected by any circumstances, including, without limitation, (1)
any setoff, counterclaim, recoupment, defense or other right which such
Revolving Credit Lender may now or hereafter have against the Swing Loan Lender,
Borrower or any other Person for any reason whatsoever, (2) the occurrence or
continuation of a Default or an Event of Default, (3) any material adverse
change in the condition of Borrower or any Subsidiary, (4) any breach or default
of this Agreement or any of the Security Documents by any Person, or (5) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing, and (B) the Swing Loan Lender shall not have any obligation to
make any Swing Loans if (1) Borrower fails for whatever reason to satisfy any of
the conditions precedent set forth in Section 7.02 or (2) any Revolving Credit
Lender fails for whatever reason to comply with its obligations under this
Section 2.01(e).
2.02. Borrowings. Borrower shall give the Administrative Agent
----------
notice of each borrowing hereunder as provided in Section 4.05. The form of
such notice of borrowing shall be substantially in the form of Exhibit I. Not
---------
later than 12:00 noon New York time on the date specified for each borrowing
hereunder, each Lender shall make available the amount of the Loan or Loans to
be made by it on such date to the Administrative Agent, at an account specified
by the Administrative Agent maintained at the Principal Office, in immediately
available funds, for account of Borrower. Each borrowing of Revolving Credit
Loans shall be made by each
-32-
Revolving Credit Lender pro rata based on such Lender's Revolving Credit
--- ----
Commitment Percentage. The amounts so received by the Administrative Agent
shall, subject to the terms and conditions of this Agreement, be made available
to Borrower by depositing the same, in immediately available funds, in an
account of Borrower maintained with the Administrative Agent at the Principal
Office designated by Borrower.
2.03. Letters of Credit. Subject to the terms and conditions hereof,
-----------------
the Revolving Credit Commitments may be utilized, upon the request of Borrower,
in addition to the Revolving Credit Loans provided for by Section 2.01(a), for
standby and commercial documentation letters of credit (herein collectively
called "Letters of Credit") issued by the Issuing Lender for the account of
-----------------
Borrower; provided, however, that in no event shall (i) the aggregate amount of
-------- -------
all Letter of Credit Liabilities, plus the aggregate principal amount of the
----
Revolving Credit Loans then outstanding, plus the aggregate principal amount of
----
Swing Loans then outstanding exceed at any time the lesser of (x) the Revolving
Credit Commitments as in effect at such time and (y) the Borrowing Base as in
effect at such time, (ii) the sum of the aggregate principal amount of Revolving
Credit Loans then outstanding made by any Revolving Credit Lender, plus such
----
Lender's pro rata share (based on the Revolving Credit Commitments) of the
--- ----
aggregate principal amount of Swing Loans then outstanding, plus such Lender's
----
pro rata share (based on the Revolving Credit Commitments) of the aggregate
- --- ----
amount of all Letter of Credit Liabilities exceed such Lender's Revolving Credit
Commitment as in effect at such time, (iii) the outstanding aggregate amount of
all Letter of Credit Liabilities exceed $15.0 million, (iv) the face amount of
any Letter of Credit be less than $10,000, (v) the expiration date of any Letter
of Credit extend beyond the earlier of (x) the fifth Business Day preceding the
Revolving Credit Commitment Termination Date (unless cash collateralized (or
backstopped by irrevocable letters of credit) beyond such date on terms and
conditions and pursuant to documentation satisfactory to the Majority Revolving
Credit Lenders) and (y) the date twelve months following the date of such
issuance for standby Letters of Credit or 270 days after the date of such
issuance for trade Letters of Credit, unless the Majority Revolving Credit
Lenders have approved such expiry date in writing (but never beyond the fifth
Business Day prior to the Revolving Credit Commitment Termination Date);
provided, however, that any standby Letter of Credit may be automatically
- -------- -------
extendible for periods of up to one year (but never beyond the fifth Business
Day preceding the Revolving Credit Commitment Termination Date) so long as such
Letter of Credit provides that the Issuing Lender retains an option satisfactory
to the Issuing Lender, to terminate such Letter of Credit prior to each
extension date, unless all of the Revolving Credit Lenders have approved such
expiry date in writing, or (vi) the Issuing Lender issue any Letter of Credit
after it has received notice from Borrower or the Majority Revolving Credit
Lenders stating that a Default or Event of Default exists until such time as the
Issuing Lender shall have received written notice of (x) rescission of such
notice from the Majority Revolving Credit Lenders, (y) waiver of such Default or
Event of Default in accordance with this Agreement or (z) the Administrative
Agent's good faith determination that such Default or Event of Default has
ceased to exist. The following additional provisions shall apply to Letters of
Credit:
(A) Borrower shall give the Administrative Agent at least three
Business Days' irrevocable prior notice (effective upon receipt) specifying
the date (which shall be no later than thirty days preceding the Revolving
Credit Termination Date) each Letter of Credit is to be issued and
describing in reasonable detail the proposed terms of such Letter of Credit
(including the beneficiary thereof) (including whether such Letter of
Credit is to be a commercial Letter of Credit or a standby Letter of
Credit). Upon receipt of any such notice, the Administrative Agent shall
advise the Issuing Lender of the contents thereof.
(B) On each day during the period commencing with the issuance by the
Issuing Lender of any Letter of Credit and until such Letter of Credit
shall have expired or been terminated, the Revolving Credit Commitment of
each Revolving Credit Lender shall be deemed to be utilized for all
purposes hereof in an amount equal to such Lender's Revolving Credit
Commitment Percentage of the then undrawn face amount of such Letter of
Credit. Each Revolving Credit Lender (other than the Issuing
-33-
Lender) agrees that, upon the issuance of any Letter of Credit hereunder,
it shall automatically acquire a participation in the Issuing Lender's
liability under such Letter of Credit in an amount equal to such Lender's
Revolving Credit Commitment Percentage of such liability, and each
Revolving Credit Lender (other than the Issuing Lender) thereby shall
absolutely, unconditionally and irrevocably assume, as primary obligor and
not as surety, and shall be unconditionally obligated to the Issuing Lender
to pay and discharge when due, its Revolving Credit Commitment Percentage
of the Issuing Lender's liability under such Letter of Credit. The Issuing
Lender shall be deemed to hold a Letter of Credit Liability in an amount
equal to its retained interest in the related Letter of Credit after giving
effect to such acquisition by the Revolving Credit Lenders other than the
Issuing Lender of their participation interests.
(C) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Lender shall
promptly notify Borrower (through the Administrative Agent) of the amount
to be paid by the Issuing Lender as a result of such demand and the date on
which payment is to be made by the Issuing Lender to such beneficiary in
respect of such demand. Borrower hereby unconditionally agrees to pay and
reimburse the Issuing Lender for the amount of each demand for payment
under such Letter of Credit not later than the next Business Day after the
date on which the Issuing Lender notifies Borrower that payment is to be
made by the Issuing Lender to the beneficiary thereunder.
(D) Forthwith upon its receipt of a notice referred to in clause (c)
of this Section 2.03, Borrower shall advise the Issuing Lender whether or
not Borrower intends to borrow hereunder to finance its obligation to
reimburse the Issuing Lender for the amount of the related demand for
payment and, if it does, submit a notice of such borrowing as provided in
Section 4.05. In the event that Borrower fails to so advise the
Administrative Agent not later than one Business Day prior to the date
payment from Borrower is due to the Issuing Lender by virtue of a drawing
under a Letter of Credit, Borrower shall be deemed to have given notice of
borrowing for a Revolving Credit Loan which is an Alternate Base Rate Loan
in the exact amount owing to the Issuing Lender and the Administrative
Agent shall act accordingly. If Borrower has given such notice indicating
that it does not intend to borrow hereunder or if Borrower fails to
reimburse the Issuing Lender for a demand for payment under a Letter of
Credit by the date of notice of such payment (or the next Business Day if
received after 12:00 noon (New York time) on such date), the Administrative
Agent shall give each Revolving Credit Lender prompt notice of the amount
of the demand for payment, specifying such Lender's Revolving Credit
Commitment Percentage of the amount of the related demand for payment.
(E) Each Revolving Credit Lender (other than the Issuing Lender)
shall pay to the Administrative Agent for account of the Issuing Lender at
the Principal Office in Dollars and in immediately available funds, the
amount of such Lender's Revolving Credit Commitment Percentage of any
payment under a Letter of Credit upon notice by the Issuing Lender (through
the Administrative Agent) to such Revolving Credit Lender requesting such
payment and specifying such amount. Each such Revolving Credit Lender's
obligation to make such payments to the Administrative Agent for account of
the Issuing Lender under this clause (e), and the Issuing Lender's right to
receive the same, shall be absolute and unconditional and shall not be
affected by any circumstance whatsoever, including (i) the failure of any
other Revolving Credit Lender to make its payment under this clause (e),
(ii) the financial condition of Borrower or the existence of any Default or
(iii) the termination of the Commitments. Each such payment to the Issuing
Lender shall be made without any offset, abatement, withholding or
reduction whatsoever. Nothing in this clause (e) shall be deemed to
prejudice the right of any Revolving Credit Lender to recover from the
Issuing Lender in the event of a wrongful payment
-34-
of the kind described in the proviso of the last paragraph of this Section
2.03 or with respect to the issuance of a Letter of Credit in breach of any
restriction on such issuance under Section 2.03.
(F) Upon the making of each payment by a Revolving Credit Lender to
the Issuing Lender pursuant to clause (e) above in respect of any Letter of
Credit, such Lender shall, automatically and without any further action on
the part of the Administrative Agent, the Issuing Lender or such Lender,
acquire (i) a participation in an amount equal to such payment in the
Reimbursement Obligation owing to the Issuing Lender by Borrower hereunder
and under the Letter of Credit Documents relating to such Letter of Credit
and (ii) a participation in a percentage equal to such Lender's Revolving
Credit Commitment Percentage in any interest or other amounts payable by
Borrower hereunder and under such Letter of Credit Documents in respect of
such Reimbursement Obligation. Upon receipt by the Issuing Lender from or
for the account of Borrower of any payment in respect of any Reimbursement
Obligation or any such interest or other amounts (including by way of
setoff or application of proceeds of any collateral security) the Issuing
Lender shall promptly pay to the Administrative Agent for account of each
Revolving Credit Lender entitled thereto, such Revolving Credit Lender's
Revolving Credit Commitment Percentage of such payment, each such payment
by the Issuing Lender to be made in the same money and funds in which
received by the Issuing Lender. In the event any payment received by the
Issuing Lender and so paid to the Revolving Credit Lenders hereunder is
rescinded or must otherwise be returned by the Issuing Lender, each
Revolving Credit Lender shall, upon the request of the Issuing Lender
(through the Administrative Agent), repay to the Issuing Lender (through
the Administrative Agent) the amount of such payment paid to such Lender,
with interest at the rate specified in clause (i) of this Section 2.03.
(G) Borrower shall pay to the Administrative Agent for the account of
the Issuing Lender in respect of each Letter of Credit a letter of credit
commission in an amount equal to (x) the rate per annum equal to the
--- -----
Applicable Margin for Revolving Credit Loans that would be LIBOR Loans in
effect at the time of issuance thereof, multiplied by (y) the daily average
undrawn face amount of such Letter of Credit for the period from and
including the date of issuance of such Letter of Credit (i) in the case of
a Letter of Credit which expires in accordance with its terms, to and
including such expiration date and (ii) in the case of a Letter of Credit
which is drawn in full or is otherwise terminated other than on the stated
expiration date of such Letter of Credit, to but excluding the date such
Letter of Credit is drawn in full or is terminated, such fee to be non-
refundable and to be paid in arrears quarterly, on each Quarterly Date and
on the earlier of the Revolving Credit Commitment Termination Date or the
date of the termination of the Revolving Credit Commitments or the date of
such termination, expiration or the Business Day subsequent to notice of a
drawing. The Issuing Lender shall pay to the Administrative Agent for
account of each Revolving Credit Lender (other than the Issuing Lender),
from time to time at reasonable intervals (but in any event at least
quarterly), but only to the extent actually received from Borrower, an
amount equal to such Lender's Revolving Credit Commitment Percentage of all
letter of credit commissions referred to in the first sentence of this
clause (g). In addition, Borrower shall pay to the Administrative Agent
for account of the Issuing Lender only in respect of each Letter of Credit
a letter of credit issuance fee in an amount equal to 0.25% per annum
--- -----
multiplied by the original face amount from the issue date through the
expiry date of such Letter of Credit (but in no event greater than $500 per
Letter of Credit), such amount to be payable on the date of issuance of
such Letter of Credit, plus all charges, costs and expenses in the amounts
customarily charged by the Issuing Lender from time to time in like
circumstances with respect to the issuance of each Letter of Credit and
drawings and other transactions relating thereto.
(H) Promptly following the end of each calendar month, the Issuing
Lender shall deliver (through the Administrative Agent) to each Revolving
Credit Lender and Borrower a notice describing
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the aggregate amount of all Letters of Credit outstanding at the end of
such month. Upon the request of any Revolving Credit Lender from time to
time, the Issuing Lender shall deliver any other information reasonably
requested by such Lender with respect to each Letter of Credit then
outstanding.
(I) To the extent that any Revolving Credit Lender fails to pay an
amount required to be paid pursuant to clause (e) or (f) of this Section
2.03 on the due date therefor, such Lender shall pay interest to the
Issuing Lender (through the Administrative Agent) on such amount from and
including such due date to but excluding the date such payment is made (i)
during the period from and including such due date to but excluding the
date three Business Days thereafter, at a rate per annum equal to the
--- -----
Federal Funds Rate (as in effect from time to time) and (ii) thereafter, at
a rate per annum equal to the post-default rate (as in effect from time to
--- -----
time) pursuant to Section 3.02(b).
(J) The issuance by the Issuing Lender of any modification or
supplement to any Letter of Credit hereunder that would extend the expiry
date or increase the face amount thereof shall be subject to the same
conditions applicable under this Section 2.03 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (x) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been
issued hereunder in such modified or supplemented form or (y) each
Revolving Credit Lender shall have consented thereto.
(K) Notwithstanding the foregoing, the Issuing Lender shall not be
under any obligation to issue any Letter of Credit if at the time of such
issuance, any order, judgment or decree of any Governmental Authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Lender from issuing such Letter of Credit or any requirement of law
applicable to the Issuing Lender or any request or directive (whether or
not having the force of law) from any Governmental Authority shall
prohibit, or request that the Issuing Lender refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Lender with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which the Issuing Lender
is not otherwise compensated) not in effect on the date hereof.
The obligations of Borrower under this Agreement and any Letter of Credit
Document to reimburse the Issuing Lender for a drawing under a Letter of Credit,
and to repay any drawing under a Letter of Credit converted into Revolving
Credit Loans, shall be unconditional and irrevocable, and shall be paid strictly
in accordance with the terms of this Agreement and each such other Letter of
Credit Document under all circumstances, including the following: (i) any lack
of validity or enforceability of this Agreement or any Letter of Credit
Document; (ii) the existence of any claim, setoff, defense or other right that
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
Letter of Credit Documents or any unrelated transaction; (iii) any draft,
demand, certificate or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or 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 any defense based upon the failure of
any drawing under a Letter of Credit to conform to the terms of the Letter of
Credit or any non-application or misapplication by the beneficiary of the
proceeds of such drawing; or (iv) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, Borrower or a Guarantor; provided, however, that Borrower shall
-------- -------
not be obligated to reimburse the Issuing Lender for any wrongful payment
determined by a court of competent jurisdiction to have been made by the Issuing
Lender as a result of acts or omissions constituting willful misconduct or gross
negligence on the part
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of the Issuing Lender or which is not in accordance with the standard of care
specified in the Uniform Commercial Code of the State of New York. To the extent
that any provision of any Letter of Credit Document is inconsistent with the
provisions of this Section 2.03, the provisions of this Section 2.03 shall
control.
2.04. Termination and Reductions of Commitments. (A) (I) The
-----------------------------------------
aggregate amount of the Revolving Credit Commitments shall be automatically and
permanently reduced to zero on the Revolving Credit Commitment Termination Date.
(II) The aggregate amount of the Term Loan Commitments shall be
automatically and permanently reduced to zero immediately after the making of
the Term Loans on the Closing Date.
(B) Borrower shall have the right, at any time or from time to time
(i) so long as no Revolving Credit Loans or Letter of Credit Liabilities will be
outstanding as of the date specified for termination, to terminate the Revolving
Credit Commitments, and (ii) to reduce the aggregate amount of the then
Unutilized Revolving Credit Commitments of all the Revolving Credit Lenders;
provided, however, that (x) Borrower shall give notice of each such termination
- -------- -------
or reduction as provided in Section 4.05, and (y) each partial reduction shall
be in an aggregate amount at least equal to $5.0 million (or a larger multiple
of $100,000).
(C) The Commitments once terminated or reduced may not be reinstated.
2.05. Fees. (A) Borrower shall pay to the Administrative Agent for
----
the account of each Revolving Credit Lender a commitment fee on the daily
average amount of such Lender's Unutilized Revolving Credit Commitment, for the
period from and including the Closing Date to but not including the earlier of
the date such Revolving Credit Commitment is terminated and the Revolving Credit
Commitment Termination Date, at a rate per annum equal to the Applicable
--- -----
Revolving Credit Fee Percentage. Any accrued commitment fee under this Section
2.05(a) shall be payable in arrears on each Quarterly Date and on the earlier of
the date the Revolving Credit Commitments are terminated and the Revolving
Credit Commitment Termination Date.
(B) Borrower shall pay to the Administrative Agent for its own
account a nonrefundable administrative fee pursuant to the terms of the
Administrative Agent's Fee Letter.
2.06. Lending Offices. The Loans of each Type made by each Lender
---------------
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
2.07. Several Obligations of Lenders. The failure of any Lender to
------------------------------
make any Loan to be made by it on the date specified therefor shall not relieve
any other Lender of its obligation to make its Loan on such date, but neither
any Lender nor the Administrative Agent shall be responsible for the failure of
any other Lender to make a Loan to be made by such other Lender, and (except as
otherwise provided in Section 4.06) no Lender shall have any obligation to the
Administrative Agent or any other Lender for the failure by such Lender to make
any Loan required to be made by such Lender.
2.08. Notes; Register. (A) (I) At the request of any Lender, the
---------------
Revolving Credit Loans made by such Revolving Credit Lender shall be evidenced
by a single promissory note of Borrower substantially in the form of Exhibit A-
---------
1, dated the Closing Date, payable to such Lender and otherwise duly completed.
- -
(II) At the request of any Lender, the Tranche A Term Loans made by
such Tranche A Term Loan Lender shall be evidenced by a single promissory note
of Borrower substantially in the form of Exhibit A-2, dated the Closing Date,
-----------
payable to such Lender and otherwise duly completed.
-37-
(III) At the request of any Lender, the Tranche B Term Loans made by
such Tranche B Term Loan Lender shall be evidenced by a single promissory note
of Borrower substantially in the form of Exhibit A-3, dated the Closing Date,
-----------
payable to such Lender and otherwise duly completed.
(IV) At the request of the Swing Loan Lender, the Swing Loans made
by Fleet National Bank shall be evidenced by a single promissory note of
Borrower substantially in the form of Exhibit A-4, dated the Closing Date,
-----------
payable to Fleet National Bank and otherwise duly completed.
(B) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan of each Class made by each Lender to
Borrower, and each payment made on account of the principal thereof, shall be
recorded by such Lender on its books and, prior to any transfer of any Note
evidencing the Loans of such Class held by it, endorsed by such Lender on the
schedule attached to such Note or any continuation thereof; provided, however,
-------- -------
that the failure of such Lender to make any such recordation or endorsement
shall not affect the obligations of Borrower to make a payment when due of any
amount owing hereunder or under such Note.
(C) Borrower hereby designates the Administrative Agent to serve as
Borrower's agent, solely for purposes of this Section 2.08, to maintain a
register (the "Register") on which it will record the name and address of each
--------
Lender, the Commitment from time to time of each of the Lenders, the principal
amount of the Loans made by each of the Lenders and each repayment in respect of
the principal amount of the Loans of each Lender. Failure to make any such
recordation or any error in such recordation shall not affect Borrower's
obligations in respect of such Loans. The entries in the Register shall be
conclusive, in the absence of manifest error, and Borrower, the Administrative
Agent and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Credit Documents,
notwithstanding any notice to the contrary. The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
2.09. Optional Prepayments and Conversions or Continuations of Loans.
--------------------------------------------------------------
Subject to Section 4.04, Borrower shall have the right to prepay Loans, or to
Convert Loans of one Type into Loans of another Type or to Continue Loans of one
Type as Loans of the same Type, at any time or from time to time to be applied
as specified by Borrower; provided, however, that: (a) Borrower shall give the
-------- -------
Administrative Agent notice of each such prepayment, Conversion or Continuation
as provided in Section 4.05 (and, upon the date specified in any such notice of
prepayment, the amount to be prepaid shall become due and payable hereunder);
(b) if LIBOR Loans are prepaid or Converted other than on the last day of an
Interest Period for such Loans Borrower shall at such time pay all expenses and
costs required by Section 5.05; and (c) prepayments of the Term Loans pursuant
to this Section 2.09 shall be applied pro rata among the Term Loan Tranches
--- ----
based upon the remaining unpaid amounts thereof and, as to each such Term Loan
Tranche, the amount to be applied thereto shall be applied pro rata among the
--- ----
remaining Amortization Payments of such Term Loan Tranche based upon the
remaining unpaid amounts thereof. Each notice of Conversion or Continuation
shall be substantially in the form of Exhibit J.
---------
Notwithstanding the foregoing, any Tranche B Term Loan Lender may, to
the extent that Tranche A Term Loans are outstanding, elect not to have all or
any part of voluntary prepayments applied to such Tranche B Term Loans, in which
case the aggregate amount so declined shall be applied to the Tranche A Term
Loans to the remaining Amortization Payments under the Tranche A Term Loans, pro
---
rata in accordance with the remaining unpaid amounts thereof. If no Tranche A
- ----
Term Loans are outstanding, such election to decline prepayments shall not be
available.
-38-
Notwithstanding the foregoing, and without limiting the rights and
remedies of the Lenders under Section 10, in the event that any Event of Default
shall have occurred and be continuing, the Administrative Agent may (and at the
request of the Majority Lenders shall) suspend the right of Borrower to Convert
any Loan into a LIBOR Loan, or to Continue any Loan as a LIBOR Loan, in which
event all Loans shall be Converted (on the last day(s) of the respective
Interest Periods therefor) or Continued, as the case may be, as Alternate Base
Rate Loans.
2.10. Mandatory Prepayments. (A) Borrower shall prepay the Term
---------------------
Loans as follows (each such prepayment to be effected in each case in the
manner, order and to the extent specified in subsection (b) below of this
Section 2.10):
(I) Casualty Events. On the date on which Borrower or any
---------------
Subsidiary receives any Net Available Proceeds from any Casualty Event, in
an aggregate principal amount equal to 100% of such Net Available Proceeds;
provided, however, that (x) so long as no Default or Event of Default then
-------- -------
exists, such Net Available Proceeds shall not be required to be so applied
on such date to the extent that Borrower has delivered an Officer's
Certificate to the Administrative Agent on or prior to such date stating
that such proceeds shall be used to (1) repair, replace or restore any
Property in respect of which such Net Available Proceeds were paid or (2)
fund the substitution of other Property used or usable in the business of
Borrower and the Subsidiaries, in each case within 365 days following the
date of the receipt of such Net Available Proceeds, (y) all such Net
Available Proceeds shall be held in the Collateral Account and released
therefrom only in accordance with the terms of the Security Agreement, and
(z) if all or any portion of such Net Available Proceeds not required to be
applied to the prepayment of Term Loans pursuant to the preceding proviso
is not so used (or committed to be used pursuant to a binding written
agreement) within 365 days after the date of the receipt of such Net
Available Proceeds, such remaining portion shall be applied on the last day
of such period as specified in Section 2.10(b).
(II) Equity Issuance. Upon any Equity Issuance after the Closing
---------------
Date, in an aggregate principal amount equal to 50% of the Net Available
Proceeds of such Equity Issuance.
(III) Debt Issuance. Upon any Debt Issuance after the Closing Date
-------------
other than Debt Issuances made pursuant to Section 9.19, in an aggregate
principal amount equal to 100% of the Net Available Proceeds of such Debt
Issuance.
(IV) Disposition Events. Upon the date of receipt of any Net
------------------
Available Proceeds from any Disposition Event other than Dispositions made
pursuant to Section 9.19, in an aggregate principal amount equal to 100% of
the Net Available Proceeds from such Disposition Event; provided, however,
-------- -------
that (x) the Net Available Proceeds from any Disposition Event permitted by
Sections 9.06(g) and 9.06(n) shall not be required to be applied as
provided herein on such date if and to the extent that (1) no Default or
Event of Default then exists and (2) Borrower delivers an Officer's
Certificate to the Administrative Agent on or prior to such date stating
that such Net Available Proceeds shall be reinvested in capital assets of
Borrower or any Subsidiary in each case within the 365 day period following
the date of such Disposition Event (which certificate shall set forth the
estimates of the proceeds to be so expended), (y) all such Net Available
Proceeds shall be held in the Collateral Account and released therefrom
only in accordance with the terms of the Security Agreement, and (z) if all
or any portion of such Net Available Proceeds not so applied as provided
herein is not so used (or committed to be used pursuant to a binding
written agreement) within such 365 day period, such remaining portion shall
be applied on the last day of such period as specified in Section 2.10(b)
(it being understood that the foregoing shall in no way affect the
obligation of Borrower to obtain the consent of the Majority Lenders if
required pursuant to this Agreement).
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(V) Excess Cash Flow. Not later than 95 days after the end of each
----------------
fiscal year of Borrower commencing with the fiscal year ended December 31,
1998, in an aggregate principal amount equal to 75% of Excess Cash Flow for
such fiscal year when the Senior Debt Leverage Ratio at the end of such
fiscal year is greater than 3.50x, and 50% of Excess Cash Flow for such
fiscal year when the Senior Debt Leverage Ratio at the end of such fiscal
year is less than or equal to 3.50x (such 25% or 50% of Excess Cash Flow,
as the case may be, not required to be applied to the prepayment of the
Loans, the "Retained Portion").
----------------
(VI) Recovery Events. On the date on which Borrower or any
---------------
Subsidiary receives any Net Available Proceeds from any Taking or
Destruction or loss of title to any Mortgaged Real Property or Real
Property, in an aggregate principal amount equal to 100% of such Net
Available Proceeds; provided, however, that (x) so long as no Default or
-------- -------
Event of Default then exists, such Net Available Proceeds shall not be
required to be so applied on such date to the extent that Borrower has
delivered an Officer's Certificate to the Administrative Agent on or prior
to such date stating that such proceeds shall be used to (1) repair,
replace or restore any Mortgaged Real Property (or, if received in respect
of Real Property which is not Mortgaged Real Property, Real Property) in
respect of which such Net Available Proceeds were paid or (2) fund the
purchase of substitute or additional Mortgaged Real Property (or Real
Property if such Net Available Proceeds were received in respect of Real
Property which was not Mortgaged Real Property), in each case within the
365 day period following the date of the receipt of such Net Available
Proceeds, (y) all such Net Available Proceeds shall be held in the
Collateral Account and released therefrom only in accordance with the terms
of the applicable Mortgage or Security Agreement, and (z) if all or any
portion of such Net Available Proceeds not required to be applied to the
prepayment of Term Loans pursuant to the preceding proviso is not so used
(or committed to be used pursuant to a binding written agreement) within
such 365 day period after the date of the receipt of such Net Available
Proceeds, such remaining portion shall be applied on the last day of such
period as specified in Section 2.10(b).
(VII) Pension Plan Refund. On the date on which Borrower or any
-------------------
Subsidiary receives any cash payments (net of any reasonable costs
associated therewith, including income, excise and other taxes payable
thereon) from any return of surplus assets from any single Plan in an
amount equal to 100% of such net amount.
(VIII) Other Required Prepayments. If the terms of any agreement,
--------------------------
instrument or indenture pursuant to which any Indebtedness pari passu with
---- -----
or junior in right of payment to the Loans is outstanding (or pursuant to
which such Indebtedness is guaranteed) require prepayment of such
Indebtedness out of the proceeds of any Disposition or otherwise unless
such proceeds are used to prepay other Indebtedness, then, to the extent
not otherwise required by this Section 2.10(a), the Loans shall be repaid
in an amount equal to the amount that would be required to be prepaid at
such time as and upon such terms so that such other Indebtedness will not
be required to be prepaid pursuant to the terms of the agreement, indenture
or instrument or guarantee governing such other Indebtedness.
(IX) Merger Agreement Payments. Upon receipt by Borrower or any of
-------------------------
its Subsidiaries of any payment under the indemnification provisions of the
Merger Agreement or otherwise by reason of the breach of any representation
or warranty therein in excess of the Dollar Equivalent amount of $100,000
since the Closing Date (the "Applicable Amount"), other than any Applicable
-----------------
Amount made to reimburse Borrower or any of its Subsidiaries for any actual
out-of-pocket expenses or damages (whether currently incurred or reasonably
expected to be incurred, including legal fees and expenses), in an amount
equal to such Applicable Amount.
-40-
(B) Application. The amount of any required prepayments described in
-----------
Section 2.10(a) or Section 9.19 shall be applied as follows:
(I) first, the amount of the required prepayment shall be applied
-----
to the reduction of Amortization Payments on the Term Loans required by
Section 3.01(b) pro rata among the Term Loan Tranches based upon the
--- ----
remaining unpaid amounts thereof and, as to each such Term Loan Tranche,
the amount to be applied thereto shall be applied pro rata among the
--- ----
remaining Amortization Payments of such Term Loan Tranche based on the
remaining unpaid amounts thereof; provided, however, that (x) any holder of
-------- -------
Tranche B Term Loans may, to the extent that Tranche A Term Loans are
outstanding, elect not to have all or any amount of required prepayments
applied to such holder's Tranche B Term Loans, in which case the aggregate
amount so declined shall be applied to the Tranche A Term Loans pro rata
--- ----
among the remaining Amortization Payments of the Tranche A Term Loans based
on the remaining unpaid amounts thereof, and (y) if no Tranche A Term Loans
are outstanding, such election to decline prepayments shall not be
available; and
(II) second, after such time as no Term Loans remain outstanding,
------
Revolving Credit Commitments shall be permanently reduced (at the same time
that the prepayment of the Term Loans would have been made assuming an
unlimited amount thereof then outstanding) pro rata in an amount equal to
--- ----
the amount of any such required prepayment that would have been applied to
the Term Loans (assuming an unlimited amount thereof then outstanding) and
to the extent that, after giving effect to such reduction, the aggregate
principal amount of Revolving Credit Loans, together with the aggregate
amount of all Letter of Credit Liabilities, would exceed the lesser of (x)
the Borrowing Base and (y) the Revolving Credit Commitments, Borrower
shall, first, prepay outstanding Revolving Credit Loans and, second,
----- ------
provide cover for Letter of Credit Liabilities as specified in Section
2.10(d), in an aggregate amount equal to such excess.
Notwithstanding the foregoing, if the amount of any prepayment of
Loans required under this Section 2.10 shall be in excess of the amount of the
Alternate Base Rate Loans at the time outstanding, only the portion of the
amount of such prepayment as is equal to the amount of such outstanding
Alternate Base Rate Loans shall be immediately prepaid and, at the election of
Borrower, the balance of such required prepayment shall be either (i) deposited
in the Collateral Account and applied to the prepayment of LIBOR Loans on the
last day of the then next-expiring Interest Period for LIBOR Loans or (ii)
prepaid immediately, together with any amounts owing to the Lenders under
Section 5.05. Notwithstanding any such deposit in the Collateral Account,
interest shall continue to accrue on such Loans until prepayment. Interest on
such amount held in the Collateral Account shall be for the account of Borrower
(after deduction of reasonable fees and expenses).
(C) Revolving Credit Extension Reductions. Until the Revolving
-------------------------------------
Credit Commitment Termination Date, Borrower shall from time to time immediately
prepay the Swing Loans and the Revolving Credit Loans (and/or provide cover for
Letter of Credit Liabilities as specified in Section 2.10(d)) in such amounts as
shall be necessary so that at all times the aggregate outstanding amount of the
Revolving Credit Loans, plus the aggregate outstanding amount of Swing Loans,
----
plus the aggregate outstanding Letter of Credit Liabilities shall not exceed the
- ----
Revolving Credit Commitments as in effect at such time, such amount to be
applied, first, to Swing Loans, second, to Revolving Credit Loans outstanding
----- ------
and, third, as cover for Letter of Credit Liabilities outstanding as specified
-----
in Section 2.10(d).
(D) Cover for Letter of Credit Liabilities. In the event that
--------------------------------------
Borrower shall be required pursuant to this Section 2.10 to provide cover for
Letter of Credit Liabilities, Borrower shall effect the same by paying to the
Administrative Agent immediately available funds in an amount equal to the
required amount, which funds shall be retained by the Administrative Agent in
the Collateral Account (as provided in the Security
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Agreement as collateral security in the first instance for the Letter of Credit
Liabilities) in an amount not to exceed the face amount of all unexpired Letters
of Credit in respect of which such cover was required to be provided until such
time as all Letters of Credit shall have been terminated and all of the Letter
of Credit Liabilities paid in full.
2.11. Replacement of Lenders. Borrower shall have the right, if no
----------------------
Default or Event of Default then exists, to replace such Lender (the "Replaced
--------
Lender") with one or more other Eligible Person reasonably acceptable to the
- ------
Administrative Agent (collectively, the "Replacement Lender") if (x) such Lender
------------------
is charging Borrower increased costs pursuant to Section 5.01 or Section 5.06 in
excess of those being charged generally by the other Lenders or such Lender
becomes incapable of making LIBOR Loans as provided in Section 5.03, and/or (y)
as provided in Section 12.04(ii), such Lender refuses to consent to certain
proposed amendments, waivers or modifications with respect to this Agreement or
the other Credit Documents, and/or (z) such Lender shall have failed to fund its
portion of a Loan it is obligated to fund under Section 2.01 or the Issuing
Lender shall have failed to issue any Letter of Credit it is obligated to issue
under Section 2.03; provided, however, that (i) at the time of any replacement
-------- -------
pursuant to this Section 2.11, the Replacement Lender shall enter into one or
more assignment agreements (and with all fees payable pursuant to said Section
12.06 to be paid by the Replacement Lender) pursuant to which the Replacement
Lender shall acquire all of the Commitments and outstanding Loans of, and in
each case Letter of Credit Interests by, the Replaced Lender and, in connection
therewith, shall pay to (x) the Replaced Lender, an amount equal to the sum of
(A) the principal of, and all accrued interest on, all outstanding Loans of the
Replaced Lender, (B) all Reimbursement Obligations owing to such Replaced
Lender, together with all then unpaid interest with respect thereto at such
time, and (C) all accrued, but theretofore unpaid, fees owing to the Replaced
Lender pursuant to Section 2.05, and (y) the Issuing Lender an amount equal to
such Replaced Lender's Revolving Credit Commitment Percentage of any
Reimbursement Obligations (which at such time remains a Reimbursement
Obligation) to the extent such amount was not theretofore funded by such
Replaced Lender, and (ii) all obligations of Borrower then owing to the Replaced
Lender (other than those specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective assignment agreement, the
payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of Notes
executed by Borrower, the Replacement Lender shall become a Lender hereunder and
the Replaced Lender shall cease to constitute a Lender hereunder and be released
of all its obligations as a Lender, except with respect to indemnification
provisions applicable to the Replaced Lender under this Agreement, which shall
survive as to such Replaced Lender.
2.12. Annual Cleandown. For a consecutive thirty-day period during
----------------
each twelve month period, measured from April 1 - March 31, beginning in April
1998, the sum of the aggregate principal amount of Revolving Credit Loans
outstanding, plus the aggregate outstanding principal amount of Swing Loans
----
shall not exceed $15.0 million.
Section 3. Payments of Principal and Interest.
----------------------------------
3.01. Repayment of Loans.
------------------
(A) Revolving Credit and Swing Loans. Borrower hereby promises to
--------------------------------
pay to the Administrative Agent for the account of each Lender the entire
outstanding principal amount of such Lender's Revolving Credit Loans, and each
Revolving Credit Loan shall mature, on the Revolving Credit Commitment
Termination Date. Borrower hereby promises to pay to the Swing Loan Lender for
its account the entire outstanding principal amount of the Swing Loans, and the
Swing Loans shall mature, on the Swing Loan Maturity Date.
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(B) (1) Tranche A Term Loans. Borrower hereby promises to pay to
--------------------
the Administrative Agent for the account of the Tranche A Term Loan Lenders, in
repayment of the principal of the Tranche A Term Loans, the amounts set forth on
Schedule 3.01(b) on the dates set forth on Schedule 3.01(b) (subject to
- ---------------- ----------------
adjustment for any prepayments permitted by Section 2.09 or required by Section
2.10 to the extent actually made).
(2) Tranche B Term Loans. Borrower hereby promises to pay to the
--------------------
Administrative Agent, for the account of the Tranche B Term Loan Lenders, in
repayment of the principal of the Tranche B Term Loans, the amounts set forth in
Schedule 3.01(b) on the dates set forth in Schedule 3.01(b) (subject to
- ---------------- ----------------
adjustment for any prepayments permitted by Section 2.09 or required by Section
2.10 to the extent actually made).
3.02. Interest. (A) Borrower hereby promises to pay to the
--------
Administrative Agent for the account of each Lender interest on the unpaid
principal amount of each Loan made by such Lender for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at the following rates per annum:
--- -----
(I) during such periods as such Loan is an Alternate Base Rate
Loan, the Alternate Base Rate (as in effect from time to time), plus the
----
Applicable Margin and
(II) during such periods as such Loan is a LIBOR Loan, for each
Interest Period relating thereto, the LIBOR Rate for such Loan for such
Interest Period, plus the Applicable Margin.
----
(B) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and other overdue amounts owed by any Obligor
under the Credit Documents shall bear interest at a rate per annum equal to (x)
in the case of principal of any Loans, the rate which is 2% in excess of the
rate then borne by such Loans, (y) in the case of interest, the rate which is 2%
in excess of the rate otherwise applicable to Alternate Base Rate Loans which
are Revolving Credit Loans from time to time and (z) in the case of such other
amounts, the rate which is 2% in excess of the rate otherwise applicable to
Alternate Base Rate Loans which are Revolving Credit Loans from time to time.
Interest which accrues under this paragraph shall be payable on demand.
(C) Accrued interest on each Loan shall be payable (i) in the case of
an Alternate Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case
of a LIBOR Loan, on the last day of each Interest Period therefor and, if such
Interest Period is longer than three months, at three-month intervals following
the first day of such Interest Period and (iii) in the case of any LIBOR Loan,
upon the payment or prepayment thereof or the Conversion of such Loan to a Loan
of another Type (but only on the principal amount so paid, prepaid or
Converted), except that interest payable at the rate set forth in Section
3.02(b) shall be payable from time to time on demand. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Administrative Agent shall give notice thereof to the Lenders to which such
interest is payable and to Borrower.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
-----------------------------------------------
4.01. Payments. (A) Except to the extent otherwise provided herein,
--------
all payments of principal, interest, Reimbursement Obligations and other amounts
to be made by Borrower under this Agreement and the Notes, and, except to the
extent otherwise provided therein, all payments to be made by the Obligors under
any other Credit Document, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Administrative Agent
at its account at the Principal Office, not later than 1:00 p.m.
-43-
New York time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day).
(B) Borrower shall, at the time of making each payment under this
Agreement or any Note for the account of any Lender, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans, Reimbursement Obligations or other amounts payable by Borrower
hereunder to which such payment is to be applied (and in the event that Borrower
fails to so specify, or if an Event of Default has occurred and is continuing,
the Administrative Agent may distribute such payment to the Lenders for
application in such manner as it or the Majority Lenders, subject to Section
4.02, may determine to be appropriate).
(C) Except to the extent otherwise provided in the second sentence of
Section 2.03(g), each payment received by the Administrative Agent under this
Agreement or any Note for the account of any Lender shall be paid by the
Administrative Agent to such Lender, in immediately available funds, (x) if the
payment was actually received by the Administrative Agent prior to 1:00 p.m.
(New York time) on any day, on such day and (y) if the payment was actually
received by the Administrative Agent after 1:00 p.m. (New York time) on any day,
on the following Business Day (it being understood that to the extent that any
such payment is not made in full by the Administrative Agent, the Administrative
Agent shall pay to such Lender, upon demand, interest at the Federal Funds Rate
from the date such amount was required to be paid to such Lender pursuant to the
foregoing clauses until the date the Administrative Agent pays such Lender the
amount).
(D) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.02. Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (a) each borrowing of Loans of a particular Class from the Lenders
under Section 2.01 shall be made from the relevant Lenders, each payment of
commitment fee under Section 2.05 in respect of Commitments of a particular
Class shall be made for account of the relevant Lenders, and each termination or
reduction of the amount of the Commitments of a particular Class under Section
2.04 shall be applied to the respective Commitments of such Class of the
relevant Lenders, pro rata according to the amounts of their respective
--- ----
Commitments of such Class; provided, however, that Swing Loans shall be made
-------- -------
only by, and interest thereon shall be paid by Borrower only to, the Swing Loan
Lender (subject to such Lender's obligations in respect of any participation
therein purchased by the other Revolving Credit Lenders as provided in Section
2.01(e)); (b) except as otherwise provided in Section 5.04, LIBOR Loans of any
Class having the same Interest Period shall be allocated pro rata among the
--- ----
relevant Lenders according to the amounts of their respective Revolving Credit
and Term Loan Commitments (in the case of the making of Loans) or their
respective Revolving Credit and Term Loans (in the case of Conversions and
Continuations of Loans); (c) each payment or prepayment of principal of
Revolving Credit Loans or Term Loans by Borrower shall be made for account of
the relevant Lenders pro rata in accordance with the respective unpaid
--- ----
outstanding principal amounts of the Loans of such Class held by them; and (d)
each payment of interest on Revolving Credit Loans and Term Loans by Borrower
shall be made for account of the relevant Lenders pro rata in accordance with
the amounts of interest on such Loans then due and payable to the respective
Lenders.
4.03. Computations. Interest on LIBOR Loans shall be computed on the
------------
basis of a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable and interest
on Alternate Base Rate Loans and Reimbursement Obligations shall be computed on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable. Computations of commitment fees and Letter of Credit
fees shall be based upon a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable. Notwithstanding
-44-
the foregoing, for each day that the Alternate Base Rate is calculated by
reference to the Federal Funds Rate, interest on Alternate Base Rate Loans and
Reimbursement Obligations shall be computed on the basis of a year of 360 days
and actual days elapsed (including the first day but excluding the last day).
4.04. Minimum Amounts. Except for mandatory prepayments made
---------------
pursuant to Section 2.10 and Conversions or prepayments made pursuant to Section
5.04, each borrowing, Conversion and prepayment of principal of Loans (other
than Swing Loans, for which the minimum amounts thereof are in Section 2.01(e))
shall be in an amount at least equal to (1) $500,000 and in integral multiples
of $100,000 in excess thereof with respect to Alternate Base Rate Loans and (2)
$500,000 and in integral multiples of $100,000 in excess thereof with respect to
LIBOR Loans (borrowings, Conversions or prepayments of or into Loans of
different Types or, in the case of LIBOR Loans, having different Interest
Periods at the same time hereunder to be deemed separate borrowings, Conversions
and prepayments for purposes of the foregoing, one for each Type or Interest
Period). Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of LIBOR Loans having the same Interest Period shall
be in an amount at least equal to $500,000 and in multiples of $100,000 in
excess thereof and, if any LIBOR Loans or portions thereof would otherwise be in
a lesser principal amount for any period, such Loans or portions, as the case
may be, shall be Alternate Base Rate Loans during such period.
4.05. Certain Notices. Notices by Borrower to the Administrative
---------------
Agent of terminations or reductions of the Commitments, of borrowings,
Conversions, Continuations and optional prepayments of Loans and of Classes of
Loans, of Types of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Administrative Agent
not later than 11:00 a.m. New York time on the number of Business Days prior to
the date of the relevant termination, reduction, borrowing, Conversion,
Continuation or prepayment or the first day of such Interest Period specified in
the table below.
NOTICE PERIODS
Notice Number of Business Days Prior
- ------ -----------------------------
Termination or reduction of Commitments
2
Borrowing or optional prepayment of, or Conversions
into, Alternate Base Rate Loans (including Swing
Loans) same day
Borrowing or optional prepayment of, Conversions
into, Continuations as, or duration of Interest
Periods for, LIBOR Loans
3
Each such notice of termination or reduction shall specify the amount
and the Class of the Commitments to be terminated or reduced. Each such notice
of borrowing, Conversion, Continuation or prepayment shall specify the Class of
Loans to be borrowed, Converted, Continued or prepaid and the amount (subject to
Section 4.04) and Type of each Loan to be borrowed, Converted, Continued or
prepaid and the date of borrowing, Conversion, Continuation or prepayment (which
shall be a Business Day). Each such notice of the duration of an Interest
Period shall specify the Loans to which such Interest Period is to relate. The
Administrative Agent shall promptly notify the Lenders of the contents of each
such notice. In the event that Borrower fails to select the Type of Loan, or
the duration of any Interest Period for any LIBOR Loan, within the time period
and otherwise as provided in this Section 4.05, such Loan (if outstanding as a
LIBOR Loan) will be
-45-
automatically Converted into an Alternate Base Rate Loan on the last day of the
then current Interest Period for such Loan or (if outstanding as an Alternate
Base Rate Loan) will remain as, or (if not then outstanding) will be made as, an
Alternate Base Rate Loan.
4.06. Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have received written notice from a Lender or
Borrower (the "Payor") prior to the date on which the Payor is to make payment
-----
to the Administrative Agent of (in the case of a Lender) the proceeds of a Loan
to be made by such Lender hereunder or (in the case of Borrower) a payment to
the Administrative Agent for the account of one or more of the Lenders hereunder
(such payment being herein called the "Required Payment"), which notice shall be
----------------
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
------------
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
--- -----
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid; provided, however, that if neither the
-------- -------
recipient(s) nor the Payor shall return the Required Payment to the
Administrative Agent within three Business Days of the Advance Date, then,
retroactively to the Advance Date, the Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows (without double
recovery):
(I) if the Required Payment shall represent a payment to be made by
Borrower to the Lenders, Borrower and the recipient(s) shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment at the rate set forth in Section 3.02(b) (without
duplication of the obligation of Borrower under Section 3.02 to pay
interest on the Required Payment at the rate set forth in Section 3.02(b)),
it being understood that the return by the recipient(s) of the Required
Payment to the Administrative Agent shall not limit such obligation of
Borrower under Section 3.02 to pay interest at the rate set forth in
Section 3.02(b) in respect of the Required Payment and
(II) if the Required Payment shall represent proceeds of a Loan to be
made by the Lenders to Borrower, the Payor and Borrower shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment pursuant to Section 3.02(a), it being understood that
the return by Borrower of the Required Payment to the Administrative Agent
shall not limit any claim Borrower may have against the Payor in respect of
such Required Payment.
4.07. Right of Setoff; Sharing of Payments, Etc. (a) Each Obligor
-----------------------------------------
agrees that, in addition to (and without limitation of) any right of setoff,
banker's lien or counterclaim a Lender may otherwise have, each Lender shall be
entitled, at its option (to the fullest extent permitted by law), to set off and
apply any deposit (general or special, time or demand, provisional or final), or
other indebtedness, held by it for the credit or account of such Obligor at any
of its offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans, Reimbursement Obligations or any other
amount payable to such Lender hereunder that is not paid when due (regardless of
whether such deposit or other indebtedness is then due to such Obligor), in
which case it shall promptly notify such Obligor and the Administrative Agent
thereof; provided, however, that such Lender's failure to give such notice shall
-------- -------
not affect the validity thereof.
(B) Each of the Lenders agrees that, if it should receive (other than
pursuant to Section 5) any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of
-46-
setoff or banker's lien, by counterclaim or cross action, by the enforcement of
any right under the Credit Documents, or otherwise) which is applicable to the
payment of the principal of, or interest on, the Loans, Reimbursement
Obligations or fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
amounts then owed and due to such Lender bears to the total of such amounts then
owed and due to all of the Lenders immediately prior to such receipt, then such
Lender receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the respective
Obligor to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount; provided, however, that if
-------- -------
all or any portion of such excess amount is thereafter recovered from such
Lender, such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. Borrower consents to the
foregoing arrangements.
(C) Borrower agrees that any Lender so purchasing such a
participation may exercise all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.
(D) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section 4.07 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
---------------------
5.01. Additional Costs. (A) If the adoption of, or any change in,
----------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority or the
NAIC made subsequent to the date hereof:
(I) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Letter of Credit or any Lender's
participation therein, any Letter of Credit Document or any LIBOR Loan made
by it or change the basis of taxation of payments to such Lender in respect
thereof by any Governmental Authority (except for taxes covered by Section
5.06 and changes in the rate of tax on the overall net income of such
Lender by any Governmental Authority);
(II) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(III) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining LIBOR Loans or issuing or participating in Letters of
Credit or to reduce any amount receivable hereunder in respect thereof then, in
any such case, Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled
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to claim any additional amounts pursuant to this subsection, it shall promptly
notify Borrower, through the Administrative Agent, of the event by reason of
which it has become so entitled. A certificate as to any additional amounts
setting forth the calculation of such additional amounts pursuant to this
Section 5.01 submitted by such Lender, through the Administrative Agent, to
Borrower shall be conclusive in the absence of clearly demonstrable error. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
(B) In the event that any Lender shall have determined that the
adoption after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy (or any change after the date hereof therein or in
the interpretation or application thereof) or compliance by any Lender or any
corporation controlling such Lender with any request or directive after the date
hereof regarding capital adequacy (whether or not having the force of law) from
any central bank or Governmental Authority or the NAIC, including, without
limitation, the issuance of any final rule, regulation or guideline, does or
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or under any
Letter of Credit to a level below that which such Lender or such corporation
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to Borrower (with a copy to the
Administrative Agent) of a prompt written request therefor, Borrower shall
promptly pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
5.02. Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if, on or prior to the determination of any LIBOR Base Rate for
any Interest Period:
(I) the Administrative Agent determines, which determination shall
be conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBOR Base Rate" in Section 1.01 are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided
herein; or
(II) if the related Loans are Revolving Credit Loans, the Majority
Revolving Credit Lenders or, if the related Loans are Tranche A Term Loans,
the Majority Tranche A Term Loan Lenders or, if the related Loans are
Tranche B Term Loans, the Majority Tranche B Term Loan Lenders, determine,
which determination shall be conclusive, that the relevant rates of
interest referred to in the definition of "LIBOR Base Rate" in Section 1.01
upon the basis of which the rate of interest for LIBOR Loans for such
Interest Period is to be determined are not likely adequate to cover the
cost to the applicable Lenders of making or maintaining LIBOR Loans for
such Interest Period,
then the Administrative Agent shall give Borrower and each Lender prompt notice
thereof, and so long as such condition remains in effect, the affected Lenders
shall be under no obligation to make additional LIBOR Loans, to Continue LIBOR
Loans or to Convert Alternate Base Rate Loans into LIBOR Loans and Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding LIBOR Loans, either prepay such Loans or Convert such Loans into
Alternate Base Rate Loans in accordance with Section 2.09.
5.03. Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender or
its Applicable Lending Office to honor its obligation to make or maintain LIBOR
Loans hereunder (and, in the sole opinion of such Lender, the designation of a
different Applicable Lending Office would either not avoid such unlawfulness or
would be disadvantageous to such Lender), then such Lender shall promptly notify
Borrower thereof (with a copy to the Administrative Agent) and such Lender's
obligation to make or
-48-
Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be
suspended until such time as such Lender may again make and maintain LIBOR Loans
(in which case the provisions of Section 5.04 shall be applicable).
5.04. Treatment of Affected Loans. If the obligation of any Lender
---------------------------
to make LIBOR Loans or to Continue, or to Convert Alternate Base Rate Loans
into, LIBOR Loans shall be suspended pursuant to Section 5.03, such Lender's
LIBOR Loans shall be automatically Converted into Alternate Base Rate Loans on
the last day(s) of the then current Interest Period(s) for such LIBOR Loans (or
on such earlier date as such Lender may specify to Borrower with a copy to the
Administrative Agent as is required by law) and, unless and until such Lender
gives notice as provided below that the circumstances specified in Section 5.03
which gave rise to such Conversion no longer exist:
(I) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal which would otherwise
be applied to such Lender's LIBOR Loans shall be applied instead to its
Alternate Base Rate Loans; and
(II) all Loans which would otherwise be made or Continued by such
Lender as LIBOR Loans shall be made or Continued instead as Alternate Base
Rate Loans and all Alternate Base Rate Loans of such Lender which would
otherwise be Converted into LIBOR Loans shall remain as Alternate Base Rate
Loans.
If such Lender gives notice to Borrower with a copy to the Administrative Agent
that the circumstances specified in Section 5.03 which gave rise to the
Conversion of such Lender's LIBOR Loans pursuant to this Section 5.04 no longer
exist (which such Lender agrees to do promptly upon such circumstances ceasing
to exist) at a time when LIBOR Loans are outstanding, such Lender's Alternate
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding LIBOR Loans and by such Lender are held pro rata (as to
--- ----
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
5.05. Compensation. (A) Borrower agrees to indemnify each Lender
------------
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (1) default by Borrower in payment when due
of the principal amount of or interest on any LIBOR Loan, (2) default by
Borrower in making a borrowing of, Conversion into or Continuation of LIBOR
Loans after Borrower has given a notice requesting the same in accordance with
the provisions of this Agreement, (3) default by Borrower in making any
prepayment after Borrower has given a notice thereof in accordance with the
provisions of the Agreement or (4) the making of a payment or a prepayment of
LIBOR Loans on a day which is not the last day of an Interest Period with
respect thereto, including in each case, any such loss (including loss of
margin) or expense arising from the reemployment of funds obtained by it or from
fees payable to terminate the deposits from which such funds were obtained.
(B) For the purpose of calculation of all amounts payable to a Lender
under this Section 5.05 each Lender shall be deemed to have actually funded its
relevant LIBOR Loan through the purchase of a deposit bearing interest at the
LIBOR Rate in an amount equal to the amount of the LIBOR Loan and having a
maturity comparable to the relevant Interest Period; provided, however, that
-------- -------
each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this subsection. Any Lender requesting compensation pursuant to
this Section 5.05 will furnish to the Administrative Agent and Borrower a
certificate setting forth the basis and amount of such request and such
-49-
certificate, absent manifest error, shall be conclusive. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
5.06. Net Payments. (A) All payments made by Borrower or the
------------
Guarantors hereunder or under any Note and the Guarantees will be made without
setoff, counterclaim or other defense. Except as provided in Section 5.06(b),
all such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
Governmental Authority or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on or measured by
the net income or net profits of a Lender (a) pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or Applicable Lending Office of such Lender is located or any subdivision
thereof or therein or (b) as a result of a present or former connection between
the Administrative Agent or such Lender and the Governmental Authority imposing
such net income or net profits tax (other than any such connection arising
solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement, the Guarantees or any Note)) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Covered Taxes"). If any Covered Taxes are so levied or imposed, Borrower and
-------------
each Guarantor, as the case may be, agrees to pay the full amount of such
Covered Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement, the Guarantees or under any
Note, after withholding or deduction for or on account of any Covered Taxes,
will not be less than the amount provided for herein or in such Note. If any
amounts are payable in respect of Covered Taxes pursuant to the preceding
sentence, Borrower agrees to reimburse each Lender, upon the written request of
such Lender, (i) for taxes imposed on or measured by the net income or net
profits of such Lender pursuant to the laws of the jurisdiction in which such
Lender is organized or in which the principal office or Applicable Lending
Office of such Lender is located or under the laws of any political subdivision
or taxing authority of any such jurisdiction by reason of the making of payments
in respect of Covered Taxes pursuant to this Section (including pursuant to this
sentence) and (ii) for any withholding of taxes as such Lender shall determine
are payable by, or withheld from, such Lender in respect of amounts paid in
respect of Covered Taxes to or on behalf of such Lender pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Lender pursuant to this sentence; provided, however, that Borrower's obligations
-------- -------
shall be reduced by any Tax Benefit described in the following paragraph.
Borrower or the Guarantors, as the case may be, will furnish to the
Administrative Agent within 45 days after the date the payment of any Covered
Taxes is due pursuant to applicable law certified copies of tax receipts or
other documentation evidencing such payment by Borrower. Borrower and the
Guarantors agree to indemnify and hold harmless each Lender, and reimburse such
Lender upon its written request, for the amount of any Covered Taxes so levied
or imposed and paid by such Lender and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto.
If Borrower or any Guarantor pays any additional amount under this
Section 5.06 to a Lender and such Lender determines in its reasonable discretion
that it has actually received or realized in connection therewith any refund or
any reduction of, or credit against, its tax liabilities in or with respect to
the taxable year in which the additional amount is paid (a "Tax Benefit"), such
-----------
Lender shall pay to Borrower or such Guarantor, as the case may be, an amount
that the Lender shall, in its reasonable discretion, determine is equal to the
net benefit, after tax, which was obtained by the Lender in such year as a
consequence of such Tax Benefit; provided, however, that (i) such Lender shall
-------- -------
not be required to make any payment under this paragraph of this Section 5.06(a)
if an Event of Default shall have occurred and be continuing; (ii) any taxes
that are imposed on a Lender as a result of a disallowance or reduction
(including through the expiration of any tax credit carryover or carryback of
such Lender that otherwise would not have expired) of any Tax Benefit with
respect to which such Lender has made a payment to Borrower or any Guarantor
pursuant to this paragraph of this Section 5.06(a) shall
-50-
be treated as a tax for which Borrower or any Guarantor is obligated to
indemnify such Lender pursuant to this Section 5.06 without any exclusions or
defenses; and (iii) nothing in this paragraph of this Section 5.06(a) shall
require the Lender to disclose any confidential information to Borrower or any
Guarantor (including, without limitation, its tax returns).
(B) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) (a "Non-U.S. Lender") agrees to
---------------
deliver to Borrower and the Administrative Agent on or prior to the Closing
Date, or in the case of a Lender that is an assignee or transferee of an
interest under this Agreement pursuant to Section 12.06 (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment or
transfer), on the date of such assignment or transfer to such Lender, (i) two
accurate and complete original signed copies of Internal Revenue Service Form
4224 or 1001 (or successor forms) certifying to such Lender's entitlement to a
complete exemption from, or reduction in rate of, United States withholding tax
with respect to payments to be made under this Agreement and under any Note (or,
with respect to any assignee Lender, at least as extensive as the assigning
Lender), or (ii) if the Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form
1001 or 4224 pursuant to clause (i) above, (x) a certificate substantially in
the form of Exhibit H (any such certificate, a "Section 5.06 Certificate") and
--------- ------------------------
(y) two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Lender's entitlement to a
complete exemption from, or reduction in rate of, United States withholding tax
with respect to payments to be made under this Agreement and under any Note (or,
with respect to any assignee Lender, at least as extensive as the assigning
Lender). In addition, each Lender agrees that from time to time after the
Closing Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to Borrower and the Administrative Agent two new accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-
8 and a Section 5.06 Certificate, as the case may be, and such other forms as
may be required in order to confirm or establish the entitlement of such Lender
to a continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate, in which case such Lender shall not be required to
deliver any such form or certificate pursuant to this Section 5.06(b).
Notwithstanding the foregoing, no Lender shall be required to deliver any such
form or certificate if a change in treaty, law or regulation has occurred prior
to the date on which such delivery would otherwise be required that renders any
such form or certificate inapplicable or would prevent the Lender from duly
completing and delivering any such form or certificate with respect to it and
such Lender so advises Borrower. Each Person that shall become a Participant
pursuant to Section 12.06 shall, upon the effectiveness of the related transfer,
be required to provide all the forms and statements required pursuant to this
Section 5.06(b), provided that in the case of a Participant such Participant
shall furnish all such required forms and statements to the Lender from which
the related participation shall have been purchased. Borrower shall not be
required to indemnify any Non-U.S. Lender, or to pay any additional amounts to
any Non-U.S. Lender, in respect of U.S. Federal withholding tax pursuant to
paragraph (a) above to the extent that (i) the obligation to withhold amounts
with respect to U.S. Federal withholding tax existed on the date such Non-U.S.
Lender became a party to this Agreement (or, in the case of a Non-U.S.
Participant, on the date such Participant became a Participant hereunder);
provided, however, that this clause (i) shall not apply to the extent that (x)
- -------- -------
the indemnity payments or additional amounts any Lender (or Participant) would
be entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the person making the assignment,
participation or transfer to such Lender (or Participant) would have been
entitled to receive in the absence of such assignment, participation or
transfer, or (y) such assignment, participation or transfer had been requested
by Borrower, (ii) the obligation to pay such additional amounts would not have
arisen but for a failure by such Non-U.S. Lender or Non-U.S. Participant to
comply with the provisions of this Section 5.06(b) or (iii) any of the
representations or certifications made by a Non-U.S. Lender or Non-U.S.
Participant pursuant to this Section 5.06(b) above are incorrect at the time a
payment hereunder is made, other than by reason of any change in treaty, law or
regulation
-51-
having effect after the date such representations or certifications were made.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 5.06 and except as set forth in Section 12.06(b),
Borrower agrees to pay additional amounts and to indemnify each Lender in the
manner set forth in Section 5.06(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Closing Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of Covered Taxes.
(C) In addition, 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 or under the Note or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "Other Taxes").
-----------
Section 6. Guarantee.
---------
6.01. The Guarantee. The Guarantors hereby jointly and severally
-------------
guarantee as a primary obligor and not as a surety to each Lender and the
Administrative Agent and their respective successors and assigns the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the principal of and interest (including any interest that would
accrue but for the provisions of the Bankruptcy Code after any bankruptcy or
insolvency petition under the Bankruptcy Code) on the Loans made by the Lenders
to, and the Notes held by each Lender of, Borrower and all other amounts from
time to time owing to the Lenders or the Administrative Agent by Borrower under
this Agreement and under the Notes and by any Obligor under any of the other
Credit Documents, and all obligations of Borrower or any Subsidiary to any
Lender or any Affiliate of any Lender in respect of any Swap Contract and all
Obligations owing to the Issuing Lender under the Letter of Credit Documents, in
each case strictly in accordance with the terms thereof (such obligations being
herein collectively called the "Guaranteed Obligations"). The Guarantors hereby
----------------------
jointly and severally agree that if Borrower shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantors will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
6.02. Obligations Unconditional. The obligations of the Guarantors
-------------------------
under Section 6.01 are absolute, irrevocable and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of Borrower under this Agreement, the Notes or
any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
Guarantor (except for payment in full). Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantors hereunder which shall
remain absolute, irrevocable and unconditional under any and all circumstances
as described above:
(I) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(II) any of the acts mentioned in any of the provisions of this
Agreement or the Notes or any other agreement or instrument referred to
herein or therein shall be done or omitted;
-52-
(III) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement,
the Notes or any other Credit Document or any other agreement or instrument
referred to herein or therein shall be amended, modified or waived in any
respect or any other guarantee of any of the Guaranteed Obligations or any
security therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
(IV) any lien or security interest granted to, or in favor of, the
Administrative Agent or any Lender or Lenders as security for any of the
Guaranteed Obligations shall fail to be perfected; or
(V) the release of any other Guarantor.
The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or proceed against
Borrower under this Agreement or the Notes or any other agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors
waive any and all notice of the creation, renewal, extension, waiver,
termination or accrual of any of the Guaranteed Obligations and notice of or
proof of reliance by any Lender upon this guarantee or acceptance of this
guarantee, and the Guaranteed Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred in reliance upon this
guarantee, and all dealings between Borrower and the Lenders shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
guarantee. This guarantee shall be construed as a continuing, absolute,
irrevocable and unconditional guarantee of payment without regard to any right
of offset with respect to the Guaranteed Obligations at any time or from time to
time held by the Lenders, and the obligations and liabilities of the Guarantors
hereunder shall not be conditioned or contingent upon the pursuit by the Lenders
or any other Person at any time of any right or remedy against Borrower or
against any other Person which may be or become liable in respect of all or any
part of the Guaranteed Obligations or against any collateral security or
guarantee therefor or right of offset with respect thereto. This guarantee shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Guarantors and the successors and assigns thereof,
and shall inure to the benefit of the Lenders, and their respective successors
and assigns, notwithstanding that from time to time during the term of this
Agreement there may be no Guaranteed Obligations outstanding.
6.03. Reinstatement. The obligations of the Guarantors under this
-------------
Section 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise. The Guarantors jointly and severally agree that
they will indemnify the Administrative Agent and each Lender on demand for all
reasonable costs and expenses (including reasonable fees of counsel) incurred by
the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law,
other than any costs or expenses resulting from the gross negligence or bad
faith of such Creditor.
6.04. Subrogation; Subordination. Each Guarantor hereby agrees that
--------------------------
until the indefeasible payment and satisfaction in full in cash of all
Guaranteed Obligations and the expiration and termination of the Commitments of
the Lenders under this Agreement it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee in Section 6.01,
whether by subrogation or otherwise, against Borrower or any other Guarantor of
any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations. The payment of any amounts due with respect to any indebtedness of
Borrower or any other Guarantor now or
-53-
hereafter owing to any Guarantor by reason of any payment by such Guarantor
under the Guarantee in this Section 6 is hereby subordinated to the prior
indefeasible payment in full in cash of the Guaranteed Obligations. Each
Guarantor agrees that it will not demand, sue for or otherwise attempt to
collect any such indebtedness of Borrower to such Guarantor until the
Obligations shall have been indefeasibly paid in full in cash. If,
notwithstanding the foregoing sentence, any Guarantor shall prior to the
indefeasible payment in full in cash of the Guaranteed Obligations collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by such Guarantor as trustee for the
Administrative Agent and the Lenders and be paid over to the Administrative
Agent on account of the Guaranteed Obligations without affecting in any manner
the liability of such Guarantor under the other provisions of the guaranty
contained herein.
6.05. Remedies. The Guarantors jointly and severally agree that, as
--------
between the Guarantors and the Lenders, the obligations of Borrower under this
Agreement and the Notes may be declared to be forthwith due and payable as
provided in Section 10 (and shall be deemed to have become automatically due and
payable in the circumstances provided in said Section 10) for purposes of
Section 6.01 notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against Borrower and that, in the event of such declaration (or
such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 6.01.
6.06. Instrument for the Payment of Money. Each Guarantor hereby
-----------------------------------
acknowledges that the guarantee in this Section 6 constitutes an instrument for
the payment of money, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
6.07. Continuing Guarantee. The guarantee in this Section 6 is a
--------------------
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
6.08. General Limitation on Guarantee Obligations. In any action or
-------------------------------------------
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 6.01
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Section 6.01, then, notwithstanding any
other provision to the contrary, the amount of such liability shall, without any
further action by such Guarantor, any Lender, the Administrative Agent or any
other Person, be automatically limited and reduced to the highest amount that is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
Section 7. Conditions Precedent.
--------------------
7.01. Effectiveness and Initial Extension of Credit. The
---------------------------------------------
effectiveness of the Credit Documents and the obligation of the Lenders to make
any initial extension of credit hereunder (whether by making a Loan or issuing a
Letter of Credit) is subject to the satisfaction of the conditions precedent
that:
(I) Documentation and Evidence of Certain Matters. The Arranger
---------------------------------------------
shall have received the following documents, each duly executed where
appropriate (with sufficient conformed copies for each Lender), each of
which shall be reasonably satisfactory to the Arranger (and to the extent
specified below, to each Lender) in form and substance:
-54-
(1) Corporate Documents. Certified true and complete
-------------------
copies of the charter and by-laws (or equivalent documents) of each
Obligor and of all corporate authority for each Obligor (including
board of director resolutions and evidence of the incumbency,
including specimen signatures, of officers) with respect to the
execution, delivery and performance of such of the Credit Documents to
which such Obligor is intended to be a party and each other document
to be delivered by such Obligor from time to time in connection
herewith and the extensions of credit hereunder and the consummation
of the Transactions, certified as of the Closing Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary of
Borrower.
(2) Officer's Certificate. An Officer's Certificate of
---------------------
Borrower, dated the Closing Date, to the effect set forth in clauses
(a) and (b) of Section 7.02(i) and to the effect that all conditions
precedent to the making of such extension of credit have been
satisfied.
(3) Opinions of Counsel. (i) Opinion of Kirkland & Ellis,
-------------------
counsel to the Obligors, substantially in the form of Exhibit E-1, and
-----------
(ii) opinion of Haynes & Boone, LLP, local counsel to the Obligors,
substantially in the form of Exhibit E-2 (and each Obligor hereby
-----------
instructs such counsel to deliver such opinion to the Lenders, the
Arranger and the Administrative Agent).
(4) The Credit Agreement. This Agreement, (i) executed and
--------------------
delivered by a duly authorized officer of Borrower, with a counterpart
for each Lender, and (ii) executed and delivered by a duly authorized
officer of each Lender and Agent.
(5) Notes. The Notes, duly completed and executed for each
-----
Lender that has requested Notes.
(6) Security Agreement. The Security Agreement (which
------------------
shall be in full force and effect), duly authorized, executed and
delivered by the Obligors and the Administrative Agent, and the
certificates identified under the name of such Obligors in Annex 1
thereto, accompanied by undated stock powers executed in blank if
applicable, and the notes identified under the name of such Obligors
in Annex 1B thereto.
(7) Consents, Licenses and Approvals. In such officer's
--------------------------------
official (and not individual) capacity and without personal liability,
a certificate of a Responsible Officer of Borrower (i) attaching
copies of all consents, authorizations and filings (other than UCC
filings) necessary to enter into and consummate the transactions
contemplated hereby and perform the obligations under the Credit
Documents and the Documents (other than filings required by this
Agreement and the other Credit Documents to effect security interests
in the Pledged Collateral), and (ii) stating that such consents,
licenses and filings are in full force and effect and that all
applicable waiting periods have expired without any action being taken
or threatened which, would restrain, prevent or otherwise impose
adverse conditions on Borrower, and each such consent, authorization
and filing shall be in form and substance satisfactory to the
Administrative Agent.
(8) Solvency Certificate and Opinion. In such officer's
--------------------------------
official (and not individual) capacity and without personal liability,
a certificate from the chief financial officer of Borrower and, at
Borrower's expense (not to exceed 50% thereof up to $25,000), an
opinion of a nationally recognized appraisal firm or valuation
consultant reasonably satisfactory to the
-55-
Arranger in form and substance reasonably satisfactory to the Arranger
with respect to the Solvency of Borrower and each other Obligor
immediately after giving effect to the Transactions.
(9) Insurance. Evidence of insurance complying with the
---------
requirements of Section 9.04 and the Security Documents, in scope,
form and substance satisfactory to the Arranger and certificates
naming the Administrative Agent as an additional insured and/or loss
payee, and stating that such insurance shall not be canceled or
revised without 30 days prior written notice by the insurer to the
Administrative Agent.
(II) Date of Closing. Such extension of credit shall be made on
---------------
or before March 31, 1998.
(III) Merger Agreement and Merger. The Board of Directors of
---------------------------
Newco and Borrower shall have authorized and approved the Transactions and
the Arranger shall have received satisfactory evidence of the same. Any
amendment to the Merger Agreement shall be in form and substance reasonably
satisfactory to the Arranger. The Merger and the Existing Debt Repayment
and the financing therefor shall be in compliance in all material respects
with all laws and regulations including any state antitakeover laws
applicable to such transactions. Borrower shall not have any "poison pill"
rights or shall have redeemed such rights at a nominal price, or the
Arranger shall otherwise be reasonably satisfied that such rights are null
and void as applied to the Merger. The Arranger shall have received
copies, certified by Borrower, of all filings made with any governmental
authority in connection with the Merger and the other Transactions.
(IV) Consummation of Merger. All material conditions to the
----------------------
Merger set forth in the Merger Agreement as in effect on the date of the
Commitment Letter shall have been satisfied in all material respects, and
not waived, amended, supplemented or otherwise modified in any material
respect except with the consent of the Arranger and the Majority Lenders
(not to be unreasonably withheld or delayed), to the reasonable
satisfaction of the Arranger and the Required Lenders. The consideration
per share of common stock in the Merger shall not exceed $25 per share and
an aggregate of $325 million for all shares and options to purchase shares.
The Merger shall have been consummated.
(V) Management Rollover. The nature and amount of the
-------------------
Management Rollover shall be reasonably satisfactory to the Arranger.
(VI) Total Fees. The Arranger shall have received satisfactory
----------
evidence that fees and expenses in connection with the Transactions will
not exceed $20 million.
(VII) Senior Subordinated Financing. Borrower shall have received
-----------------------------
aggregate gross proceeds (i.e., before payment of expenses, underwriting
---
fees, discounts and the like) of at least $100 million from the Senior
Subordinated Financing pursuant to agreements, and terms and conditions
thereunder, in form and substance reasonably satisfactory to the Arranger.
(VIII) Equity Financing. Borrower and/or Newco shall have
----------------
received aggregate gross proceeds (i.e., before payment of expenses,
---
underwriting fees, discounts and the like) from the Equity Financing of at
least $115 million pursuant to agreements, and terms and conditions
thereunder, in form and substance reasonably satisfactory to the Arranger.
Any preferred stock issued to Madison Dearborn or any Affiliate of Madison
Dearborn as part of the Equity Financing shall be on terms and conditions,
and pursuant to documentation, reasonably satisfactory to the Arranger.
-56-
(IX) Madison Dearborn Voting and Economic Interest. Immediately
---------------------------------------------
after the consummation of the Transactions, Madison Dearborn shall own at
least 75% (on a fully diluted basis) of the voting common equity of
Borrower and 75% of the economic interest in Borrower.
(X) Repayment of Existing Debt. All obligations of Borrower and
--------------------------
the Subsidiaries with respect to the Refinanced Debt shall have been paid
in full (or provisions made therefor reasonably satisfactory to the
Arranger) and all lending commitments thereunder terminated to the
reasonable satisfaction of the Arranger with all security interests in
favor of existing lenders being unconditionally released and evidence
thereof reasonably satisfactory to the Arranger shall have been provided in
writing. The Arranger shall have received a "pay-off" letter with respect
to all such debt repaid to the extent "pay-off" letters are customarily
issued with respect to such Indebtedness.
(XI) Borrowing Base Certificate. The Administrative Agent and
--------------------------
the Lenders shall have received and the Majority Lenders shall be satisfied
(as to form and substance) with a Borrowing Base Certificate prepared as of
the last Business Day of the month immediately preceding the Closing Date.
In the event the Borrowing Base has changed or, in Borrower's reasonable
judgment, is expected to change, as of the Closing Date, Borrower shall
deliver to the Administrative Agent and the Lenders an additional Borrowing
Base Certificate on the Closing Date.
(XII) Approvals. All governmental (domestic and foreign) and
---------
other third-party approvals and consents necessary in connection with the
Transactions and the other transactions contemplated hereby (without the
imposition of any materially burdensome or materially adverse conditions)
shall have been obtained and shall be in full force and effect (or there
shall be a plan reasonably satisfactory to the Arranger for the obtaining
thereof). All applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents, or
imposes materially adverse conditions upon the Transactions.
(XIII) Employment Arrangements of Messrs. Smith and Ross. The
-------------------------------------------------
Arranger shall be reasonably satisfied with the employment and consultant
status (as well as employment and consulting agreements) of Jerry M. Smith
(President and CEO of Borrower) and Lloyd Ross (Chairman of Borrower).
(XIV) No Material Adverse Change. There shall not have occurred
--------------------------
or become known (i) any Material Adverse Change or any condition or event
that could reasonably be expected to result in a Material Adverse Change
with respect to Newco or Borrower, as the case may be (and before and after
giving effect to the Transactions), since December 31, 1996, (ii) any facts
or circumstances discovered by the Lenders in the course of their ongoing
due diligence investigation of the Transactions, Newco, Borrower and the
Subsidiaries after giving effect to the Transactions, and the other
transactions contemplated hereby, which would be materially inconsistent
with the assumptions underlying the projections delivered to the Lenders in
syndication, (iii) any transaction (other than the Transactions) entered
into by Newco, Borrower or any Subsidiary, whether or not in the ordinary
course of business, that, in the reasonable judgment of the Majority
Lenders, would be reasonably likely to result in a Material Adverse Change
with respect to Newco or Borrower, or (iv) any dividend or distribution of
any kind since the date of the most recent audited financials declared or
paid by Borrower on its Equity Interests (except pursuant to the Merger
Agreement).
(XV) No Action or Proceeding. There shall not exist any
-----------------------
threatened or pending Proceeding by or before any Governmental Authority,
(i) challenging the consummation of any of the Transactions or which would
restrain, prevent or impose materially burdensome conditions on the
Transactions,
-57-
individually or in the aggregate, or any other transaction contemplated
hereunder, (ii) seeking to prohibit the ownership or operation by Borrower
or any Subsidiary of all or a material portion of any of their businesses
or assets or (iii) seeking to obtain, or having resulted in the entry of,
any judgment, order or injunction that (a) would restrain, prohibit or
impose materially adverse conditions on the ability of the Lenders to make
the Loans under the Credit Facilities, (b) could be reasonably expected to
result in a Material Adverse Change with respect to Newco or Borrower, as
the case may be (and before and after giving effect to the Transactions),
(c) could reasonably be expected to affect the legality, validity or
enforceability of any Credit Document or any documents relating thereto or
could reasonably be expected to have a Material Adverse Effect, or (d) is
seeking any material damages as a result thereof.
(XVI) Satisfactory Capitalization and Corporate Structure. The
---------------------------------------------------
Arranger and the Majority Lenders shall be satisfied (in their reasonable
judgment) with the proposed and actual capitalization and corporate and
organizational structure of Newco and Borrower and the Subsidiaries (after
giving effect to the Transactions), including as to direct and indirect
ownership and as to the terms of the Indebtedness and Equity Interests of
Newco, Borrower, and their respective Subsidiaries. Immediately after
giving effect to the Transactions, Borrower shall have no outstanding
Indebtedness or preferred stock (or Contingent Obligation in respect
thereof) other than the Loans, the Senior Subordinated Notes, any Qualified
Capital Stock issued as part of the Equity Financing and certain other
Indebtedness reasonably acceptable to the Arranger (such as Capital Leases
and other Indebtedness disclosed to the Arranger (including outstanding
mortgage Indebtedness not to exceed an aggregate principal amount of $5.0
million)).
(XVII) No Default in Other Agreements. Any material defaults in
------------------------------
any material agreements of Newco or Borrower or any Subsidiary that may
result from the Transactions shall have been resolved or otherwise
addressed in a manner reasonably satisfactory to the Arranger; and no law
or regulation adopted, proposed or applicable after the date of the
Commitment Letter shall be applicable in the reasonable judgment of the
Arranger that restrains, prevents or imposes materially adverse conditions
upon any material component of the Transactions or the financing thereof,
including the extensions of credit under this Agreement.
(XVIII) Satisfactory Material Documentation. All other material
-----------------------------------
documentation and agreements related to the Transactions or which, in the
judgment of the Arranger, affects the extension of credit hereunder in any
material respect shall be in form and substance reasonably satisfactory to
the Arranger; and all material conditions precedent under all documentation
relating to the consummation of the Transactions (other than the conditions
precedent set forth in this Agreement) or the financing or refinancing
thereof as the case may be shall have been satisfied in all material
respects (except to the extent such conditions have been waived with the
prior consent of the Arranger and the Majority Lenders (such consent not to
be unreasonably withheld or delayed)).
(XIX) Margin Rule Compliance. All Loans and other financing to
----------------------
Newco and Borrower shall be in full compliance with all applicable
requirements of Regulations G, T, U and X.
(XX) Payment of Fees and Expenses. All accrued fees and
----------------------------
expenses (including the reasonable fees and expenses of counsel to the
Lenders, the Arranger and the Administrative Agent) of the Lenders, the
Arranger and the Administrative Agent in connection with the Credit
Documents shall have been paid.
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(XXI) Satisfactory Environmental Reports. The Arranger shall
----------------------------------
have received reasonably satisfactory third-party environmental reports
(including Phase 1 reports) of Borrower, and the Subsidiaries.
(XXII) Tax, ERISA and Other Matters Satisfactory. The Arranger
-----------------------------------------
shall be reasonably satisfied as to the amount and nature of all tax,
ERISA, employee retirement benefit, and other contingent liabilities to
which Newco, Borrower or any Subsidiary may be subject, and the plans of
Borrower and the Subsidiaries with respect thereto.
(XXIII) Pro Forma Financials; Historical Financials. The Lenders
-------------------------------------------
shall have received a reasonably satisfactory pro forma balance sheet of
Borrower and the Subsidiaries as at December 31, 1997 and after giving
effect to the Transactions and the financings contemplated hereby, which
pro forma balance sheet shall be substantially in conformity with that
delivered to the Lenders during syndication. The Lenders shall have
received projected cash flows and income statements for the period of seven
years following December 31, 1997, which projections shall be (i) based
upon reasonable assumptions made in good faith, (ii) reasonably
satisfactory to the Lenders and (iii) substantially in conformity with
those projections delivered to the Lenders during syndication. The Lenders
shall have received (i) audited financial statements of Borrower for 1994
through 1996 and (ii) unaudited interim combined financial statements of
Borrower for each fiscal month and quarterly period ended subsequent to
September 30, 1997 as to which such financial statements are available, and
such financial statements shall not, in the reasonable judgment of the
Lenders, reflect any Material Adverse Change with respect to Borrower as
compared with the financial statements or projections previously furnished
to the Lenders.
(XXIV) 1998 Business Plan and Budget. The Lenders shall have
-----------------------------
received a reasonably satisfactory business plan or budget for Borrower and
the Subsidiaries after giving effect to the Transactions for the remainder
of the 1997 fiscal year and the fiscal year 1998.
(XXV) Satisfactory Lien Search. The Lenders shall have received
------------------------
the results of a recent lien, tax and judgment search in each of the
jurisdictions and offices where assets of each of Newco, Borrower and their
respective Subsidiaries are located or recorded, and such search shall
reveal no liens on any of their assets except for liens permitted by the
Credit Documents or liens to be discharged in connection with the
transactions contemplated hereby.
(XXVI) Minimum Trailing Four Quarter EBITDA. For the trailing
------------------------------------
four quarter period immediately prior to the Closing Date Borrower's EBITDA
shall not be less than $33.5 million, and the Arranger shall have received
a satisfactory Officer's Certificate certifying as to the same (including
satisfactory schedules and other supporting data).
(XXVII) Field Examination. The Lenders shall have received the
-----------------
report of an independent field examination, reasonably satisfactory in form
and substance to the Lenders, with respect to the inventory of Borrower and
the Subsidiaries and shall be reasonably satisfied with the results thereof
(it being understood that Borrower shall not be responsible for more than
$10,000 of expenses for such field examination).
(XXVIII) Filings and Lien Searches. The Obligors shall have
-------------------------
authorized, executed and delivered each of the following:
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(1) UCC Financing Statements (Form UCC-1) in appropriate
form for filing under the UCC and any other applicable law in
each jurisdiction as may be necessary or appropriate to perfect
the Liens created, or purported to be created, by the Security
Documents;
(2) UCC, tax lien and judgment lien search reports, each
of a recent date against each Obligor as debtor and that are
filed in those jurisdictions in which any of the Collateral is
located and the jurisdictions in which each Obligor's principal
place of business is located;
(3) to the extent equipment or inventory is maintained on
a leased premise, a copy of each lease or other agreement
relating to such leased premise or, to the extent acceptable to
Arranger, abstracts of such leases or other agreements; and
(4) evidence of the completion of all filings with
respect to the Security Agreement and delivery of such other
documents as may be necessary or desirable, to perfect the Liens
created, or purported to be created, by the Security Agreement;
provided, however, that Borrower may satisfy this subclause (4)
-------- -------
to Section 7.01(xxviii) within a reasonable time after the
Closing Date.
(XXIX) Conditions Relating to Mortgaged Real Property and Real
-------------------------------------------------------
Property. On or prior to the Closing Date, Borrower and each Subsidiary to
--------
enter into a Mortgage shall have caused to be delivered to the
Administrative Agent, on behalf of the Lenders, the following documents and
instruments:
(i) a Mortgage encumbering each Mortgaged Real Property
in favor of the Administrative Agent, for the benefit of the Lenders,
in form for recording in the recording office of each jurisdiction
where each such Mortgaged Real Property is situated, together with
such other documentation as shall be required to create a lien under
applicable law, and other similar instruments as are contemplated by
the counsel opinions described in subsection 7.01(i)(3) hereof in
respect of such Mortgage, all of which shall be in form and substance
reasonably satisfactory to the Arranger, which Mortgage and other
instruments shall be effective to create a first priority Lien on such
Mortgaged Real Property subject to no Liens other than Prior Liens (or
Permitted Liens) applicable to such Mortgaged Real Property;
(ii) with respect to each Mortgaged Real Property,
Borrower shall use its best efforts to obtain such consents,
approvals, estoppels, tenant subordination agreements or other
instruments as reasonably necessary or as reasonably required by the
Arranger to consummate the transactions contemplated hereby or to
grant the Lien contemplated by the Mortgage; and
(iii) the following documents and instruments:
(1) with respect to each Mortgage, a policy (or
commitment to issue a policy) of title insurance insuring
(or committing to insure) the Lien of such Mortgage as a
valid first priority Lien (other than the Lien described in
clause (m) of the definition of Permitted Liens) on the
real property and fixtures described therein in an amount
not less than the fair market value thereof which policy
(or commitment) shall (a) be issued by the Title Company,
(b) include such reinsurance arrangements, if any (with
provisions for direct access), as shall be reasonably
acceptable to the Arranger, (c) have been supplemented by
such endorsements, to the extent available, as shall be
reasonably requested by the Arranger, (d) such affidavits
and instruments of
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indemnification as shall be reasonably required to induce
the Title Company to issue the policy or policies (or
commitment) and endorsements contemplated in this
subparagraph (iii) and (e) contain no exceptions to title
other than exceptions for (x) Liens of the type described
in clauses (a), (b), (c), (d), (f), (g), (h), (i), (m), (o)
and (p) of the definition of Permitted Liens, (y) any Lien
of the type described in clause (r) of the definition of
Permitted Liens to the extent the original Lien is
permitted hereunder and (z) the Prior Liens applicable to
such Mortgaged Real Property;
(2) with respect to each Mortgaged Real Property, a
Survey;
(3) with respect to each Mortgaged Real Property,
policies or certificates of insurance as required by the
Mortgage relating thereto;
(4) with respect to each Mortgaged Real Property,
UCC, judgment and tax lien searches complying with Section
7.01(xxv) above and subclause (2) of Section 7.01 (xxviii)
above;
(5) evidence acceptable to the Arrangers of payment
by Borrower of all title insurance premiums, search and
examination charges, survey costs, mortgage recording taxes
and related charges required for the recording of the
Mortgages and issuance of the title insurance policies
referred to in subclause (iii)(1) of this Section
7.01(xxix) above;
(6) with respect to each Real Property or Mortgaged
Real Property, copies of all Leases, subleases, leases in
which Borrower holds the tenant's interest or other
agreements relating to possessory interests or, to the
extent acceptable to Arranger, abstracts of such leases or
other agreements; to the extent any of the foregoing affect
any Mortgaged Real Property, such agreement shall be
subordinate to the Lien of the Mortgage to be recorded
against such Mortgaged Real Property, and shall otherwise
be acceptable to the Arrangers; and
(7) with respect to each Mortgaged Real Property,
an Officer's Certificate or other evidence satisfactory to
the Arranger that as of the date thereof (a) there has been
issued and is in effect, to the extent required, a valid
and proper certificate of occupancy or local or foreign
equivalent for the use then being made of such Mortgaged
Real Property, (b) there has not occurred any material
Destruction of any Mortgaged Real Property that has not
been restored and there is not pending any Taking of any
Mortgaged Real Property and (c) to the best knowledge of
Borrower, except as may be disclosed in the Survey of such
Mortgaged Real Property delivered pursuant to subclause
(iii)(2) of this Section 7.01(xix) above, there are no
disputes regarding boundary lines, location, encroachment
or possession of such Mortgaged Real Property and no state
of facts existing which could give rise to any such claim.
7.02. Initial and Subsequent Extensions of Credit. The obligation of
-------------------------------------------
the Lenders to make any Loan or otherwise extend any credit to Borrower upon the
occasion of each borrowing or other extension of credit (whether by making a
Loan or issuing a Letter of Credit) hereunder (including the initial borrowing)
is subject to the further conditions precedent that:
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(I) No Default or Event of Default; Representations and
---------------------------------------------------
Warranties True; Borrowing Base Not Exceeded. Both immediately prior to the
--------------------------------------------
making of such Loan or other extension of credit and also after giving pro
---
forma effect thereto and to the intended use thereof:
-----
(a) no Default or Event of Default shall have occurred and
be continuing;
(b) the representations and warranties made by the
Obligors in Section 8, and by each Obligor in each of the other Credit
Documents to which it is a party, shall be true and complete in all
material respects on and as of the date of the making of such Loan or
other extension of credit with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date); and
(c) for each Revolving Credit Loan and each Letter of
Credit issuance, the Borrowing Base (as determined upon the most
recent Borrowing Base Certificate delivered hereunder) exceeds the sum
of all Revolving Credit Loans then outstanding, plus the aggregate
----
principal amount of Swing Loans then outstanding, plus the aggregate
----
amount of all Letter of Credit Liabilities then outstanding.
(II) No Legal Bar. The Loans and the use of proceeds thereof
------------
shall not contravene, violate or conflict with, nor involve any Lender in a
violation of, any law, rule, injunction, or regulation or determination of
any court of law or other Governmental Authority.
Each notice of borrowing or request for the issuance of a Letter of
Credit by Borrower hereunder shall constitute a certification by Borrower to the
effect set forth in clause (i) above (both as of the date of such notice or
request and, unless Borrower otherwise notifies the Administrative Agent prior
to the date of such borrowing or issuance, as of the date of such borrowing or
issuance).
Each notice submitted by Borrower hereunder for an extension of credit
hereunder shall constitute a representation and warranty by Borrower, as of the
date of such notice and as of the relevant borrowing date or date of issuance of
a Letter of Credit, as applicable, that the applicable conditions in Sections
7.01 and 7.02 have been satisfied in accordance with the terms hereof.
Section 8. Representations and Warranties. Each Obligor represents
------------------------------
and warrants to the Creditors that at and as of each Funding Date (in each case
immediately before and immediately after giving effect to the transactions to
occur on such date) and at and as of the date of each other extension of credit
hereunder:
8.01. Corporate Existence. Each Obligor and each Subsidiary: (a) is
-------------------
a corporation, partnership or other entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization; (b) has
all requisite corporate or other power and authority, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its Property and carry on its business as now being conducted; and (c) is
qualified to do business and is in good standing in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary
and where failure to be so qualified and in good standing would reasonably be
expected to (either individually or in the aggregate) have a Material Adverse
Effect.
8.02. Financial Condition; Etc. (A) Borrower has heretofore
------------------------
delivered to the Lenders (A) the audited consolidated balance sheets of Borrower
and the Subsidiaries as of December 31, 1992, December 31,
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1993, December 31, 1994, December 31, 1995 and December 31, 1996, and the
related statements of earnings, changes in stockholders' equity and cash flows
for the fiscal years ended on those dates, together with reports thereon by KPMG
Peat Marwick LLP, certified public accountants, and (B) the unaudited
consolidated balance sheets of Borrower and the Subsidiaries as of September 30,
1997, and the related statements of earnings and cash flows for the fiscal
periods ended on September 30, 1997. All of said financial statements, including
in each case the related schedules and notes, are true, complete (in the case of
year-end financial statements) and correct in all material respects, have been
prepared in accordance with GAAP consistently applied and present fairly the
financial position of Borrower and the Subsidiaries as of the respective dates
of said balance sheets and the results of their operations for the respective
periods covered thereby, subject (in the case of interim statements) to period-
end audit adjustments and the absence of footnotes.
(B) Except as set forth in Schedule 8.02, no Obligor or any
-------------
Subsidiary has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or anticipated losses from any
unfavorable commitments.
(C) Except as set forth in the financial statements referred to in
Section 8.02(a), since December 31, 1996 there has been no Material Adverse
Effect, or any event, change or circumstance which could reasonably be expected
to cause or evidence, either individually or together with any other events,
changes or circumstances, a Material Adverse Effect.
8.03. Litigation. Except as disclosed in Schedule 8.03, there are no
---------- -------------
Proceedings or investigations now pending or, to the knowledge of the Obligors,
threatened against or directly affecting any Obligor or any Subsidiary or any of
their respective Property that, if adversely determined could (either
individually or in the aggregate) be reasonably expected to have a Material
Adverse Effect.
8.04. No Breach; No Default. (A) None of the execution, delivery
---------------------
and performance by each Obligor of any Credit Document or any Document to which
it is a party and the consummation of the transactions herein and therein
contemplated will (i) conflict with or result in a breach of, or require any
consent (which has not been obtained and is in full force and effect) under, the
charter or by-laws of any Obligor, or any applicable law or regulation, or any
order, writ, injunction or decree of any Governmental Authority binding on any
Obligor, or any term or provision of any agreement or instrument to which any
Obligor or any of its Subsidiaries is a party or by which any of them or any of
their Property is bound or to which any of them is subject (other than consents
which may be required pursuant to the terms of any Lease), or (ii) constitute
(with due notice or lapse of time or both) a default under any such agreement or
instrument, or (iii) result in the creation or imposition of any Lien (except
for the Liens created pursuant to the Security Documents) upon any Property of
any Obligor or any of its Subsidiaries pursuant to the terms of any such
agreement or instrument, except with respect to each of the foregoing which
would not (either individually or in the aggregate) reasonably be expected to
have a Material Adverse Effect.
(B) No Obligor or any Subsidiary is in default under or with respect
to any contractual obligation or any order, award or decree of any Governmental
Authority or arbitrator binding upon it or any of its Property in any respect
which would reasonably be expected to have a Material Adverse Effect.
(C) No Default or Event of Default has occurred and is continuing.
8.05. Action. Each Obligor has all necessary corporate power,
------
authority and legal right to execute, deliver and perform its obligations under
each Credit Document and each Document to which it is a party and to consummate
the transactions herein and therein contemplated; the execution, delivery and
performance by each Obligor of each Credit Document and each Document to which
it is a party and the
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consummation of the transactions herein and therein contemplated have been duly
authorized by all necessary corporate action on its part; and this Agreement has
been duly and validly executed and delivered by each Obligor and constitutes,
and each of the Notes, the other Credit Documents and the Documents to which it
is a party when executed and delivered by such Obligor (in the case of the
Notes, for value) will constitute, its legal, valid and binding obligation,
enforceable against such Obligor in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws of general applicability
from time to time in effect affecting the enforcement of creditors' rights and
remedies and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
8.06. Approvals. No authorizations, approvals or consents of, and no
---------
filings or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by any Obligor
of the Credit Documents or Documents to which it is a party or for the legality,
validity or enforceability hereof or thereof or for the consummation of the
transactions herein and therein contemplated, except for filings and recordings
in respect of the Liens created pursuant to the Security Documents.
8.07. ERISA. Each member of the ERISA Group (x) has fulfilled its
-----
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and (y) is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code with respect to each
Benefit Arrangement. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Code in respect of any
Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which failure or amendment has
resulted or could reasonably be expected to result in the imposition of a Lien
or the posting of a bond or other security under ERISA or the Code, (iii)
incurred any accumulated funding deficiency (whether or not waived) with respect
to any Plan, (iv) any direct or indirect withdrawal liability with respect to
any Multiemployer Plan, or any direct or indirect potential withdrawal liability
if it were to withdraw from a Multiemployer Plan as of the date of determination
or (v) incurred any liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA or contributions in the normal
course. The sum of the amount of unfunded benefit liabilities (within the
meaning of Section 4001(a)(18) of ERISA) under all Plans (excluding each Plan
with an amount of unfunded benefit liabilities of zero or less) is not more than
$1.0 million. There are no actions, liens, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any Benefit
Arrangement that could reasonably be expected to have a Material Adverse Effect.
Borrower and each Subsidiary and each of the Foreign Plans are in compliance in
all material respects with all applicable laws and regulations with respect to
the Foreign Plans and the terms of the Foreign Plans, and all required
contributions have been made to the Foreign Plans. For purposes hereof, the
term "Foreign Plans" shall mean any employee benefit plan, program, policy,
-------------
arrangement or agreement maintained or contributed to by, or entered into with,
Borrower or any Subsidiary with respect to employees employed outside the United
States.
8.08. Taxes. Except as set forth in Schedule 8.08, each Obligor and
----- -------------
each Subsidiary has filed or caused to be filed all U.S. Federal income tax
returns and all other material tax returns, domestic or foreign, required to be
filed by it and has paid all material taxes payable by it which have become due
or any assessments made against it or any of its Property and all other material
taxes, fees or other charges imposed on it or any of its Property (including the
Mortgaged Real Property) by any Governmental Authority (other than those which,
in the aggregate, are not substantial in amount or those the amount or validity
of which are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided on
the books of each Obligor or the Subsidiaries, as the case may be); and no tax
lien has been filed and, to the knowledge of the Obligors, no action, suit,
proceeding, investigation, audit or claim is being asserted
-64-
or has been threatened by any authority with respect to any such tax, fee or
other charge, except where the existence of such would not (individually or in
the aggregate) have a Material Adverse Effect. No Obligor or any Subsidiary has
entered into an agreement or waiver extending any statute of limitations
relating to the payment or collection of taxes of any Obligor or any Subsidiary,
except where the existence of such would not (individually or in the aggregate)
have a Material Adverse Effect.
8.09. Investment Company Act; Public Utility Holding Company Act;
-----------------------------------------------------------
Other Restrictions. No Obligor or any Subsidiary is an "investment company", or
- ------------------
a company "controlled" by an "investment company", within the meaning of the
United States Investment Company Act of 1940, as amended. No Obligor or any
Subsidiary is a "holding company", or an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company", within the meaning of the United
States Public Utility Holding Company Act of 1935, as amended. No Obligor is
subject to regulation under any law or regulation of any Governmental Authority
(other than Regulation X of the Board of Governors of the Federal Reserve
System) which limits its ability to incur Indebtedness.
8.10. Senior Subordinated Notes. The subordination provisions
-------------------------
contained in the Senior Subordinated Note Documents are enforceable against
Borrower and each Subsidiary party thereto, and all Obligations are within the
definition of "Senior Indebtedness" or "Guarantor Senior Indebtedness", as the
case may be, included in such subordination provisions. Senior Subordinated
Notes, in either case, when issued and sold, will either (a) have been
registered or qualified under applicable federal and state securities laws or
(b) be exempt therefrom. The offering documents for the issuance and sale of
the Senior Subordinated Notes, as of their date, did not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein not misleading (it
being understood that no representation or warranty is being made with respect
to information in respect of the initial purchasers thereof expressly provided
by them for inclusion therein).
8.11. Environmental Matters. Except as disclosed in Schedule 8.11
--------------------- -------------
and except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect: (i) each Obligor and the
Subsidiaries are in compliance with and in the last five years have been in
compliance with, and are not subject to liability under, any Environmental Laws
applicable to them and there are no Environmental Laws, including such Laws
which have been formally proposed for public comment, which would reasonably be
expected to result in material expenditures by any Obligor or any Subsidiary,
and no such Environmental Laws would reasonably be expected to interfere in any
material way with current or projected operations of any Obligor or any
Subsidiary; (ii) no Obligor or any Subsidiary has received notice that it or any
of their respective predecessors interests has been identified as a potentially
responsible party under the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any similar
------
law of any Governmental Authority, nor has any Obligor or any Subsidiary
received notice that any Hazardous Materials that it or any of their respective
predecessors in interest has used, generated, stored, treated, handled,
transported or disposed of, or arranged for disposal or treatment of, have been
found at any site at which any Person is conducting or plans to conduct any
action pursuant to any Environmental Law, and no Obligor or any Subsidiary, or
to the knowledge of the Obligors, any of their respective predecessors in
interest, has disposed of, arranged for the disposal or treatment of, or
otherwise released Hazardous Materials at any site at which any Person is
conducting or plans to conduct any action under Environmental Law; (iii) no
properties now or formerly owned, leased or operated by any Obligor or any
Subsidiary or, to the knowledge of the Obligors, any of their respective
predecessors in interest, are (x) listed or, to the knowledge of any Obligor or
Subsidiary, at any Property proposed for listing on the National Priorities List
under CERCLA or (y) listed on the Comprehensive Environmental Response,
Compensation and Liability Information System List promulgated pursuant to
CERCLA or (z) included on any similar lists maintained by any Governmental
Authority; (iv) there are no past or present events, conditions, activities,
practices or actions, or any agreements, judgments, decrees or orders by
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which any Obligor or any Subsidiary is bound, which would reasonably be expected
to prevent any Obligor's or any Subsidiary's compliance with any Environmental
Law, or which would reasonably be expected to give rise to any liability of any
Obligor or any Subsidiary under any Environmental Law, including, without
limitation, liability under CERCLA or similar state or foreign laws; (v) no Lien
has been asserted or recorded, or to the knowledge of the Obligors, threatened,
under any Environmental Law with respect to any asset, facility, inventory or
property currently owned, leased or operated by any Obligor or any Subsidiary;
(vi) there are no underground storage tanks or related piping at any Property
owned, operated or, to the knowledge of any Obligor or Subsidiary, at any
Property leased by any Obligor or any Subsidiary; (vii) to the knowledge of any
Obligor or any Subsidiary no such tanks or related piping has been removed from
such properties; and (viii) no Obligor or any Subsidiary is subject to any
Proceeding alleging the violation of, or liability under, any Environmental Law
and, to the knowledge of the Obligors, no such Proceeding is threatened.
8.12. Environmental Investigations. All material environmental
----------------------------
investigations, studies, audits or assessments which have been conducted and
which are in the possession, custody or control of any Obligor or any Subsidiary
relating (i) to the current or prior business, operations, facilities or
Properties of any Obligor or any Subsidiary or any of their respective
predecessors in interest or (ii) to any facility or Property of any Obligor now
or previously owned, operated, leased or used by any Obligor or any Subsidiary
or any of their respective predecessors in interest have been made available to
the Administrative Agent and the Lenders.
8.13. Use of Proceeds. Neither Borrower nor any Subsidiary is
---------------
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock and no part of the proceeds of any extension of
credit hereunder will be used to purchase or carry any Margin Stock. Borrower
will use the proceeds of all Term Loans to consummate the Merger and to finance
the Existing Debt Repayment.
8.14. Subsidiaries. On the date hereof (after giving effect to the
------------
Transactions), Borrower does not have any Subsidiaries or interests in
partnerships, joint ventures or business trusts other than the entities set
forth in Schedule 8.14. Borrower owns, as of the Closing Date, the percentage
-------------
of the issued and outstanding Equity Interests or other evidences of the
ownership of each Subsidiary, partnership or joint venture listed on Schedule
--------
8.14 as set forth on such Schedule. No such Subsidiary, partnership or joint
- ----
venture has issued any securities convertible into shares of its Equity
Interests (or other evidence of ownership) or any Equity Rights to acquire such
shares or securities convertible into such shares (or other evidence of
ownership), and the outstanding stock and securities (or other evidence of
ownership) of such Subsidiaries, partnerships or joint ventures are owned by
Borrower and the Subsidiaries free and clear of all Liens and Equity Rights of
others of any kind whatsoever, except for Liens pursuant to the Security
Documents.
8.15. Properties. Except as otherwise contemplated or provided in
----------
the Mortgage, the other Security Documents or this Agreement, each of the
Obligors has good and marketable title to and beneficial ownership of all
Properties owned by it, including all Property reflected in the most recent
financial statements delivered pursuant to this Agreement (except as sold or
otherwise disposed of since the date of such financial statements in the
ordinary course of business and in accordance with this Agreement). Title to
each such Property that is not Collateral is held by the Obligors and each of
their respective Subsidiaries free and clear of all Liens except for Permitted
Liens. Title to such Property that constitutes Collateral is held by the
Obligors free and clear of all Liens other than Prior Liens and other Liens
expressly permitted by the applicable Security Document.
8.16. Security Interest; Absence of Financing Statements. The
--------------------------------------------------
Security Documents, once executed and delivered, will create, in favor of the
Administrative Agent for the benefit of the Lenders, as security for the
obligations purported to be secured thereby, a valid and enforceable, and upon
filing or recording
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with the appropriate Governmental Authorities or the taking of other appropriate
action, depending upon the type of Collateral, perfected first priority security
interest in and Lien upon all of the Collateral, superior to and prior to the
rights of all third persons other than the holders of Prior Liens and subject to
no other Liens except Prior Liens and other liens specifically permitted by the
terms of the applicable Security Document.
Except with respect to Permitted Liens which are subordinate to the
Liens of the Security Documents, Prior Liens and the Liens created by the
Security Documents, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect
or give notice of any present or possible future Lien on, or security interest
in, any assets or Property of Borrower or any Subsidiary or rights thereunder.
8.17. Compliance with Laws. Each Obligor is in material compliance
--------------------
with all applicable statutes, laws, ordinances, rules, orders and regulations of
any Governmental Authority in all jurisdictions in which it is presently doing
business, and each Obligor will comply and cause each of its Subsidiaries to
comply with all such laws and regulations which may be imposed in the future in
jurisdictions in which it or such Subsidiary may then be doing business, in each
case other than those the non-compliance with which would not (individually or
in the aggregate) reasonably be expected to have a Material Adverse Effect. At
the time of consummation of the Merger and the other Transactions, the Merger
and the other Transactions shall have been consummated substantially in
accordance with the terms of the Merger Agreement and all applicable
Requirements of Law and all consents and approvals of all Governmental
Authorities required to consummate the Merger and the other Transactions shall
have been obtained, given, filed or taken or waived and are or will be in full
force and effect (or effective judicial relief with respect thereto has been
obtained). Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the Transactions, or
the performance by any Obligor of its obligations under the Credit Documents,
the Documents and all applicable laws.
8.18. True and Complete Disclosure. The information, reports,
----------------------------
financial statements, exhibits and schedules furnished in writing by or on
behalf of any of the Obligors to any Creditor in connection with the
negotiation, preparation or delivery of this Agreement and the other Credit
Documents or included herein or therein or delivered pursuant hereto or thereto,
including pursuant to any information memorandum distributed in connection with
the syndication of the Commitments and including the Merger Agreement, whether
prior to or after the date of this Agreement, when taken as a whole, do not, as
of the date such information was furnished, contain any untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not materially misleading. The projections and pro forma financial
--- -----
information furnished at any time by any Obligor to any Creditor pursuant to
this Agreement have been prepared in good faith based on assumptions believed by
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount and no Obligor, however, makes any representation
as to the ability of Borrower or any Subsidiary to achieve the results set forth
in any such projections. Borrower understands that all such statements,
representations and warranties shall be deemed to have been relied upon by the
Lenders as a material inducement to make each extension of credit hereunder.
8.19. Solvency. As of the Closing Date and each other date of an
--------
extension of credit hereunder immediately prior to and immediately following
such extension of credit each Obligor is and will be Solvent.
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Section 9. Covenants. Each Obligor covenants and agrees with the
---------
Creditors that, so long as any Commitment, Loan or Letter of Credit Liability is
outstanding and until payment in full of all amounts payable by Borrower
hereunder:
9.01. Financial Statements, Etc. Borrower (for itself and on behalf
-------------------------
of the Guarantors) shall deliver to the Administrative Agent in sufficient
quantities to distribute to each of the Lenders:
(A) Quarterly Financials. As soon as available and in any event
--------------------
within 50 days after the end of each of the first three quarterly fiscal
periods of each fiscal year, consolidated and consolidating statements of
income and cash flow of Borrower and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year
to the end of such period, and the related consolidated and consolidating
balance sheet of Borrower and its Consolidated Subsidiaries as at the end
of such period, setting forth in each case in comparative form (i) the
corresponding consolidated and consolidating statements of income for the
corresponding period in the preceding fiscal year and (ii) the
corresponding budget or plan for such period, accompanied by a certificate
of a senior financial officer of Borrower, which certificate shall state
that said consolidated and consolidating financial statements fairly
present the consolidated and consolidating financial condition and results
of operations of Borrower and its Consolidated Subsidiaries in accordance
with GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments and absence of footnotes);
(B) Annual Financials. As soon as available and in any event within
-----------------
95 days after the end of each fiscal year, consolidated and consolidating
statements of income, retained earnings and cash flow of Borrower and its
Consolidated Subsidiaries for such year and the related consolidated and
consolidating balance sheet of Borrower and its Consolidated Subsidiaries
as at the end of such year, setting forth in each case in comparative form
(i) the corresponding consolidated and consolidating figures as of the end
of and for the preceding fiscal year and (ii) the corresponding budget or
plan for such period, and accompanied by an opinion, without material
qualification, thereon of independent certified public accountants of
recognized national standing, which opinion shall state that said
consolidated and consolidating financial statements fairly present the
consolidated and consolidating financial condition and results of
operations of Borrower and its Consolidated Subsidiaries as at the end of,
and for, such fiscal year in accordance with GAAP, and a certificate of
such accountants stating that, in making the examination necessary for
their opinion, they obtained no knowledge of any Default; Borrower shall
supply such additional information and detail as to any item or items
contained on any such statement that Lenders may reasonably require; all
such information will be prepared in accordance with GAAP;
(C) Monthly Financials. As soon as available, but in any event not
------------------
later than twenty-five days after the end of each month (except year-end
and quarter-end), consolidated and consolidating unaudited balance sheets
of Borrower and its Consolidated Subsidiaries as at the end of such month,
and consolidated and consolidating unaudited statements of income and
expenses for Borrower and its Consolidated Subsidiaries for such month and
for the period from the beginning of the fiscal year to the end of such
month, all in reasonable detail, fairly presenting the financial position
and results of operation of Borrower and its Consolidated Subsidiaries as
at the date thereof and for such periods, and prepared in accordance with
GAAP consistent with the audited financial statements required pursuant to
Section 9.01(b); such statements shall be certified to fairly present the
financial position and results of operation of Borrower and its
Consolidated Subsidiaries as at the date thereof by a senior financial
officer of Borrower, subject to normal year-end adjustments and absence of
footnotes; notwithstanding the foregoing, it is agreed and understood that
with respect to the months of January and February, only
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preliminary, unaudited statements will be delivered within the 25-day
period with the final reports to be submitted as part of the information
provided under Section 9.01(b);
(D) Other Financial Information. Promptly upon delivery thereof to
---------------------------
the shareholders of any Obligor or any Subsidiary generally, copies of all
financial statements and reports and proxy statements so delivered which
Borrower sends to all holders of securities of the same class and within
five days after the same are filed, copies of all financial statements and
reports which Borrower may make to or file with any securities regulatory
commission or the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(E) Interest Rate Certificates. Together with the financial
--------------------------
statements delivered pursuant to clause (a) or (b) of this Section 9.01, an
Interest Rate Certificate;
(F) Notice of Default. Within two Business Days after a Responsible
-----------------
Officer of Borrower or any Subsidiary knows or should have known that any
Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that Borrower has taken and proposes
to take with respect thereto;
(G) Environmental Matters. Written notice of any Environmental Claim
---------------------
materially affecting any Obligor or any Subsidiary, any Mortgaged Real
Property or the operations of Borrower or any Subsidiary, and of (i) the
occurrence of any release, spill or discharge of any Hazardous Material
that is reportable under any Environmental Law or the commencement of any
clean-up pursuant to or in accordance with any Environmental Law of any
Hazardous Material at, on, under or within the Mortgaged Real Property or
any part thereof, or any other condition, circumstance, occurrence or
event, any of which could reasonably be expected to result in a material
liability of Borrower or any Subsidiary under any Environmental Law; or
(ii) any matters relating to Hazardous Materials or Environmental Laws that
may impair, or threaten to impair, Lenders' security interest in the
Mortgaged Real Property or any Obligor's ability to perform any of its
material obligations under this Agreement when such performance is due;
(H) Auditors' Reports. Promptly upon receipt thereof, copies of all
-----------------
material reports submitted to Borrower by independent certified public
accountants in connection with each annual, interim or special audit of the
books of Borrower made by such accountants, including, without limitation,
any management letter commenting on Borrower's internal controls submitted
by such accountants to management in connection with their annual audit;
(I) Annual Budgets. An annual budget in reasonable detail and
--------------
financial projections made in good faith, within 60 days after the end of
each fiscal year of Borrower;
(J) Borrowing Base Audits. Periodically at the request of the Agent
---------------------
or the Majority Revolving Credit Lenders, but in no event more frequently
than twice in each fiscal year so long as no Event of Default has occurred
and is continuing, a report, the scope and cost of which shall be
reasonably acceptable to the Revolving Credit Lenders and Borrower (the
reasonable cost and expense of which, unless an Event of Default shall have
occurred and be continuing, for one shall be for the sole account of
Borrower), of an independent collateral auditor (which may be, or be
affiliated with, one of the Lenders) with respect to the Inventory included
in the Borrowing Base as at the end of a monthly accounting period, which
report shall indicate that, based upon a review by such auditors of the
Inventory (including verification as to the value, location and respective
types), the information set forth
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in the Borrowing Base Certificate delivered by Borrower as at the end of
such accounting period is accurate and complete in all material respects;
(K) Borrowing Base Certificate. As soon as available and in any
--------------------------
event within 15 Business Days after the end of each monthly accounting
period (ending on the last day of each calendar month), a Borrowing Base
Certificate as of the last day of such accounting period; each Borrowing
Base Certificate shall have attached to it such additional schedules and/or
other information as the Administrative Agent may reasonably request (if
Borrower fails to deliver any such Borrowing Base Certificate within 15
Business Days after the end of any such month, then the Borrowing Base
shall be deemed to be $0 until such time as Borrower shall deliver such
required Borrowing Base Certificate); at the request of the Administrative
Agent, Borrower shall deliver to the Administrative Agent a Borrowing Base
Certificate at such time as the Increased Advance Rate is in effect, on a
weekly basis, not later than 12:00 noon, on the third Business Day after
the end of any such week; Borrower shall notify the Administrative Agent
promptly upon becoming aware of any event or condition that could
reasonably be expected to have a Material Adverse Effect on the Borrowing
Base;
(L) Lien Matters. Written notice of (1) the incurrence of any
------------
material Lien (other than Prior Liens) on, or claim asserted against any
material item of the Collateral or (2) the occurrence of any other event
which could reasonably be expected to have a Material Adverse Effect on the
aggregate value of the Collateral;
(M) Notice of Material Adverse Change. Written notice of any
---------------------------------
occurrence of any event or condition which has had or resulted in or is
reasonably likely to have or result in a Material Adverse Change or a
Material Adverse Effect;
(N) Governmental Filings. Promptly after request by the
--------------------
Administrative Agent or any Lender, copies of any other material reports or
documents that were filed by any Obligor with any Governmental Agency;
(O) ERISA Information. If and when any member of the ERISA Group (i)
-----------------
gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which could
reasonably be expected to constitute grounds for a termination of such Plan
under Title IV of ERISA or other action by the PBGC with respect to the
Plan, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the notice
of such reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title IV
of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal (or deemed withdrawal under Section 4092(e) of ERISA) from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer Plan
or in respect of any Benefit Arrangement or makes any amendment to any Plan
or Benefit Arrangement which failure or amendment has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting
of a bond or other security under ERISA or the Code, an Officer's
Certificate setting forth details as to such occurrence and action, if any,
which Borrower or the applicable member of the ERISA Group is required or
proposes to take;
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(P) Annual Returned Portion Balance. Together with the annual
-------------------------------
financial statements required by Section 9.09(b), an Officer's Certificate
showing the calculation of the Annual Retained Portion Balance for such
fiscal year; and
(Q) Miscellaneous. Promptly, such financial and other information
-------------
regarding Borrower and the Subsidiaries as any Creditor may from time to
time reasonably request.
Borrower will furnish to the Administrative Agent and each of the Lenders, at
the time it furnishes each set of financial statements pursuant to paragraph (a)
or (b) above, a certificate of a senior financial officer of Borrower (i) to the
effect that no Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action that Borrower has taken and proposes to take with respect
thereto) and (ii) setting forth in reasonable detail the computations necessary
to determine whether Borrower is in compliance with Sections 9.07, 9.08, 9.09,
9.10 and 9.11 as of the end of the respective quarterly fiscal period or fiscal
year.
9.02. Litigation, Etc. Borrower shall promptly give to the
---------------
Administrative Agent and each Lender notice of all Proceedings and any material
development in respect of such Proceedings, affecting Borrower or any
Subsidiary, except Proceedings which could not reasonably be expected to have
(individually or in the aggregate) a Material Adverse Effect.
9.03. Existence; Compliance with Law; Payment of Taxes; Inspection
------------------------------------------------------------
Rights; Performance of Obligations; Etc. Each Obligor and each Subsidiary
- ---------------------------------------
shall, (i) preserve and maintain its legal existence and all of its material
rights, privileges and franchises, the loss of which could reasonably be
expected to have a Material Adverse Effect (provided, however, that nothing in
-------- -------
this Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.06); (ii) comply with the requirements of all applicable laws
(including ERISA and the rules and regulations thereunder), rules, regulations
and orders of Governmental Authorities if failure to comply with such
requirements would (individually or in the aggregate) have a Material Adverse
Effect; (iii) timely file true, accurate and complete tax returns required by
all Governmental Authorities and pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto (except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained in accordance with GAAP) if such failure to file
or pay and discharge would (individually or in the aggregate) have a Material
Adverse Effect; (iv) maintain all of its Properties used or useful in its
business in good working order and condition, ordinary wear and tear excepted,
except to the extent that the failure to do so with respect to any such Property
would not individually or in the aggregate be reasonably likely to have a
Material Adverse Effect; (v) permit representatives of any
Creditor, during normal business hours, to examine, copy and make extracts from
its books and records, to inspect its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by such
Creditor; (vi) allow the Administrative Agent to consult with Borrower's
independent public accountants and auditors with respect to the financial
affairs of Borrower and the Subsidiaries and agrees to authorize such
accountants to disclose to the Administrative Agent and the Lenders any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of Borrower and the Subsidiaries; at the
request of the Administrative Agent, Borrower shall deliver a letter addressed
to such accountants instructing them to comply with the provisions of this
Section 9.03(vi); (vii) perform in all material respects all of its obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument and material contract by which it is bound or to which it is a party,
except where such failure to so perform, singly or in the aggregate with all
other such failures, would not have a Material Adverse Effect; and (viii) keep
proper books of record and accounts, in which full and correct entries shall be
made of all financial transactions and the Property and business of each Obligor
and its Subsidiaries in all
-71-
material respects in accordance with GAAP in effect from time to time or in all
material respects as otherwise required by applicable rules and regulations of
any Governmental Authority having jurisdiction over such Obligor or its
Subsidiaries, as relevant. Borrower will confer with the Lenders in enforcing or
waiving material rights of Borrower or any Subsidiary under any Document.
9.04. Insurance. Borrower and each Subsidiary shall keep insured by
---------
financially sound and reputable insurers all Property of a character usually
insured by corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such corporations and carry such other insurance as is
usually carried by such corporations, including, in any event, business
interruption insurance or insurance of inventory at retail consistent with past
practice and flood insurance if the property is located in an area designated by
the Secretary of Housing and Urban Development as a special flood hazard area in
an amount not to exceed that available for one hundred percent (100%)
reinsurance by the Federal Emergency Management Agency.
All policies of insurance required to be maintained by Borrower or any
Subsidiary must name the Administrative Agent on behalf of Lenders as mortgagees
(in the case of property insurance) or additional insured (in the case of
liability insurance), as applicable, and must provide that no cancellation or
modification of the policies will be made without thirty (30) days' prior
written notice to the Administrative Agent.
Each policy of insurance obtained or maintained by Borrower or any
Subsidiary shall: (i) be written by financially responsible companies selected
by Borrower and having an A.M. Best rating of "A" or better and being in a
financial size category of XII or larger, or by other companies reasonably
acceptable to the Administrative Agent and the Arranger; (ii) waive all rights
of subrogation of the insurers against the Creditors; (iii) waive any right of
the insurers to set-off or counterclaim or to make any other deduction, whether
by way of attachment or otherwise, as against any Creditor; (iv) waive all
claims for insurance premiums or commissions or additional premiums or
assessments against the Creditors; and (v) provide that, except in the case of
third-party liability insurance, the proceeds of any loss affecting real or
personal property or interests shall be applied in accordance with the terms of
the applicable Security Document.
Borrower will advise the Administrative Agent promptly of any material
policy cancellation, reduction or amendment.
Borrower will not and will not permit any Subsidiary to materially
modify any of the provisions of any policy with respect to casualty insurance
without delivering the original copy of the endorsement reflecting such
modification to the Administrative Agent.
9.05. Limitation on Lines of Business. No Obligor or Subsidiary
-------------------------------
shall directly or indirectly, engage to any material extent in any line or lines
of business activity other than the business of the type conducted by Borrower
and the Subsidiaries as of the Closing Date.
9.06. Limitation on Fundamental Changes; Limitation on Acquisitions;
--------------------------------------------------------------
Limitation on Dispositions. No Obligor or Subsidiary shall, directly or
- --------------------------
indirectly, (1) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), (2) acquire any business or Property from, or
Equity Interests of, or be a party to any acquisition of, any Person, or effect
any Acquisition, or (3) effect any Disposition or convey, sell, lease, assign,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or a substantial part of its business or Property, whether now
owned or hereafter acquired, including receivables and leasehold interests.
Notwithstanding the foregoing provisions of this Section 9.06, each of the
following shall be permitted:
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(A) purchases of inventory and other Property to be sold or used in
the ordinary course of business (including Capital Expenditures permitted
by Section 9.11(e));
(B) the pledge of the Collateral pursuant to the Security Documents;
(C) any Subsidiary may be merged or consolidated or dissolved or
liquidated with or into: (i) Borrower if Borrower shall be the continuing
or surviving corporation, (ii) any Wholly Owned Subsidiary which is an
Obligor; provided, however, that a Wholly Owned Subsidiary which is an
-------- -------
Obligor shall be the continuing or surviving corporation or (iii) if such
Subsidiary effecting such transaction is not an Obligor, another Subsidiary
which is not an Obligor;
(D) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its Property (upon voluntary liquidation or otherwise) to
Borrower or to any Wholly Owned Subsidiary which is an Obligor or, if such
Subsidiary effecting such transaction is not an Obligor, to another
Subsidiary which is not an Obligor;
(E) Dispositions of used, worn out, obsolete or surplus Property by
Borrower or any Subsidiary, all in the ordinary course of business,
including the termination, sale or abandonment of leases for retail sites
not favorable to Borrower, if in the ordinary course of business and on
ordinary business terms;
(F) Borrower or any Subsidiary may sell or discount, in each case
without recourse, accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof
and may sell for less than face value notes or accounts receivables in
connection with trade discounts in the ordinary course of business or
consistent with past practice;
(G) Borrower or any Subsidiary may effect any Disposition for fair
market value not to exceed (1) $500,000 in the aggregate in any fiscal year
of Borrower and (2) in addition to that permitted by subclause (1) of this
Section 9.06(g) (which shall not count against this subclause (2)), $2.0
million since the Closing Date; provided, however, that in each case (1)
-------- -------
and (2) the Net Available Proceeds therefrom are reinvested as specified in
Section 2.10(a)(iv) or applied to the prepayment of the Term Loans as
specified in Section 2.10(a)(iv);
(H) Newco may merge with and into Borrower, on the Closing Date, with
Borrower as the surviving corporation;
(I) Dispositions pursuant to Section 9.19;
(J) Investments permitted by Section 9.09;
(K) any Wholly Owned Subsidiary that is a Foreign Subsidiary may
sell, lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to another Wholly Owned
Subsidiary that is a Foreign Subsidiary;
(L) any Foreign Subsidiary may be merged or consolidated with or into
any one or more Wholly Owned Subsidiaries that are Foreign Subsidiaries
(provided that a Wholly Owned Subsidiary that is a Foreign Subsidiary shall
be the continuing or surviving corporation);
form and substance to the Administrative Agent;
(N) the sale by Borrower of Specified Real Property; provided,
--------
however, that the Net Available Proceeds therefrom are reinvested as
-------
specified in Section 2.10(a)(iv) or applied to the prepayment of the Term
Loans as specified in Section 2.10(a)(iv);
(O) any Acquisition; provided, however, that (w) no Default or Event
-------- -------
of Default exists or will result therefrom, (x) on a pro forma basis, after
giving effect to such Acquisition(s), Borrower would have been in
compliance with Section 9.11 on the last day of the most recently completed
fiscal quarter (assuming, for purposes of Section 9.11, that such
Acquisition had occurred on the first day of the Measurement Period ending
on such last day) as evidenced in an Officer's Certificate delivered to the
Administrative Agent and each Lender at least 10 days prior to the
consummation thereof (which shall have attached thereto reasonably detailed
backup data and calculations showing such compliance), (y) the aggregate
amount of the consideration (which for each Acquisition shall be measured
at the date of consummation thereof and which shall include Indebtedness
and other liabilities incurred or assumed, working capital deficits and
deferred payments) paid for all Acquisitions consummated since the Original
Closing Date shall not exceed $5.0 million, and (z) such Acquisition shall
be effected through Borrower or a Wholly Owned Subsidiary which is an
Obligor and the Person acquired shall be merged with or into a Wholly Owned
Subsidiary which is an Obligor or shall be at the time of consummation
thereof a Wholly Owned Subsidiary which is an Obligor (it being understood
that proceeds of Loans shall not be used to finance hostile acquisitions);
(P) any Acquisition the consideration paid for which in any fiscal
year does not exceed the amount that would have been permitted at the time
of consummation of such Acquisition to be made as a Capital Expenditure
pursuant to Section 9.11(e)(1) (after taking into account the then
permitted amount thereunder and the aggregate amount of Capital
Expenditures made and the aggregate amount expended for other Acquisitions
effected pursuant to this Section 9.06(p), in each case on or prior to the
date of consummation of such Acquisition); provided, however, that (x) no
-------- -------
Default or Event of Default exists or would result therefrom, (y) on a pro
---
forma basis, immediately after giving effect to any such Acquisition,
-----
Borrower would be in compliance with all financial covenants set forth in
Section 9.11 on the last day of the most recently ended fiscal quarter
(assuming, for purposes of Section 9.11, that such Acquisition had occurred
on the first day of the Measurement Period ending on such last day) as
evidenced in an Officer's Certificate delivered to the Lenders at least 10
days prior to the consummation of such Acquisition (which shall have
attached thereto reasonably detailed backup data and calculations showing
such compliance), and (z) such Acquisition shall be effected through
Borrower or a Wholly Owned Subsidiary of Borrower which is an Obligor and
the Person acquired shall be merged with or into a Wholly Owned Subsidiary
which is an Obligor or shall be at the time of consummation thereof a
Wholly Owned Subsidiary which is an Obligor;
(Q) any Acquisition the consideration for which is paid with the
proceeds of an Excluded Issuance; provided, however, that (x) no Default or
-------- -------
Event of Default exists or would result therefrom, (y) on a pro forma
--- -----
basis, immediately after giving effect to any such Acquisition, Borrower
would be in compliance with all financial covenants set forth in Section
9.11 on the last day of the most recently ended fiscal quarter (assuming,
for purposes of Section 9.11, that such Acquisition had occurred on the
first day of the Measurement Period ending on such last day) as evidenced
in an Officer's Certificate delivered to the Lenders at least 10 days prior
to the consummation of such Acquisition (which shall have attached thereto
reasonably detailed backup data and calculations showing such compliance),
and (z) such Acquisition shall be effected through Borrower or a Wholly
Owned Subsidiary of Borrower
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which is an Obligor and the Person acquired shall be merged with or into a
Wholly Owned Subsidiary which is an Obligor or shall be at the time of
consummation thereof a Wholly Owned Subsidiary which is an Obligor;
(R) any Acquisition the consideration for which is paid with the Net
Available Proceeds of any Disposition permitted by Section 9.06(g) or (n)
so long as such Net Available Proceeds are not then required to be applied
to the Loans pursuant to Section 2.10 and to the extent such Net Available
Proceeds have not been used to effect Capital Expenditures pursuant to
Section 9.11(e)(2), any Acquisition permitted by this Section 9.06 or
otherwise expended by Borrower or any Subsidiary; provided, however, that
-------- -------
(x) no Default or Event of Default exists or would result therefrom, (y) on
a pro forma basis, immediately after giving effect to any such Acquisition,
--- -----
Borrower would be in compliance with all financial covenants set forth in
Section 9.11 on the last day of the most recently ended fiscal quarter
(assuming, for purposes of Section 9.11, that such Acquisition had occurred
on the first day of the Measurement Period ending on such last day) as
evidenced in an Officer's Certificate delivered to the Lenders at least 10
days prior to the consummation of such Acquisition (which shall have
attached thereto reasonably detailed backup data and calculations showing
such compliance), and (z) such Acquisition shall be effected through
Borrower or a Wholly Owned Subsidiary of Borrower which is an Obligor and
the Person acquired shall be merged with or into a Wholly Owned Subsidiary
which is an Obligor or shall be at the time of consummation thereof a
Wholly Owned Subsidiary which is an Obligor; and
(S) any Acquisition the consideration for which is paid with the
Cumulative Retained Portion Balance in effect at any given date; provided,
--------
however, that (w) no Default or Event of Default exists or would result
-------
therefrom, (x) on a pro forma basis, immediately after giving effect to any
--- -----
such Acquisition, Borrower would be in compliance with all financial
covenants set forth in Section 9.11 on the last day of the most recently
ended fiscal quarter (assuming, for purposes of Section 9.11, that such
Acquisition had occurred on the first day of the Measurement Period ending
on such last day) as evidenced in an Officer's Certificate delivered to the
Lenders at least 10 days prior to the consummation of such Acquisition
(which shall have attached thereto reasonably detailed backup data
and calculations showing such compliance), (y) the aggregate cash
consideration paid for all Acquisitions effected pursuant to this Section
9.06(s) since the Closing Date, when added to the aggregate amount of
Investments made since the Closing Date pursuant to Section 9.09(v) (giving
effect to any such Investment to occur on the same date as such
Acquisition), shall not exceed $20 million, and (z) such Acquisition shall
be effected through Borrower or a Wholly Owned Subsidiary of Borrower which
is an Obligor and the Person acquired shall be merged with or into a Wholly
Owned Subsidiary which is an Obligor or shall be at the time of
consummation thereof a Wholly Owned Subsidiary which is an Obligor.
To the extent the Majority Lenders waive the provisions of this Section 9.06
with respect to the sale or other disposition of any Collateral, or any
Collateral is sold or otherwise disposed of as permitted by this Section 9.06,
such Collateral in each case shall be sold or otherwise disposed of free and
clear of the Liens created by the Security Documents and the Administrative
Agent shall take such actions as are appropriate in connection therewith.
9.07. Limitation on Liens and Related Matters. No Obligor or
---------------------------------------
Subsidiary shall, directly or indirectly, create, incur, assume or suffer to
exist any Lien upon or with respect to any Collateral except for Prior Liens and
other Liens expressly permitted by the applicable Security Document. No Obligor
or Subsidiary shall, directly or indirectly, create, incur, assume or suffer to
exist any Lien upon or with respect to any of their respective Property that
does not constitute Collateral, whether now owned or hereafter acquired, or sell
any such
-75-
property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets or assign any right to receive
income, or file or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute,
except the following, which are herein collectively referred to as "Permitted
---------
Liens":
- -----
(A) Liens in existence on the date hereof and identified in Schedule
--------
9.07 (excluding, however, following the making of the initial Loans
----
hereunder, Liens securing any Refinanced Debt);
(B) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of Borrower or the affected Subsidiary,
as the case may be, in accordance with GAAP;
(C) Liens in respect of Property of Borrower or any Subsidiary (A)
imposed by law, (B) to the extent such Liens exist as of the Closing Date,
imposed by contract, or (C) to the extent such Liens are imposed by
contract after the Closing Date (in which case Borrower shall use its best
efforts to provide that any such Lien is created in a commercially
reasonable amount and manner), in each case which were incurred in the
ordinary course of business, such as carriers', warehousemen's, landlords'
and mechanics' Liens and other similar Liens arising in the ordinary course
of business, in each case for sums the payment of which is not delinquent
or, if delinquent, is not then required by Section 9.03;
(D) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation or the deposits securing
the liability to insurance carriers;
(E) pledges or deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(F) easements, rights-of-way, restrictions or minor defects or
irregularities in title incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Real Property or minor imperfections in title
thereto which, in the aggregate, are not material in amount, and which do
not in any case materially detract from the value of the Real Property
subject thereto or interfere with the ordinary conduct of the business of
Borrower or any Subsidiary; and precautionary UCC filings by lessors and
bailees in the ordinary course of business;
(G) Liens upon tangible personal Property acquired after the date
hereof by Borrower or any Subsidiary, each of which Liens either (A)
existed on such Property before the time of its acquisition and was not
created in anticipation thereof, or (B) was created solely for the purpose
of securing Indebtedness representing, or incurred to finance, refinance or
refund, the cost of such Property or improvements thereon; provided,
--------
however, that (x) no such Lien shall extend to or cover any Property of any
-------
Obligor or any Subsidiary other than the Property so acquired and
improvements thereon and (y) the principal amount of Indebtedness secured
by any such Lien shall at no time exceed 100% of the fair market value of
such Property at the time such Lien was created;
(H) Liens existing on any Property of any Person at the time such
Person becomes a Subsidiary or is merged or consolidated with or into a
Subsidiary and, in each case, not created in contemplation of or in
connection with such event; provided, however, that such Liens do not
-------- -------
extend to any other Property of any Obligor or any Subsidiary;
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(I) Liens (excluding Liens on Collateral) not otherwise permitted
hereunder securing obligations not at any time exceeding in the aggregate
$1.0 million;
(J) Liens securing obligations under Swap Contracts with any Lender
or any Affiliate of a Lender so long as the Obligations are secured by the
same collateral on a pari passu basis;
(K) Liens consisting of judgment or judicial attachment Liens
(including prejudgment attachment) the enforcement of which is effectively
stayed or payment of which is covered in full (subject to a customary
deductible) by insurance or which do not otherwise result in an Event of
Default under Section 10(h);
(L) Liens securing obligations in respect of Capital Leases solely on
Property subject to such Capital Leases;
(M) Liens on the Existing Warehouse Facility securing only
Indebtedness incurred pursuant to Section 9.19(A);
(N) Liens on the New Warehouse Facility securing only the New
Warehouse Financing incurred pursuant to Section 9.19(B);
(O) Liens on the assets of Borrower and any Subsidiary in favor of
the lenders of the Replacement Indebtedness, but only to the extent that
such Liens (i) rank pari passu (or are subordinate) to the Liens granted in
---- -----
favor of the Lenders pursuant to the Credit Documents and encumber only
those assets in which the Lenders also have been granted a Lien pursuant to
the Credit Documents and (ii) are spread between the Obligations and
obligations in respect of the Replacement Indebtedness on a pari passu
---- -----
basis and are subject to an intercreditor agreement reflecting the
foregoing and reasonably satisfactory to the Agents and the Majority Term
Lenders;
(P) Liens arising from filing UCC financing statements for
precautionary purposes relating solely to true leases of personal property
permitted by this Agreement under which Borrower or any of its Subsidiaries
is a lessee;
(Q) Liens encumbering customary initial deposits and margin deposits,
and other Liens incurred in the ordinary course of business that are within
the general parameters customary in the industry;
(R) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by the Borrower or any Subsidiary in the
ordinary course of business in accordance with past practices;
(S) any extension, renewal or replacement of the foregoing; provided,
--------
however, that the Liens permitted hereunder shall not cover any additional
-------
Indebtedness or Property (other than like Property substituted for Property
covered by such Lien);
(T) interests of lessors under leases and restrictions and
encumbrances on the interests of such lessors;
(U) Liens in favor of banks which arise under Article IV of the UCC
on items in collection and the documents relating thereto and proceeds
thereof;
-77-
(V) Liens in favor of customs and revenue authorities arising as a
matter of law to secure customs duties in connection with the importation
of goods; and
(W) interests of licensors of patents, trademarks and other
intellectual property.
Except with respect to (i) specific Property encumbered pursuant to a
Lien permitted to be incurred pursuant to this Section 9.07 or (ii) specific
Property to be sold pursuant to an executed agreement with respect to a
Disposition consummated in accordance with this Agreement, no Obligor will, nor
will any of them permit any of their respective Subsidiaries to, directly or
indirectly, enter into any agreement after the date hereof (other than the
Credit Documents) prohibiting or restricting in any manner (directly or
indirectly and including by way of covenant, representation or warranty or event
of default) the creation or assumption of any Lien upon its Property, whether
now owned or hereafter acquired except for customary restrictions on the
creation of Liens contained in leases and licenses affecting the Property leased
or licensed thereunder.
9.08. Limitation on Indebtedness. No Obligor or Subsidiary shall,
--------------------------
directly or indirectly, create, incur or suffer to exist or be or become liable
for any Indebtedness, except (each of which shall be given independent effect):
(A) Indebtedness under the Credit Documents;
(B) (x) the Refinanced Debt but the Refinanced Debt shall not be
outstanding (and not permitted to be outstanding hereunder) after the
Closing Date, and (y) Indebtedness outstanding on the Closing Date and
listed in Schedule 9.08 and specified on Schedule 9.08 as to remain
------------- -------------
outstanding after the Closing Date;
(C) Indebtedness of Borrower or any Wholly Owned Subsidiary owing to
Borrower or any Wholly Owned Subsidiary which is an Obligor; provided,
--------
however, that (i) if requested by the Majority Lenders, such Indebtedness
-------
shall be evidenced by an Intercompany Note which shall be pledged to the
Administrative Agent on behalf of the Lenders pursuant to the Security
Agreement and (ii) such Indebtedness shall not be held by any Person other
than Borrower or a Wholly Owned Subsidiary which is an Obligor and shall
not be subordinate to any other Indebtedness or other obligation of the
obligor other than the Loans and the Senior Subordinated Notes;
(D) Indebtedness of Borrower and the Subsidiaries secured by Liens
permitted under Section 9.07(g) or (l) not exceeding in the aggregate $2.0
million at any one time outstanding;
(E) Indebtedness of Borrower represented by the Senior Subordinated
Notes in an aggregate principal amount of $100 million less any prepayments
or repayments thereof and any senior subordinated guarantees thereof by
Subsidiary Guarantors in accordance with the terms of the Senior
Subordinated Note documents as in effect on the Closing Date;
(F) obligations to repurchase stock or stock options of Borrower
pursuant to written agreements in effect on the Closing Date and permitted
by Section 9.10;
(G) unsecured deeply subordinated Indebtedness of Borrower in an
amount not to exceed $10 million at any time outstanding; provided,
--------
however, that (i) the maturity of any principal payments thereunder shall
-------
be no earlier than one year after the final maturity of the Loans and such
Indebtedness shall not require by its terms any prepayments of any
principal amount thereunder prior to one year after the final maturity of
the Loans, (ii) such Indebtedness is subordinated to the Obligations
substantially on
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the terms set forth in Exhibit K, (iii) no Default or Event of Default
---------
shall exist at the time of issuance of such Indebtedness or would arise
therefrom, (iv) such Indebtedness shall not provide for any payment of
interest in cash so long as any Loans or Reimbursement Obligations are then
outstanding, or any Commitment to make extensions of Credit is then in
existence remain outstanding or any Commitments remain in effect hereunder,
and (v) the terms and provisions thereof (including covenants, interest
rate, defaults, prepayment terms and maturities) shall be acceptable to the
Arranger and the Administrative Agent in their sole discretion;
(H) Indebtedness of Borrower in connection with the incurrence of a
mortgage on the Existing Warehouse Facility so long as incurred as and when
permitted by Section 9.19(A);
(I) Indebtedness of Borrower incurred to effect the purchase or
construction of, or to permanently refinance in full Indebtedness incurred
to effect the purchase or refinancing of, the New Warehouse Facility so
long as incurred as and when permitted by Section 9.19 (the "New Warehouse
-------------
Financing");
---------
(J) Indebtedness of Borrower in an aggregate principal amount that
does not exceed $90.0 million or, if the Increased Facility Amount is used
pursuant to Section 2.01(a)(ii), an amount to be increased by the Increased
Facility Amount (the "Replacement Indebtedness") in the form of revolving
------------------------
loans and/or letters of credit, and the guaranty of such Indebtedness by
the Subsidiaries (but only to the extent such Subsidiaries also guaranty
the Obligations of Borrower on a pari passu basis); provided, however, that
---- ----- -------- -------
the Replacement Indebtedness shall only be incurred
(I) on terms and conditions reasonably satisfactory to the
Majority Term Lenders;
(II) if all Revolving Loans, Swing Line Loans and
Reimbursement Obligations shall have been repaid, or will
simultaneously be repaid, in cash in full and each of the Revolving
Facility Commitments, all outstanding Letters of Credit, and the Swing
Loan Commitment have been permanently terminated (or have expired);
(III) if no Event of Default would result from the
incurrence of the Replacement Indebtedness; and
(IV) the Revolving Credit Commitment Termination Date has
occurred.
(K) unsecured Indebtedness incurred by any Foreign Subsidiary not to
exceed $1.0 million in the aggregate at any time outstanding;
(L) Indebtedness arising from honoring a check, draft or similar
instrument against insufficient funds; provided, however, that such
-------- -------
Indebtedness is extinguished within two Business Days of its incurrence;
(M) unsecured Indebtedness of Borrower or any Subsidiary which is an
Obligor in an aggregate principal amount not to exceed $5.0 million at any
time outstanding;
(N) Indebtedness represented by amounts declared, payable as, or set
apart for, Dividend Payments permitted by Section 9.10;
-79-
(O) Swap Contracts entered into in the ordinary course of business
and designed to protect the Obligors against fluctuations in interest
rates, currency exchange rates, commodity prices or similar risks;
(P) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this subsection (p), a "refinancing")
-----------
of any Indebtedness permitted by clauses (b)(y), (d), (e), (g), (h), (i),
(j), (k), (m) or (t) of this Section 9.08, including any successive
refinancings; provided, however, that (w) no Default or Event of Default
-------- -------
shall have occurred and be continuing or would arise therefrom, (x) any
such refinancing Indebtedness shall (I) not be on financial and other
terms, in the reasonable judgment of Borrower, that are more onerous than
the Indebtedness being refinanced, (II) not have a stated maturity or
weighted average life that is shorter than the Indebtedness being
refinanced, (III) be at least as subordinate to the Obligations as the
Indebtedness being refinanced (and unsecured if the refinanced Indebtedness
is unsecured), and (IV) be in principal amount that does not exceed the
principal amount so refinanced, plus the lesser of (1) the stated amount of
any premium or other payment required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness being refinanced and
(2) the amount of premium or other payment actually paid at such time to
refinance the Indebtedness, plus, in either case, the amount of reasonable
expenses of Borrower or any Subsidiary incurred in connection with such
refinancing, (y) the obligor on such refinancing Indebtedness shall be
Borrower or the original obligor on such Indebtedness being refinanced
(with any guarantor on the Indebtedness being refinanced permitted to
guarantee the refinancing Indebtedness and Borrower likewise permitted to
guarantee such refinancing Indebtedness of Subsidiary Guarantors), and (z)
the incurrence of such refinancing Indebtedness shall not increase the
overall Indebtedness of Borrower and the Subsidiaries;
(Q) the guarantee of the Obligations pursuant to Section 6 and
guarantees by Subsidiary Guarantors of the Senior Subordinated Notes
pursuant to the Senior Subordinated Note documents as in effect on the
Closing Date;
(R) Contingent Obligations of Borrower or any Subsidiary in respect
of Indebtedness or other liabilities of Borrower or any Wholly Owned
Subsidiary which is an Obligor to the extent that the existence of such
Indebtedness or other liabilities is not prohibited under this Agreement;
(S) Contingent Obligations in connection with Dispositions permitted
under Section 9.06, arising in connection with indemnification and other
agreements in respect of any contract relating to such Disposition, not to
exceed the consideration received by Borrower or any Subsidiary in
connection with such sale and excluding in all cases any Contingent
Obligation with respect to any obligation of any third person incurred in
connection with the acquisition of the Property which is the subject of
such Disposition; and
(T) Acquired Indebtedness not to exceed $5.0 million in the
aggregate.
Notwithstanding anything herein to the contrary, if Borrower mortgages
the Existing Warehouse Facility pursuant to subsection (h) of this Section 9.08,
the Administrative Agent is hereby authorized and required to release, at the
request and sole cost and expense of Borrower, the Mortgage on the Existing
Warehouse Facility securing the Obligations.
All intercompany debt shall be unsecured and subordinate in right of
payment to the Obligations.
-80-
No Obligor shall directly or indirectly make any optional prepayment,
redemption, retirement or defeasance, whether in cash, property, securities or a
combination thereof, on account of the principal amount of any Indebtedness,
other than (1) refinancings permitted by Section 9.08(p), (2) the Loans, and (3)
the Existing Debt Repayment.
9.09. Limitation on Investments; Limitation on Creation of
----------------------------------------------------
Subsidiaries. No Obligor or Subsidiary shall, directly or indirectly, make or
- ------------
permit to remain outstanding any Investments, except:
(A) operating deposit accounts and certificates of deposit with banks
in the ordinary course of business;
(B) Permitted Investments;
(C) Investments by Borrower or any Subsidiary in any Wholly Owned
Subsidiary that is an Obligor and Investments by any Subsidiary in
Borrower;
(D) Investments outstanding on the date hereof and identified with
particularity in Schedule 9.09 and any renewals, extensions, modifications
-------------
and replacements thereof that do not increase the amount thereof;
(E) Investments that constitute Indebtedness permitted under Section
9.08;
(F) Investments by Borrower in Swap Contracts entered into as bona
----
fide hedges and not for speculative purposes;
----
(G) advances, loans or extensions of credit by Borrower or any
Subsidiary to employees of Borrower or any Subsidiary; provided, however,
-------- -------
that the aggregate amount of all such loans, advances and extensions of
credit shall not at any time exceed in the aggregate $3.0 million (without
giving effect to any write-down or write-off thereof) and, provided,
--------
further, that no Investment shall be made pursuant to this clause (g) if
-------
any Event of Default exists;
(H) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(I) pledges or deposits required in the ordinary course of business
in connection with workmen's compensation, unemployment insurance and other
social security or similar legislation;
(J) pledges or deposits in connection with (i) the non-delinquent
performance of bids, trade contracts (other than for borrowed money),
leases or statutory obligations, (ii) contingent obligations on surety or
appeal bonds, and (iii) other non-delinquent obligations of a like nature,
in each case incurred in the ordinary course of business;
(K) Investments (including debt obligations) 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;
(L) Borrower and the Subsidiaries may hold additional Investments in
any non-Wholly Owned Subsidiary or Foreign Subsidiary to the extent that
such Investments reflect an increase in the stockholders' equity of such
Subsidiary resulting from retained earnings of such Subsidiary;
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(M) any Foreign Subsidiary may make Investments in or to any other
Foreign Subsidiary;
(N) Capital Expenditures permitted by Section 9.11(e);
(O) Investments by Borrower or any Subsidiary in any non-Wholly Owned
Subsidiary or any Subsidiary which is not an Obligor to the extent made in
the ordinary course to fund or support the ordinary course operations of
such Subsidiary so long as no Event of Default shall have occurred and be
continuing; provided, however, that (x) the amount of such Investments made
-------- -------
pursuant to this clause (o) shall not exceed $1.0 million in the aggregate
outstanding at any time (without giving effect to any write-down or write-
off thereof) and (y) upon the request of the Majority Lenders all such
Investments evidenced by Intercompany Notes shall be pledged to the
Administrative Agent pursuant to the Security Agreement and provided,
--------
further that no Investment shall be made pursuant to this clause (o) if any
-------
Event of Default exists;
(P) Investments for the creation of any Wholly Owned Foreign
Subsidiary which is a foreign sales corporation consisting of de minimis
-- -------
capitalization;
(Q) Borrower or any Subsidiary may hold the Equity Interests,
partnership interests or other ownership or equity interest therein of any
Subsidiary existing on the Closing Date or created or acquired thereafter
in accordance with the provisions hereof and any additional Equity
Interests, partnership interests or ownership or equity interests issued in
exchange therefor or as a dividend thereon;
(R) Investments consisting of non-cash consideration received in the
form of securities, notes or similar obligations in connection with a
Disposition permitted by Section 9.06(g); provided, however, that (i) the
-------- -------
aggregate amount of such non-cash consideration received in connection with
any such Disposition shall not exceed 15% of the total consideration
received in connection with such Disposition and (ii) such non-cash
consideration is pledged pursuant to the appropriate Security Document;
(S) Investments by or through Borrower or any Wholly Owned Subsidiary
which is an Obligor made in order to consummate Acquisitions effected in
accordance with Section 9.06(o), (p), (q), (r) or (s); provided, however,
-------- -------
that no Default or Event of Default exists or will result therefrom;
(T) Investments by Foreign Subsidiaries in high quality investments
of the type similar to Permitted Investments made outside the United
States;
(U) Investments made by or through Borrower or any Wholly Owned
Subsidiary which is an Obligor with the Net Available Proceeds of any
Disposition effected in accordance with Section 9.06(g) or (n) so long as
such Net Available Proceeds are not then required to be applied to the
Loans pursuant to Section 2.10 and to the extent such Net Available
Proceeds have not been used to effect Capital Expenditures pursuant to
Section 9.11(e)(2), any Acquisition permitted by Section 9.06 or otherwise
expended by Borrower or any Subsidiary; provided, however, that (x) no
-------- -------
Default or Event of Default exists or would result therefrom, and (y) such
Investment shall be effected through Borrower or a Wholly Owned Subsidiary
which is an Obligor and, if an Acquisition, shall comply with Section 9.06;
(V) Investments in joint ventures controlled by Borrower or a Wholly
Owned Subsidiary which are in the same line of business as Borrower and the
Subsidiaries and Investments in suppliers of Borrower or the Subsidiaries,
in each case so long as with respect to any such Investment made pursuant
to this Section 9.09(v) (1) such Investment is made with the Cumulative
Retained Portion Balance in
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effect at any given date, (2) the aggregate amount of such Investments made
since the Closing Date pursuant to this Section 9.09(v), when added to the
aggregate amount of Acquisitions effected pursuant to Section 9.06(s)
(after giving effect to any such Acquisition to occur on the same date as
such Investment), would not exceed $20 million, and (3) the aggregate
amount of such Investments made since the Closing Date would not exceed
$7.5 million; provided, however, that no Investment shall be made pursuant
-------- -------
to this clause (v) if any Event of Default exists; and
(W) in addition to the foregoing, other Investments not exceeding
$5.0 million in the aggregate outstanding at any time (without giving
effect to any write-downs or write-offs thereof), net of any returns of
capital, cash dividends and distributions received in respect thereof and
net cash proceeds of sales thereof and; provided, however, that no
-------- -------
Investment shall be made pursuant to this clause (w) if any Event of
Default exists.
No Obligor shall, nor shall any of them permit any Subsidiary to,
directly or indirectly, create or acquire any Subsidiary without the prior
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, provided, however, that the provisions of this Section
-------- -------
9.09 shall not require the Administrative Agent's consent for the creation or
acquisition of wholly-owned direct and indirect Subsidiaries of Borrower so long
as, with respect to any such acquisition, it complies with the provisions of
Section 9.06.
9.10. Limitation on Dividend Payments. No Obligor or Subsidiary
-------------------------------
shall, directly or indirectly, declare or make any Dividend Payment at any time,
except that:
(A) any Subsidiary may declare and make Dividend Payments to the
extent made pro rata to all holders of the Equity Interests thereof;
--- ----
(B) Borrower may make Dividend Payments in the amounts payable on the
Closing Date pursuant to the Merger Agreement as in effect on the date
hereof;
(C) so long as no Default or Event of Default then exists or would
arise therefrom, Borrower may make repurchases and redemptions from
Designated Senior Management of Equity Interests or Equity Rights of
Borrower; provided, however, that:
-------- -------
(I) Such obligation is pursuant to a written agreement as in
effect on the Closing Date;
(II) All such repurchases and redemptions made in any fiscal year
shall not exceed the Annual Retained Portion Balance at such
time;
(III) Such repurchases and redemptions shall not exceed, in the
aggregate, $2.0 million in Borrower's fiscal year ending
December 31, 1999, $6.5 million in Borrower's fiscal year
ending December 31, 2000, $9.0 million in Borrower's fiscal
year ending December 31, 2001 and $11.0 million in
Borrower's fiscal year ending December 31, 2002; and
(IV) Such repurchases and redemptions shall not exceed, in the
aggregate, $25.0 million since the Closing Date; and
(D) so long as no Default or Event of Default then exists or would
arise therefrom, Borrower may repurchase, redeem or otherwise acquire or
retire for value shares of Equity Interests or Equity Rights of Borrower
from employees who have died (or their estates or beneficiaries) or whose
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employment has terminated; provided, however, that such payment shall not
-------- -------
exceed $1.5 million in any fiscal year, excluding any amounts used to
repurchase, redeem, acquire or retire for value shares of Equity Interests
or Equity Rights of Borrower pursuant to clause (c) above of this Section
9.10.
9.11. Financial Covenants.
-------------------
(A) Maximum Leverage Ratio. Borrower shall not permit the Leverage
----------------------
Ratio at any date set forth in the table below to exceed the ratio set forth
opposite such date in the table below:
DATE RATIO
---- -----
September 30, 1998 6.50: 1.00
December 31, 1998 6.25: 1.00
March 31, 1999 6.25: 1.00
June 30, 1999 6.25: 1.00
September 30, 1999 6.25: 1.00
December 31, 1999 5.75: 1.00
March 31, 2000 5.75: 1.00
June 30, 2000 5.75: 1.00
September 30, 2000 5.75: 1.00
December 31, 2000 5.25: 1.00
March 31, 2001 5.25: 1.00
June 30, 2001 5.25: 1.00
September 30, 2001 5.25: 1.00
December 31, 2001 4.75: 1.00
March 31, 2002 4.75: 1.00
June 30, 2002 4.75: 1.00
September 30, 2002 4.75: 1.00
December 31, 2002 4.25: 1.00
March 31, 2003 and
each March 31, June 30,
September 30 and
December 31 thereafter 4.25: 1.00
(B) Minimum Interest Coverage Ratio. Borrower shall not permit the
-------------------------------
Interest Coverage Ratio for any Measurement Period ending at any date set forth
in the table below to be less than the ratio set forth opposite such date in the
table below:
DATE RATIO
---- -----
March 31, 1998 1.25: 1.00
June 30, 1998 1.25: 1.00
September 30, 1998 1.25: 1.00
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December 31, 1998 1.30: 1.00
March 31, 1999 1.30: 1.00
June 30, 1999 1.30: 1.00
September 30, 1999 1.30: 1.00
December 31, 1999 1.40: 1.00
March 31, 2000 1.40: 1.00
June 30, 2000 1.40: 1.00
September 30, 2000 1.40: 1.00
December 31, 2000 1.50: 1.00
March 31, 2001 1.50: 1.00
June 30, 2001 1.50: 1.00
September 30, 2001 1.50: 1.00
December 31, 2001 1.55: 1.00
March 31, 2002 1.55: 1.00
June 30, 2002 1.55: 1.00
September 30, 2002 1.55: 1.00
December 31, 2002 1.60: 1.00
March 31, 2003 and
each March 31, June 30,
September 30 and
December 31 thereafter 1.60: 1.00
(C) Minimum Fixed Charge Coverage Ratio. Borrower shall not permit
-----------------------------------
the ratio of (x) Consolidated EBITDA plus Consolidated Rental Payments less
Capital Expenditures for any Measurement Period on or after the Closing Date to
(y) Fixed Charges for such Measurement Period on or after the Closing Date at
any date set forth in the table below to be less than the ratio set forth
opposite such date in the table below:
DATE RATIO
---- -----
March 31, 1998 1.20: 1.00
June 30, 1998 1.20: 1.00
September 30, 1998 1.20: 1.00
December 31, 1998 1.20: 1.00
March 31, 1999 1.20: 1.00
June 30, 1999 1.20: 1.00
September 30, 1999 1.20: 1.00
December 31, 1999 1.20: 1.00
March 31, 2000 1.20: 1.00
June 30, 2000 1.20: 1.00
September 30, 2000 1.20: 1.00
December 31, 2000 1.20: 1.00
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March 31, 2001 1.20: 1.00
June 30, 2001 1.20: 1.00
September 30, 2001 1.20: 1.00
December 31, 2001 1.20: 1.00
March 31, 2002 1.20: 1.00
June 30, 2002 1.20: 1.00
September 30, 2002 1.20: 1.00
December 31, 2002 1.20: 1.00
March 31, 2003 and
each March 31, June 30,
September 30,
December 31 thereafter 1.50: 1.00
(D) Minimum Trailing Four Quarter Consolidated EBITDA. Borrower
-------------------------------------------------
shall not permit Consolidated EBITDA for any Measurement Period ending at any
date in the table below to be less than the amount set forth opposite such date
in the table below:
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DATE AMOUNT
---- ------
March 31, 1998 $35,000,000
June 30, 1998 35,000,000
September 30, 1998 35,000,000
December 31, 1998 38,000,000
March 31, 1999 38,000,000
June 30, 1999 38,000,000
September 30, 1999 39,000,000
December 31, 1999 42,000,000
March 31, 2000 42,000,000
June 30, 2000 42,000,000
September 30, 2000 43,000,000
December 31, 2000 45,000,000
March 31, 2001 45,000,000
June 30, 2001 45,000,000
September 30, 2001 46,000,000
December 31, 2001 47,000,000
March 31, 2002 47,000,000
June 30, 2002 47,000,000
September 30, 2002 48,000,000
December 31, 2002 49,000,000
March 31, 2003 and
each March 31, June 30,
September 30,
December 31 thereafter 50,000,000
(E) Capital Expenditures. (1) Borrower shall not permit the
--------------------
aggregate amount of Capital Expenditures made by Borrower and the Subsidiaries
to exceed (a) $6.0 million in Borrower's fiscal year ending December 31, 1998;
(b) $6.5 million in Borrower's fiscal year ending December 31, 1999; (c) $7.0
million in Borrower's fiscal year ending December 31, 2000; (d) $7.5 million in
Borrower's fiscal year ending December 31, 2001; (e) $8.0 million in Borrower's
fiscal year ending December 31, 2002; and (f) $8.5 million for any fiscal year
of Borrower thereafter; provided, however, that (x) if the aggregate amount of
-------- -------
Capital Expenditures for any fiscal year shall be less than the amount permitted
for such fiscal year (before giving effect to any carryover), then the shortfall
may be added to the amount of Capital Expenditures permitted for the immediately
succeeding (but not any other) fiscal year if the amount expended in such fiscal
year would not exceed 125% of the amount permitted for such fiscal year (before
any carryover) and (y) in determining whether any amount is available for
carryover, the amount expended in any fiscal year shall first be deemed to be
from the amount allocated to such year before any carryover. No amount expended
pursuant to Section 9.11(e)(2) or (3) shall count against any amount otherwise
permitted by this Section 9.11(e)(1).
(2) Notwithstanding anything herein to the contrary, so long as no
Default or Event of Default shall have occurred and be continuing, Borrower and
the Subsidiaries may make Capital Expenditures with the Net
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Available Proceeds of any Disposition effected in accordance with Section
9.06(g) or (n) to the extent that such Net Available Proceeds have not been
otherwise expended by Borrower or any Subsidiary.
(3) Notwithstanding anything herein to the contrary, the aggregate
amount of Capital Expenditures calculated pursuant to clause (e)(1) of this
Section 9.11 shall not include (a) expenditures from Indebtedness incurred in
connection with a New Warehouse Financing pursuant to Section 9.08(i), and (b)
expenditures from any Proceeds Transaction effected in accordance with Section
9.19.
(F) Measuring Dates. The covenants in clauses (a), (b), (c) and
---------------
(d) of this Section 9.11 shall be measured as of the Closing Date and the end of
each fiscal quarter thereafter (with respect to Section 9.11(a) and 9.11(c),
after giving effect to the Amortization Payment which occurs immediately after
the end of such fiscal quarter) and will apply to Borrower and the Subsidiaries
on a consolidated basis.
9.12. Pledge of Additional Collateral. Promptly, and in any event
-------------------------------
within 30 days, after the acquisition of any Property of the type that would
have constituted Collateral at the Closing Date (including the Equity Interests
of any Subsidiary hereafter created or acquired) other than Real Property (the
"Additional Collateral"), each Obligor and each Wholly Owned Subsidiary (other
- ----------------------
than any Foreign Subsidiary) shall take all action reasonably necessary or
desirable, including the execution and delivery of all such agreements,
assignments, documents and instruments (including amendments to the Credit
Documents) and the filing of appropriate financing statements under the
provisions of the UCC or applicable governmental requirements in each of the
offices where such filing is necessary or appropriate, to grant the
Administrative Agent for the benefit of the Lenders a duly perfected first
priority Lien (subject to Prior Liens) on such Property pursuant to and to the
full extent required by the Security Documents and this Agreement; provided,
--------
however, that not more than 65% of the Equity Interests of any "first tier"
- -------
Foreign Subsidiary need be pledged and no Equity Interests of any Foreign
Subsidiary which is not a "first-tier" Foreign Subsidiary need be pledged.
In the event that, after the Closing Date, Borrower or any Domestic
Subsidiary acquires or holds a fee interest in any Real Property with a market
or book value of $3.5 million or more (other than the Specified Real Property,
the New Warehouse Facility or, if Indebtedness is incurred under Section
9.08(h), the Existing Warehouse Facility), the Obligors and each Wholly Owned
Subsidiary shall reasonably promptly (i) take such actions and execute such
documents as the Administrative Agent shall reasonably require to confirm the
Lien of an existing Mortgage, if applicable, or to create a new Mortgage on such
additional Real Property and (ii) cause to be delivered to the Administrative
Agent, on behalf of the Lenders, the documents and instruments reasonably
requested by the Administrative Agent, including, without limitation, the items
set forth in Section 7.01 in respect of Mortgaged Real Property.
The costs of all actions taken by the parties in connection with the
pledge of Additional Collateral or in connection with any Mortgage, including
reasonable costs of counsel for the Administrative Agent, shall be paid by the
Obligors promptly following written demand.
9.13. Security Interests. (A) Each Obligor and each Subsidiary
------------------
shall, promptly, upon the reasonable request of the Administrative Agent or any
Lender, at Borrower's expense, execute, acknowledge and deliver, or cause the
execution, acknowledgment and delivery of, and thereafter register, file or
record, or cause to be registered, filed or recorded, in an appropriate
governmental office, any document or instrument supplemental to or confirmatory
of the Security Documents or otherwise deemed by the Administrative Agent
reasonably necessary or desirable for the continued validity, perfection and
priority of the Liens on the Collateral covered thereby.
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(B) Each Obligor and each Subsidiary shall deliver or cause to be
delivered to the Administrative Agent from time to time such other
documentation, consents, authorizations, approvals and orders in form and
substance reasonably satisfactory to the Administrative Agent as the
Administrative Agent shall reasonably deem necessary to perfect or maintain the
Liens on the Collateral.
9.14. Compliance with Environmental Laws. (A) Each Obligor and each
----------------------------------
Subsidiary shall comply with all Environmental Laws, and will keep or cause all
Real Property to be kept free of any Liens under Environmental Laws, unless
failure to do so would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; (b) in the event of the presence of
any Hazardous Material at, on, under or emanating from any Real Property which
would reasonably be expected to result in liability under or a violation of any
Environmental Law, in each case which would, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, each
Obligor and each Subsidiary shall undertake, and/or cause any of their
respective tenants or occupants to undertake, at their sole expense, any action
required pursuant to Environmental Laws to mitigate and eliminate any such
adverse effect; provided, however, that no Obligor or Subsidiary shall be
-------- -------
required to comply with any order or directive which is being contested in good
faith and by proper proceedings so long as it has maintained adequate reserves
with respect to such compliance to the extent required in accordance with GAAP;
(c) each Obligor shall promptly notify the Administrative Agent of the
occurrence of any event specified in clause (b) of this Section 9.14 and shall
periodically thereafter keep the Administrative Agent informed of any material
actions taken in response to such event and the results of such actions; and (d)
at the written request of the Administrative Agent, each Obligor will provide,
at such Obligor's sole cost and expense, an environmental site assessment
(including, without limitation, the results of any subsurface testing, conducted
if the Administrative Agent directs that such testing be conducted) concerning
any Real Property now or hereafter owned, leased or operated by such Obligor or
any Subsidiary, conducted by an environmental consulting firm proposed by such
Obligor and reasonably acceptable to the Administrative Agent indicating the
presence or absence of Hazardous Materials and the potential cost of any
required investigation or other response or any corrective action in connection
with any Hazardous Materials on, at, under or emanating from such Real Property;
provided, however, that such request may be made only if (1) there has occurred
- -------- -------
and is continuing an Event of Default, or (2) the Administrative Agent
reasonably believes that such Obligor or any Subsidiary or any such Real
Property is not in material compliance with Environmental Law which could
reasonably be expected to have a Material Adverse Effect, or (3) circumstances
exist that reasonably could be expected to form the basis of an Environmental
Claim against such Obligor, any Subsidiary or any such Real Property which could
reasonably be expected to have a Material Adverse Effect. If any Obligor fails
to provide the same within 60 days after such request was made, the
Administrative Agent may but is under no obligation to order the same, and each
Obligor shall grant and hereby grants to the Administrative Agent and its agents
access to such Real Property and specifically grants the Administrative Agent an
irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at such Obligor's sole cost and expense.
9.15. Limitation on Prepayments of Senior Subordinated Notes or
---------------------------------------------------------
Exchangeable Preferred Stock, Etc. Borrower shall not, and shall not cause or
- ---------------------------------
permit any Subsidiary to make (or give any notice in respect of) any voluntary
or optional payment or prepayment or redemption or acquisition for value of the
Senior Subordinated Notes or Exchangeable Preferred Stock (including, without
limitation, by way of depositing with any trustee with respect thereto money or
securities before such Indebtedness or Exchangeable Preferred Stock is due for
the purpose of paying such Indebtedness when due).
9.16. Limitation on Transactions with Affiliates. No Obligor or
------------------------------------------
Subsidiary shall, directly or indirectly: enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any Property, the rendering of any service, or a merger or
consolidation), with any Affiliate (an "Affiliate Transaction") unless such
---------------------
Affiliate Transaction is otherwise not prohibited under this Agreement, is in
the ordinary course of the Obligor's business and is on fair and reasonable
terms that are not less favorable to the
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Obligor than those that would be obtainable at the time in an arm's-length
transaction with a Person who is not such an Affiliate; provided, however, that
-------- -------
so long as no Default or Event of Default shall have occurred and be continuing,
the following shall be permitted: (a) Dividend Payments permitted by Section
9.10; (b) the payment of reasonable and customary regular fees to directors of
Borrower or any Subsidiary who are not employees of Borrower or any Subsidiary;
(c) any transaction with an officer or member of the board of directors of
Borrower or any Subsidiary in the ordinary course of business involving
compensation, indemnity or employee benefit arrangements; (d) loans or advances
to employees permitted by Section 9.09; (e) transactions and agreements in
existence on the date hereof and listed and described with particularity in
Schedule 9.16 (the "Existing Affiliate Agreements") and the transactions
- ------------- -----------------------------
contemplated by each of the Existing Affiliate Agreements; (f) payments made
pursuant to management agreements with Madison Dearborn not to exceed $350,000
for Borrower's fiscal year ending December 31, 1998 and $500,000 for each fiscal
year of Borrower thereafter; (g) employment agreements and arrangements
(including, without limitation, benefits) approved by the board of directors of
Borrower; (h) any employee benefit plan available to employees of Borrower
generally; (i) transactions with Obligors; and (j) transactions in the ordinary
course of business with Subsidiaries and other transactions with Subsidiaries
not prohibited hereunder.
9.17. Limitation on Accounting Changes; Limitation on Investment
----------------------------------------------------------
Company Status. No Obligor or Subsidiary shall make or permit, any change in
- --------------
(i) accounting policies or reporting practices, except immaterial changes and
except as required by generally accepted accounting principles or (ii) its
fiscal year end (December 31 of each year). No Obligor shall be or become an
investment company subject to the registration requirements under the United
States Investment Company Act of 1940, as amended.
9.18. Limitation on Modifications of Certain Documents, Etc. No
-----------------------------------------------------
Obligor or Subsidiary shall, directly or indirectly, consent to any
modification, supplement or waiver of, or amend or modify, any of the provisions
of (1) any term or provision of the subordination provisions of any Indebtedness
incurred pursuant to Section 9.08(g), (2) any Senior Subordinated Note Document
or Exchangeable Preferred Stock Document or (3) in any manner which could
reasonably be expected to be materially adverse to the Lenders, its certificate
of incorporation or its by-laws (or any other organizational document), or any
agreement entered into with respect to its Equity Interests.
9.19. Warehouse Financing. Notwithstanding Sections 9.06, 9.07 and
-------------------
9.08, after delivery to the Administrative Agent and the Lenders of unaudited
financial statements in respect of the fiscal year ended December 31, 1998 (or
audited financial statements if then available):
(A) Borrower may effect the Disposition of, incur a Mortgage in
respect of, or enter into a sale/leaseback transaction (each, a "Proceeds
--------
Transaction") with respect to, the Existing Warehouse Facility, if:
-----------
(1) At the time of consummation of such Proceeds Transaction:
(a) no Default or Event of Default then exists or would arise
therefrom;
(b) Borrower is in compliance with all covenants in Section 9
and will be in compliance therewith on a pro forma basis after giving
effect thereto, including Section 9.11 on a pro forma basis as if the
Proceeds Transaction had occurred at the beginning of the Measurement
Period most recently ended;
(c) Borrower's Senior Debt Leverage Ratio, on a pro forma basis,
as of the Measurement Period most recently ended is less than
3.00:1.00;
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(d) the Net Available Proceeds therefrom are held in the
Collateral Account pending the application thereof contemplated by
clauses (2) and (3) below of this clause (A); and
(e) if such Proceeds Transaction is to be consummated prior to
the delivery of the audited financial statements in respect of the
fiscal year ended December 31, 1998 required by Section 9.01(b), at
September 30, 1998 the Senior Debt Leverage Ratio (as evidenced in an
Officer's Certificate delivered to the Administrative Agent and the
Lenders) after giving pro forma effect to the proposed Proceeds
Transaction would be less than 3:00:1.0.
(2) Within 360 days of the Proceeds Transaction, the Net Available
Proceeds therefrom are:
(a) used or committed to be used pursuant to written documents
provided to the Administrative Agent for the construction of the New
Warehouse Facility; or
(b) used to repay or prepay the New Warehouse Financing or the
Term Loans.
(3) On the 361st day after the Proceeds Transaction (or such earlier
date on which the New Warehouse Facility has been constructed or the New
Warehouse Financing shall have been repaid in full), the Term Loans shall
be prepaid as specified in Section 2.10(b) in an amount equal to 50% of any
Net Available Proceeds of the Proceeds Transaction remaining after the uses
thereof permitted by clause (2) of this clause (A) above (the "Remaining
---------
Amount"). The remaining 50% of the Remaining Amount may be used by
------
Borrower in any manner permitted by the Credit Documents.
(B) Borrower may incur the New Warehouse Financing if: (w)
immediately after giving effect thereto no Default or Event of Default
shall have occurred and be continuing or would arise therefrom, (x)
Borrower shall be in compliance with all covenants in Section 9.11 on a pro
forma basis as if such Indebtedness had been incurred at the beginning of
the most recent Measurement Period, (y) Borrower's Senior Debt Leverage
Ratio, on a pro forma basis after giving effect to the incurrence of such
Indebtedness, as of the end of the Measurement Period most recently ended
is less than 3.00 to 1.00, and (z) such Indebtedness is secured solely by
the New Warehouse Facility and no other Property of Borrower or any
Subsidiary; provided, however, that the aggregate amount of Indebtedness
-------- -------
permitted to be incurred pursuant to this clause (B) shall be (i) if such
Indebtedness is incurred after the Proceeds Transaction, incurred only
after all of the Net Available Proceeds of the Proceeds Transaction have
been applied pursuant to clause (2) of clause (A) above, and (ii) if such
Indebtedness is incurred before the Proceeds Transaction, prepaid
immediately with the Net Available Proceeds of the Proceeds Transaction.
9.20. Limitation on Certain Restrictions Affecting Subsidiaries. No
---------------------------------------------------------
Obligor or Subsidiary shall, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any direct or indirect encumbrance or
restriction on the ability of any such Subsidiary to (a) pay dividends or make
any other distributions on such Subsidiary's Equity Interests or any other
interest or participation in its profits owned by Borrower or any Subsidiary, or
pay any Indebtedness or any other obligation owed to Borrower or any Subsidiary,
(b) make Investments in or to Borrower or any Subsidiary, or (c) transfer any of
its Property to Borrower or any Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) the Credit
Documents, (iii) the Senior Subordinated Note Documents as in effect on the
Closing Date, (iv) such restrictions with respect to the transfer of those
assets subject to a Lien permitted under Section 9.07, (v) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
or license of Borrower or any Subsidiary, (vi) with respect to restrictions
described in clause (c) only,
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restrictions in any agreement relating to any Disposition which is permitted
under this Agreement, and (vii) Acquired Indebtedness; provided, however, that
-------- -------
with regard to this clause (vii), (1) such restriction applies solely to the
Person acquired or to a newly formed Wholly Owned Subsidiary with only de
--
minimis assets formed expressly to make the acquisition in question and (if such
- -------
Acquisition is of Equity Interests) the Person acquired does not merge at any
time while such restriction is in effect with or into Borrower or any Subsidiary
of Borrower other than any such newly formed Wholly Owned Subsidiary and (2)
such Person acquired or such newly formed Subsidiary shall be a Guarantor.
9.21. Additional Obligors. Promptly, but in any event within 30 days
-------------------
of Borrower or any Subsidiary creating or acquiring a Wholly Owned Subsidiary
(other than a Foreign Subsidiary) after the date hereof (each such Subsidiary
referred to herein as an "Additional Obligor" and collectively as the
------------------
"Additional Obligors"), Borrower shall cause each such Subsidiary to execute and
- --------------------
deliver all such agreements, guarantees, documents and certificates (including
any amendments to the Credit Documents and a Joinder Agreement substantially in
the form of Exhibit L) as the Administrative Agent may reasonably request and do
---------
such other acts and things as the Administrative Agent may reasonably request in
order to have such Subsidiary guarantee the Obligations in accordance with the
terms of the Credit Documents.
9.22. Limitation on Designated Senior Indebtedness. Borrower will
--------------------------------------------
not and will not permit any Subsidiary to, designate or permit the designation
of any Indebtedness (other than the Obligations) as "Designated Senior
Indebtedness" or "Designated Guarantor Senior Indebtedness" for purposes of, and
as defined in, the Senior Subordinated Notes Documents.
9.23. Limitation on Change of Principal Place of Business or
------------------------------------------------------
Corporate Name. Each Obligor shall not change its principal place of business
- --------------
or its corporate name unless it shall have (a) given the Administrative Agent at
least thirty days' advance written notice of such change, and (b) filed in all
necessary jurisdictions such documents as may be necessary to continue without
impairment or interruption the perfection and priority of the liens on the
Collateral in favor of the Administrative Agent pursuant to the Security
Documents.
Section 10. Events of Default. If one or more of the following
-----------------
events (herein called "Events of Default") shall occur and be continuing:
-----------------
(A) (i) Borrower shall default in the payment when due (whether at
stated maturity upon prepayment or repayment or acceleration or otherwise)
of any principal of any Loan, or (ii) Borrower shall default in the payment
when due of interest on any Loan or any Reimbursement Obligation or any fee
or any other amount payable by it hereunder or under any other Credit
Document when due and such default under this clause (ii) shall have
continued unremedied for five or more Business Days; or
(B) Any Obligor or any Subsidiary (the Obligors and such Subsidiaries
herein collectively called the "Relevant Parties" and each, a "Relevant
---------------- --------
Party") shall default in the payment when due of any principal of or
-----
interest on any of its Indebtedness (other than the Loans) aggregating $5.0
million or more, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created, after
giving effect to any consents or waivers relating thereto; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any Indebtedness aggregating $5.0 million or more if the effect
of such event (after giving effect to any consents or waivers relating
thereto) is to cause, or (with the giving of any notice or the lapse of
time or both) to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by
redemption,
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purchase, offer to purchase or otherwise), prior to its stated maturity; or
any Relevant Party shall default in the payment when due of any amount
aggregating $1.0 million or more under any Swap Contract; or
(C) Any representation or warranty made or deemed made in any Credit
Document (or in any modification or supplement thereto) by any Relevant
Party or in any certificate furnished to any Creditor pursuant to the
provisions thereof, shall prove to have been false or misleading as of the
time made, deemed made or furnished in any material respect; or
(D) Any Obligor shall default in the performance of any of its
obligations under any of Sections 9.01(f) or 9.05 through 9.12 and 9.14
through 9.23; or any Obligor shall default in the performance of any of its
obligations under Section 5.02 of the Security Agreement; or Borrower shall
default in the performance of its obligations under Section 9.01(e) or (k)
and such default shall continue unremedied for five Business Days; or any
Obligor shall default in the performance of any of its other obligations in
this Agreement, the Security Documents or the Letter of Credit Documents
and such default shall continue unremedied for a period of thirty days
after written notice thereof to such Obligor or Borrower by the
Administrative Agent; or
(E) Any Relevant Party shall not, or shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become
due; or
(F) Any Relevant Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
Property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or readjustment of debts, (v) fail to controvert within 60
days or in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code,
or (vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(G) A proceeding or case shall be commenced, without the application
or consent of the affected Relevant Party, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of
such Relevant Party or of all or any substantial part of its assets, or
(iii) similar relief in respect of such Relevant Party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and either (1) such proceeding shall
not be actively contested by such Relevant Party, or (2) such proceeding or
case shall continue undismissed, undischarged or unbonded, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more
days; or an order for relief against any Relevant Party shall be entered in
an involuntary case under the Bankruptcy Code; or
(H) A final judgment or judgments for the payment of money in excess
of $5.0 million in the aggregate (exclusive of judgment amounts to the
extent covered by insurance) shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against any
Relevant Party and the same shall not be discharged (or provision shall not
be made for such discharge), vacated or bonded pending appeal, or a stay of
execution thereof shall not be procured, within 45 days from the date of
entry thereof and such Relevant Party shall not, within said period of 45
days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
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(I) Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $2.5 million which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could reasonably be expected to cause one or more members of the ERISA
Group to incur a payment obligation in excess of $2.5 million; or
(J) Any Change of Control; or
(K) Any Security Document after delivery thereof at any time shall
cease to be in full force and effect or shall for any reason fail to create
or cease to maintain a valid and duly perfected first priority security
interest in and Lien upon (subject to Prior Liens) any portion of the
Collateral, except for (A) released Collateral or (B) any Collateral in
which a security interest may not be perfected by the filing of UCC
financing statements or by possession of such Collateral and possession of
such Collateral by the Administrative Agent is not required by the Security
Documents or this Agreement; or
(L) Any Guarantee ceases to be in full force and effect or any of
the Guarantors repudiates, or attempts to repudiate, any of its obligations
under any of the Guarantees (except Guarantors released from their
obligations under Section 6.02); or
(M) The subordination provisions relating to any Senior Subordinated
Note Document (the "Subordination Provisions") shall fail to be enforceable
------------------------
by the Lenders (which have not effectively waived the benefits thereof) in
accordance with the terms thereof, or any Obligation shall fail to
constitute Senior Indebtedness or Guarantor Senior Indebtedness (as defined
in the Senior Subordinated Note Documents), or Borrower or any Subsidiary
shall, directly or indirectly, disavow or contest in any manner any of the
Subordination Provisions;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 10, the Administrative Agent may, and upon
written direction of the Majority Lenders shall, by notice to Borrower,
terminate the Commitments and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans, the Reimbursement Obligations and
all other amounts payable by Borrower hereunder and under the Notes (including
any amounts payable under Section 5.05 or 5.06) to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by Borrower, reduce any claim to judgment, take any other
action permitted by law and/or take any action permitted to be taken by the
Security Documents during the existence of an Event of Default; and (2) in the
case of the occurrence of an Event of Default referred to in clause (f) or (g)
of this Section 10, the Commitments shall automatically be terminated and the
principal amount then outstanding of, and the accrued interest on, the Loans,
the Reimbursement Obligations and all other amounts payable by Borrower
hereunder and under the Notes (including any amounts payable under Section 5.05
or 5.06) shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by Borrower.
In addition, Borrower agrees, upon the occurrence and during the
continuance of any Event of Default if the Administrative Agent has declared the
principal amount then outstanding of, and accrued interest
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on, the Revolving Credit Loans, and all other amounts payable to the Revolving
Credit Lenders hereunder and under the Notes evidencing such Loans to be due and
payable, it may and shall, if requested by the Majority Revolving Credit Lenders
through the Administrative Agent (and, in the case of any Event of Default
referred to in clause (f) or (g) of this Section 10 with respect to any Relevant
Party, forthwith, without any demand or the taking of any other action by the
Administrative Agent or such Lenders) provide cover for the Letter of Credit
Liabilities by paying to the Administrative Agent immediately available funds in
an amount equal to the then aggregate undrawn face amount of all Letters of
Credit, which funds shall be held by the Administrative Agent in the Collateral
Account as collateral security in the first instance for the Letter of Credit
Liabilities and be subject to withdrawal only as provided in the Security
Agreement.
Section 11. The Administrative Agent.
------------------------
11.01. General Provisions. Each of the Lenders and the Issuing
------------------
Lender hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto.
The Lender or other financial institution serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default or Event of Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Majority Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 12.04), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
Borrower or any Subsidiary that is communicated to or obtained by the financial
institution serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Majority Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.04) or in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not
to have knowledge of any Default or Event of Default unless and until written
notice thereof is given to the Administrative Agent by Borrower or a Lender, and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Credit Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
under any other Credit Document or in connection herewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other Credit Document or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Section 7 or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed
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by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Affiliates, directors, officers, employees, agents and
advisors ("Related Parties"). The exculpatory provisions of the preceding
---------------
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Lender and Borrower.
Upon any such resignation, the Majority Lenders shall have the right, in
consultation with Borrower, to appoint a successor, subject to the approval of
Borrower, whose consent shall not be unreasonably withheld; provided that such
--------
Borrower approval shall not be necessary if an Event of Default shall have
occurred and be continuing. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Lender, appoint a successor Administrative Agent which shall be a bank which
constitutes a Person with an office in New York, New York, or an Affiliate of
any such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Section 11
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as
Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
11.02. Indemnification. Each Lender agrees to indemnify and hold
---------------
harmless the Administrative Agent and the Arranger (to the extent not promptly
reimbursed under Section 12.03, but without limiting the obligations of Borrower
under Section 12.03), ratably in accordance with the aggregate principal amount
of the Loans and Reimbursement Obligations held by the Lenders (or, if no Loans
or Reimbursement Obligations are at the time outstanding, ratably in accordance
with their respective Commitments), for any and all liabilities (including
pursuant to any Environmental Law), obligations, losses, damages, penalties,
actions, judgments, deficiencies, suits, costs, expenses (including reasonable
attorney's fees) or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent or the
Arranger (including by any Lender) arising out of or by reason of any
investigation in or in any way relating to or
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arising out of any Credit Document or any other documents contemplated by or
referred to therein for any action taken or omitted to be taken by the
Administrative Agent or the Arranger under or in respect of any of the Credit
Documents or other such documents or the transactions contemplated thereby
(including the costs and expenses that Borrower is obligated to pay under
Section 12.03, including any payments under any indemnity that the
Administrative Agent is required to issue in its individual capacity in
connection with the payoff of Borrower's prior lender and including also any
payments under any indemnity that the Administrative Agent is required to issue
to any Lender referred to in Section 4.01(c) of the Security Agreement, or to
any bank referred to in Section 4.02 of the Security Agreement to which
remittances in respect of Accounts, as defined therein, are to be made, but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents; provided, however, that no Lender shall be liable for
-------- -------
any of the foregoing to the extent they are determined by a court of competent
jurisdiction in a final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of the party to be indemnified. The
agreements set forth in this Section 11.02 shall survive the payment of all
Loans and other obligations hereunder and shall be in addition to and not in
lieu of any other indemnification agreements contained in any other Credit
Document.
11.03. Consents Under Other Credit Documents. Except as otherwise
-------------------------------------
provided in this Agreement and the other Credit Documents, the Administrative
Agent may, with the prior consent of the Majority Lenders (but not otherwise),
consent to any modification, supplement or waiver under any of the other Credit
Documents.
11.04. Collateral Sub-Agents. Each Lender by its execution and
---------------------
delivery of this Agreement agrees, as contemplated by Section 4.03 of the
Security Agreement, that, in the event it shall hold any Permitted Investments
referred to therein, such Permitted Investments shall be held in the name and
under the control of such Lender, and such Lender shall hold such Permitted
Investments as a collateral sub-agent for the Administrative Agent thereunder.
Borrower by its execution and delivery of this Agreement hereby consents to the
foregoing.
Section 12. Miscellaneous.
-------------
12.01. Waiver. No failure on the part of any Creditor to exercise
------
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Credit Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
12.02. Notices. All notices, requests and other communications
-------
provided for herein and under the Security Documents (including any
modifications of, or waivers, requests or consents under, this Agreement) shall
be given or made in writing (including by facsimile) delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof; or, as to any party, at such other address as shall be designated
by such party in a notice to each other party. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been duly given
when transmitted by facsimile or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid. Any
Notice of Borrowing or Notice of Continuation/Conversion shall be deemed to have
been received when actually received.
12.03. Expenses, Indemnification, Etc. (A) The Obligors, jointly
------------------------------
and severally, agree to pay or reimburse:
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(I) the Arranger and the Administrative Agent for all of their reasonable
out-of-pocket costs and expenses (including the reasonable fees and
expenses of counsel) in connection with (1) the negotiation, preparation,
execution and delivery of the Credit Documents and the extension of credit
hereunder and (2) the negotiation or preparation of any modification,
supplement or waiver of any of the terms of any Credit Document (whether or
not consummated or effective);
(II) each of the Lenders and the Administrative Agent for all reasonable
out-of-pocket costs and expenses of the Lenders and the Administrative
Agent (including the reasonable fees and expenses of legal counsel) in
connection with (1) any Default or Event of Default and any enforcement or
collection proceedings resulting therefrom, including all manner of
participation in or other involvement with (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (y)
judicial or regulatory proceedings and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (2) the enforcement of
this Section 12.03; and
(III) each of the Lenders and the Administrative Agent for all reasonable
costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated by any Credit Document or any other document
referred to therein.
(B) The Obligors, jointly and severally, hereby agree to indemnify
each Creditor and their respective Affiliates, directors, trustees, officers,
employees and agents (each, an "Indemnitee") from, and hold each of them
----------
harmless against, and that no Indemnitee will have any liability for, any and
all Losses incurred by any of them (including any and all Losses incurred by the
Administrative Agent, the Arranger or the Issuing Lender to any Lender, whether
or not any Creditor is a party thereto) directly or indirectly arising out of or
by reason of or relating to the negotiation, execution, delivery, performance,
administration or enforcement of any Credit Document, any of the transactions
contemplated by the Credit Documents, any breach by any Obligor of any
representation, warranty, covenant or other agreement contained in any of the
Credit Documents, the use or proposed use of any of the Loans or Letters of
Credit or the use of any collateral security for the Loans (including the
exercise by any Creditor of the rights and remedies or any power of attorney
with respect thereto and any action or inaction in respect thereof), but
excluding any such Losses to the extent arisen from the gross negligence or bad
faith of the Indemnitee.
Without limiting the generality of the foregoing, the Obligors,
jointly and severally, will indemnify each Creditor and each other Indemnitee
from, and hold each Creditor and each other Indemnitee harmless against, any
Losses described in the preceding sentence arising under any Environmental Law
as a result of (A) the past, present or future operations of Borrower or any
Subsidiary (or any predecessor in interest to Borrower or any Subsidiary), (B)
the past, present or future condition of any site or facility owned, operated or
leased at any time by Borrower or any Subsidiary (or any such predecessor in
interest), or (C) any Release or threatened Release of any Hazardous Materials
at, under or from any such site or facility, including any such Release or
threatened Release that shall occur during any period when any Creditor shall be
in possession of any such site or facility following the exercise by such
Creditor of any of its rights and remedies hereunder or under any of the
Security Documents; provided, however, that the indemnity hereunder shall be
-------- -------
subject to the exclusions from indemnification set forth in the preceding
sentence.
To the extent that the undertaking to indemnify and hold harmless set
forth in this Section 12.03 or any other provision of any Credit Document
providing for indemnification is unenforceable because it is violative of any
law or public policy or otherwise, the Obligors, jointly and severally, shall
contribute the
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maximum portion that each of them is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified liabilities
incurred by any of the Persons indemnified hereunder.
The Obligors also agree that no Indemnitee shall have any liability
(whether direct or indirect, in contract or tort or otherwise) for any Losses to
any Obligor or any Obligor's security holders or creditors resulting from,
arising out of, in any way related to or by reason of any matter referred to in
any indemnification or expense reimbursement provisions set forth in this
Agreement or any other Credit Document, except to the extent that any Loss
resulted from the gross negligence or bad faith of such Indemnitee.
The Obligors agree that, without the prior written consent of the
Administrative Agent, the Arranger and the Majority Lenders which consent shall
not be unreasonably withheld, no Obligor will settle, compromise or consent to
the entry of any judgment in any pending or threatened Proceeding in respect of
which indemnification is reasonably likely to be sought under the
indemnification provisions of this Section 12.03 (whether or not any Indemnitee
is an actual or potential party to such Proceeding), unless such settlement,
compromise or consent includes an unconditional written release of each
Indemnitee from all liability arising out of such Proceeding and does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnitee and does not involve any payment of money or
other value by any Indemnitee or any injunctive relief or factual findings or
stipulations binding on any Indemnitee.
12.04. Amendments, Etc. (i) Any provision of this Agreement or any
---------------
other Credit Document may be amended, modified or supplemented by an instrument
in writing signed by the Obligors and the Majority Lenders, or by the Obligors
and the Administrative Agent acting with the written consent of the Majority
Lenders, and any provision of this Agreement may be waived by an instrument in
writing signed by the Obligors and the Majority Lenders, or by the Obligors and
the Administrative Agent acting with the written consent of the Majority Lenders
and Borrower; provided, however, that:
-------- -------
(A) no amendment, modification, supplement or waiver shall, unless by
an instrument signed by all of the Lenders or by the Administrative Agent
acting with the written consent of each Lender (with Obligations directly
affected in the case of clause (I)): (I) extend the scheduled final
maturity of any Loan or Note, or extend the stated expiration date of any
Letter of Credit beyond the Revolving Credit Commitment Termination Date,
or reduce the rate of interest (other than any waiver of any increase in
the interest rate applicable to any of the Loans pursuant to clause (b) of
Section 3.02) or fees thereon, or extend the time of payment of interest or
fees thereon, or reduce the principal amount thereof, (II) extend the final
maturity of any of the Commitments (or reinstate any Commitment terminated
pursuant to Section 10), (III) change the currency in which any Obligation
is payable, (IV) amend the terms of this Section 12.04 or Section 4.07, 5
or 11.03, (V) reduce the percentages specified in the definition of the
term "Majority Lenders" or "Supermajority Lenders" or amend any provision
of any Credit Document requiring the consent of all the Lenders or reduce
any other percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof (it being
understood that, the Increased Facility Amount, if extended by any Lender,
shall be, and with the consent of the Majority Lenders, other additional
extensions of credit pursuant to this Agreement may be, included in the
determination of the Majority Lenders and Supermajority Lenders without
notice to or consent of any other Lender or Agent on substantially the same
basis as the Commitments (and related extensions of credit) are included on
the Closing Date), (VI) release any Guarantor from its obligations under
Section 6 (unless permitted by this Agreement), (VII) consent to the
assignment or transfer by any Obligor of any of its rights and obligations
under any Credit Document, (VIII) release all or substantially all the
Collateral or terminate the Lien under any Credit Document in respect of
all or substantially all the Collateral (except as permitted by the Credit
Documents, including as permitted by Section 9.06, Section 9.08 and Section
9.19 upon the incurrence
-99-
of a mortgage on the Existing Warehouse Facility) or agree to additional
obligations (other than the Obligations and the Increased Facility Amount
and Replacement Indebtedness) being secured by the Collateral, or (IX)
amend Section 12.03 or any other indemnification and expense reimbursement
provision set forth in any Credit Document (it being understood that any
prepayment required by Section 2.10(a) may be modified, supplemented or
waived by the Majority Lenders);
(B) no such amendment, modification, supplement or waiver shall
increase the Commitments of any Lender over the amount thereof then in
effect without the consent of such Lender (it being understood that
amendments, modifications or waivers of conditions precedent, covenants,
Default or Events of Default shall not constitute an increase of the
Commitment of any Lender);
(C) any modification or supplement of or waiver with respect to
Section 11 which affects the Administrative Agent or the Arranger in their
respective capacities as such shall require the consent of the
Administrative Agent and the Arranger;
(D) no consent of any Lender need be obtained, and the Administrative
Agent is hereby authorized, to release any Lien securing the Obligations on
Property which is the subject of any Disposition permitted by this
Agreement and the other Credit Documents or to release the Lien of the
Mortgage on the Existing Warehouse Facility upon the incurrence of a
mortgage thereon in accordance with Section 9.07(m), Section 9.08(h) and
Section 9.19(A);
(E) subject to clause (a)(I) above of this proviso to this Section
12.04(i), the consent of the Supermajority Lenders of the Affected Class as
well as Supermajority Lenders shall be required with respect to any
extension of any scheduled Amortization Payment or any reduction in the
amount of any scheduled Amortization Payment (it being understood that,
subject to clause (f) below of this Section 12.04, any prepayment required
by Section 2.10 (a) may otherwise be modified, supplemented or waived by
the Majority Lenders);
(F) no modification, supplement or waiver shall, unless by an
instrument signed by the Supermajority Lenders of the Affected Class or by
the Administrative Agent acting with the written consent of the
Supermajority Lenders of the Affected Class, change the timing of the
receipt or the application of mandatory prepayments hereunder as between
the Tranche A Term Loans and the Tranche B Term Loans or the order in which
any such prepayment is applied to the Tranche A Term Loans or Tranche B
Term Loans (although any required prepayment set forth in Section 2.10(a)
may be modified, supplemented or waived by the Majority Lenders);
(G) no reduction of the percentage specified in the definition of
"Majority Revolving Credit Lenders," "Majority Tranche A Term Loan Lenders"
or "Majority Tranche B Term Loan Lenders" shall be made without the consent
of each Revolving Credit Lender, each Tranche A Term Loan Lender or each
Tranche B Term Loan Lender, respectively (it being understood that only the
Class of such Loan to which such definition relates need consent to any
such reduction and that the Increased Facility Amount, if extended by any
Lender, shall be, and with the consent of the Majority Lenders, other
additional extensions of credit pursuant to this Agreement may be, included
in any such definition without notice to or consent of any other Lender or
Agent on substantially the same terms as the Commitments (and related
extensions of credit) are included on the Closing Date);
(H) no reduction of the percentage specified in the definition of (I)
"Majority Term Lenders" shall be made without the consent of the Majority
Tranche A Term Loan Lenders and the Majority Tranche B Term Loan Lenders or
(II) "Supermajority Lenders of the Affected Tranche" shall be made
-100-
without the consent of each Term Loan Lender (it being understood that,
with the consent of the Majority Lenders, additional extensions of credit
pursuant to this Agreement may be included in either such definition
without notice to or consent of any other Lender or Agent on substantially
the same terms as the Commitments (and related extensions of credit) are
included on the Closing Date);
(I) no amendment, modification or waiver shall make any change to
Section 2.01(e) or the definitions of "Swing Loan Commitment", "Swing Loan
Maturity Date" or "Swing Loans" or the Swing Loan Note without the consent
of the Swing Loan Lender; and
(J) no amendment, modification or waiver shall affect the rights or
duties of the Issuing Lender in its capacity as such or alter the
obligation of any Revolving Credit Lender pursuant to Section 2.03(e) or
2.03(f) without the consent of the Issuing Lender.
(ii) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
Section 12.04(i)(a) (other than clause (I) of such section), the consent of the
Majority Lenders, Majority Revolving Credit Lenders, Majority Term A Lenders,
Majority Term B Lenders, Majority Term Lenders, Supermajority Lenders or
Supermajority Lenders of the Affected Class, as the case may be, is obtained but
the consent of one or more of such other Lenders whose consent is required is
not obtained, then Borrower shall have the right to replace each such non-
consenting Lender or Lenders (so long as all non-consenting Lenders are so
replaced) with one or more Replacement Lenders pursuant to Section 2.11 so long
as at the time of such replacement, each such Replacement Lender consents to the
proposed change, waiver, discharge or termination; provided, however, that
-------- -------
Borrower shall not have the right to replace a Lender solely as a result of the
exercise of such Lender's rights (and the withholding of any required consent by
such Lender) pursuant to clause (I) of Section 12.04(i)(a).
12.05. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.06. Assignments and Participations. (A) No Obligor may assign
------------------------------
its respective rights or obligations hereunder or under the Notes or any other
Credit Document without the prior written consent of all of the Lenders.
(B) Each Lender may assign to any Eligible Person any of its Loans,
its Notes, its Letter of Credit Interests and its Commitments (but only with the
consent (which shall not be unreasonably withheld or delayed) of Borrower, the
Administrative Agent and the Arranger and, in the case of the Revolving Credit
Commitments, the Issuing Lender); provided, however, that (i) no such consent by
-------- -------
Borrower, the Issuing Lender, the Arranger or the Administrative Agent shall be
required in the case of any assignment to another Lender or any Lender's
Affiliate or any Approved Fund of any Lender (in which case, the assignee and
assignor Lenders shall give notice of the assignment to the Administrative
Agent); (ii) no consent of Borrower need be obtained if any Default or Event of
Default shall have occurred and be continuing; (iii) each assignment, other than
to a Lender or any Lender's Affiliate or any Approved Fund of any Lender and
other than any assignment effected by Merrill Lynch Capital Corporation in
connection with the syndication of the Commitments (unless Borrower and the
Administrative Agent otherwise agree), shall be in an aggregate amount at least
equal to $10 million unless the assigning Lender's exposure is reduced to $0;
(iv) subject to (i) above, assignments under the Revolving Facility will require
the consent of the Issuing Lender; and (v) in no event may any such assignment
be made to any Obligor or any of its Affiliates without consent of all Lenders.
Any assignment of a Loan shall be effective only upon appropriate entries with
respect thereto being made in the Register (and each Note shall expressly so
provide). Any assignment or transfer of a Loan shall be registered on the
Register only upon surrender for registration of assignment or transfer of the
Note evidencing such Loan (if a Note was issued in respect thereof),
-101-
accompanied by an instrument in writing substantially in the form of Exhibit F,
---------
and upon consent thereto by Borrower, the Administrative Agent, the Arranger and
the Issuing Lender to the extent required above, one or more new Notes (if
requested by the New Lender) in the same aggregate principal amount shall be
issued to the designated assignee and the old Notes shall be returned by the
Administrative Agent to Borrower marked "cancelled". Upon execution and delivery
by the assignee to Borrower, the Administrative Agent and the Arranger of an
instrument in writing substantially in the form of Exhibit F, and upon consent
---------
thereto by Borrower, the Administrative Agent and the Issuing Lender to the
extent required above, and in the case of a Loan, upon appropriate entries being
made in the Register the assignee shall have, to the extent of such assignment
(unless otherwise provided in such assignment with the consent of the
Administrative Agent), the obligations, rights and benefits of a Lender
hereunder holding the Commitment(s), Loans (or portions thereof) and Letter of
Credit Interests assigned to it (in addition to the Commitment(s), Letter of
Credit Interests and Loans, if any, theretofore held by such assignee) and the
assigning Lender shall, to the extent of such assignment, be released from the
Commitment(s) (or portion(s) thereof) so assigned. At the time of each
assignment pursuant to this Section 12.06(b) to a Person which is not already a
Lender hereunder and which is not a United States person (as such term is
defined in Section 7701(a)(3) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to Borrower and the Administrative
Agent the appropriate Internal Revenue Service Forms (and, if applicable, a
Section 5.06 Certificate) described in Section 5.06(b). Upon any such assignment
(other than to a Lender or any Affiliate of a Lender and other than in
connection with the Arranger's initial syndication of the Loans the Arranger's
next succeeding five assignments) the assignee Lender shall pay a fee of $3,500
to the Administrative Agent. Upon any such assignment, certain rights and
obligations of the assigning Lender shall survive as set forth in Section 12.07.
(C) A Lender may sell or agree to sell to one or more other Eligible
Persons a participation in all or any part of any Loans and Letter of Credit
Interests held by it, or in its Commitments, in which event each purchaser of a
participation (a "Participant") shall be entitled to the rights and benefits of
-----------
the provisions of Section 5 (provided, however, that no Participant shall be
-------- -------
entitled to receive any greater amount pursuant to Section 5 than the transferor
Lender would have been entitled to receive in respect of the participation
effected by such transferor Lender had no participation occurred) with respect
to its participation in such Loans, Letter of Credit Interests and Commitments
as if such Participant were a "Lender" for purposes of said Section, but, except
as otherwise provided in Section 4.07(c), shall not have any other rights or
benefits under this Agreement or any Note or any other Credit Document (the
Participant's rights against such Lender in respect of such participation to be
those set forth in the agreements executed by such Lender in favor of the
Participant). All amounts payable by Borrower to any Lender under Section 5 in
respect of Loans, Letter of Credit Interests and its Commitments, shall be
determined as if such Lender had not sold or agreed to sell any participation in
such Loans, Letter of Credit Interests and Commitments, and as if such Lender
were funding each of such Loan, Letter of Credit Interests and Commitments in
the same way that it is funding the portion of such Loan, Letter of Credit
Interests and Commitments in which no participations have been sold. In no
event shall a Lender that sells a participation agree with the Participant to
take or refrain from taking any action hereunder or under any other Credit
Document, except that such Lender may agree with the Participant that it will
not, without the consent of the Participant, agree to any modification or
amendment set forth in subclauses (I), (II), (III) or (VIII) of clause (a) of
the proviso to Section 12.04.
(D) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, any Lender may assign and pledge
all or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank and, in the case of a Lender that is an investment
fund, any such Lender may assign or pledge any portion of its Loans and its
Notes to its trustee in support of its obligations to its trustee, without
notice to or consent of Borrower or the Administrative Agent. No such
assignment shall release the assigning Lender from its obligations hereunder.
-102-
(E) A Lender may furnish any information concerning Borrower or any
Subsidiary in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants) subject,
however, to the provisions of Section 12.11. In addition, each of the
Administrative Agent and the Arranger may furnish any information concerning any
Obligor or any of its Affiliates in the Administrative Agent's or the Arranger's
possession to any Affiliate of the Administrative Agent or the Arranger. The
Obligors shall assist any Lender (at such Lender's cost and expense, except as
provided in the Commitment Letter in respect of syndication) in effectuating any
assignment or participation pursuant to this Section 12.06 (including during
syndication) in whatever manner such Lender reasonably deems necessary,
including participation in meetings with prospective transferees.
12.07. Survival. The obligations of the Obligors under Sections
--------
5.01, 5.05, 5.06 and 12.03, the obligations of each Guarantor under Section
6.03, and the obligations of the Lenders under Sections 5.06 and 11.05, shall
survive the repayment of the Loans and Reimbursement Obligations and the
termination of the Commitments and, in the case of any Lender that may assign
any interest in its Commitments, Loans or Letter of Credit Interest hereunder,
shall (to the extent relating to such time as it was a Lender) survive the
making of such assignment, notwithstanding that such assigning Lender may cease
to be a "Lender" hereunder. In addition, each representation and warranty made,
or deemed to be made by a notice of any extension of credit, herein or pursuant
hereto shall survive the execution and delivery of this Agreement and the Notes
and the making of any extension of credit hereunder.
12.08. Captions. The table of contents and captions and section
--------
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.09. Counterparts; Interpretation; Effectiveness. This Agreement
-------------------------------------------
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof, other than the
indemnity, confidentiality, waiver of jury trial and governing law provisions of
the Commitment Letter, which are not superseded and survive. Except as provided
in Section 7.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
12.10. Governing Law; Submission to Jurisdiction; Waivers; Etc. (A)
-------------------------------------------------------
Each Credit Document shall be governed by, and construed in accordance with, the
law of the State of New York, without regard to the principles of conflicts of
laws thereof (except in the case of the other Credit Documents, to the extent
otherwise expressly stated therein). Each Obligor hereby irrevocably and
unconditionally: (a) submits for itself and its property in any Proceeding
relating to any Credit Document to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof; (b) consents that any such Proceeding may be brought in such
courts and waives trial by jury and any objection that it may now or hereafter
have to the venue of any such Proceeding in any such court or that such
Proceeding was brought in an inconvenient court and agrees not to plead or claim
the same; (c) agrees that service of process in any such Proceeding may be
effected by mailing a copy thereof by
-103-
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to Borrower at its address set forth in Section 12.02 or at
such other address of which the Administrative Agent shall have been notified
pursuant thereto; and (d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(B) Each Obligor hereby irrevocably appoints and designates CT
Corporation System, whose address is 1633 Broadway, New York, New York 10019, as
its true and lawful attorney and duly authorized agent for service of legal
process of such Obligor.
12.11. Confidentiality. Each Creditor agrees to take normal and
---------------
reasonable precautions to maintain the confidentiality of information provided
to it by Borrower or any Subsidiary in connection with this Agreement to the
extent it is not a matter of general public knowledge or it was not previously
known to the Lender at the time such information was provided to it or if
previously known, had become known to the Lender or provided to it in violation
of an agreement of confidentiality; provided, however, that any Creditor may
-------- -------
disclose such information (a) at the request of any bank regulatory or
securities authority or the NAIC or in connection with an examination of such
Creditor by any such authority or the NAIC, (b) pursuant to subpoena or other
court process, (c) when required to do so in accordance with the provisions of
any applicable law, (d) at the discretion of any other Governmental Authority,
(e) to such Creditor's Affiliates, independent auditors and other professional
advisors or (f) to any transferee or potential transferee or participant or
potential participant or to any direct or indirect contractual counterparties in
swap agreements or to the professional advisors of such swap counterparties;
provided, however, that they agree to comply with the provisions of this Section
- -------- -------
12.11.
12.12. Independence of Representations, Warranties and Covenants.
---------------------------------------------------------
The representations, warranties and covenants contained herein shall be
independent of each other and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exception be deemed to permit any action or omission that would be in
contravention of applicable law.
12.13. Severability. Wherever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
[Signature Pages Follow]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
TUESDAY MORNING CORPORATION
By: ___________________________________________
Name: Benjamin Chereskin
Title:
Address for Notices:
Tuesday Morning Corporation
14621 Inwood Road
Dallas, TX 75224
Attention: Benjamin Chereskin
Telecopier No.: (312) 895-1306
Telephone No.: (312) 895-1320
S-2
TMI HOLDINGS, INC.
By: ___________________________________________
Name: Benjamin Chereskin
Title:
Address for Notices:
c/o Tuesday Morning Corporation
14621 Inwood Road
Dallas, TX 75224
Attention: Benjamin Chereskin
Telecopier No.: (312) 895-1306
Telephone No.: (312) 895-1320
S-3
TUESDAY MORNING, INC.
By: ___________________________________________
Name: Benjamin Chereskin
Title:
Address for Notices:
c/o Tuesday Morning Corporation
14621 Inwood Road
Dallas, TX 75224
Attention: Benjamin Chereskin
Telecopier No.: (312) 895-1306
Telephone No.: (312) 895-1320
S-4
FRIDAY MORNING, INC.
By: ___________________________________________
Name: Benjamin Chereskin
Title:
Address for Notices:
c/o Tuesday Morning Corporation
14621 Inwood Road
Dallas, TX 75224
Attention: Benjamin Chereskin
Telecopier No.: (312) 895-1306
Telephone No.: (312) 895-1320
S-5
TMIL CORPORATION
By: ___________________________________________
Name: Benjamin Chereskin
Title:
Address for Notices:
c/o Tuesday Morning Corporation
14621 Inwood Road
Dallas, TX 75224
Attention: Benjamin Chereskin
Telecopier No.: (312) 895-1306
Telephone No.: (312) 895-1320
S-6
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED,
as Arranger and Syndication Agent
By: ___________________________________________
Name: Brian O'Callahan
Title: Vice President
Address for Notices:
World Financial Center
c/o Merrill Lynch & Co.
North Tower
250 Vesey Street
New York, New York 10281-1307
Attention: Christopher Reilly
Telecopier No.: (212) 449-2372
Telephone No.: (212) 449-8405
S-7
FLEET NATIONAL BANK,
as Administrative Agent
By: ___________________________________________
Name:
Title:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
S-8
LENDERS
-------
MERRILL LYNCH CAPITAL CORPORATION,
as a Lender
By: ___________________________________________
Name: Brian O'Callahan
Title: Vice President
Lending Office for all Loans:
World Financial Center
c/o Merrill Lynch & Co.
North Tower - 7th Floor
250 Vesey Street
New York, New York 10281-1307
Address for Notices:
World Financial Center
c/o Merrill Lynch & Co.
North Tower
250 Vesey Street
New York, New York 10281-1307
Attention: Christopher Reilly
Telecopier No.: (212) 449-2372
Telephone No.: (212) 449-8405
S-9
FLEET NATIONAL BANK,
as a Lender
By: ___________________________________________
Name:
Title:
Lending Office for all Loans:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
ANNEX A
-------
TUESDAY MORNING ALLOCATIONS
(dollars in millions)
Allocation
------------------------------------------------------------------------------------
REVOLVING CREDIT TRANCHE A TERM TRANCHE B TERM
INSTITUTION COMMITMENTS LOAN COMMITMENT LOAN COMMITMENT TOTAL
- ------------------------------ ---------------------- -------------------- ------------------ ------------------
Merrill Lynch 13.8400 4.1600 45.000
Capital Corporation
Fleet National Bank 8.5000 4.0000
Heller Financial, Inc. 8.5000 4.0000
Credit Lyonnais 8.5000 4.0000
National Westminster Bank 7.8200 3.6800
Credit Agricole Indosuez 7.8200 3.6800
Bank Leumi 6.8000 3.2000
LaSalle National Bank 6.8000 3.2000
Union Bank of California 6.8000 3.2000
Prime Income Trust 12.5000
Pilgrim America 12.5000
---------------------- -------------------- ------------------ ------------------
Total $90.0000 $40.0000 $70.0000 $200.0000
====================== ==================== ================== ==================
SCHEDULE 1.01(a)
----------------
REVOLVING CREDIT LOANS AND TRANCHE A TERM LOANS
Alternate
Tier Leverage Ratio LIBOR Loans Base Rate Loans
- ---- -------------- ----------- ---------------
I (greater than) 5:00:1.0 2.500% 1.500%
II (greater than) 4.50:1.0 but (less than) 5.00:1.0 2.250% 1.250%
III (greater than) 4:00:1.0 but (less than) 4.50:1.0 2.000% 1.000%
IV (greater than) 3.50:1.0 but (less than) 4.00:1.0 1.750% 0.750%
V (greater than) 3.00:1.0 but (less than) 3.50:1.0 1.500% 0.5000%
VI (less than or equal to) 3.00:1.0 1.250% 0.250%
- -------------------------------------------------------------------------------------------------------------------------------
TRANCHE B TERM LOANS
Tier Leverage Ratio LIBOR Loans Base Rate Loans
- ---- -------------- ----------- ---------------------------------
I (greater than) 5.00 1.0 3.000% 2.000%
II (greater than) 4.00:1.0 but (less than) 5.00:1.0 2.750% 1.750%
III (less than or equal to) 4.00:1.0 2.500% 1.500%
SCHEDULE 1.01(b)
----------------
GUARANTORS
SCHEDULE 1.01(c)
----------------
REFINANCED DEBT
SCHEDULE 3.01(b)
----------------
AMORTIZATION PAYMENTS
---------------------
TRANCHE A TRANCHE B
DATE TERM LOAN TERM LOAN
---- --------- ---------
October 15, 1998 $ 1,000,000 $ 350,000
January 15, 1999 1,000,000 350,000
April 15, 1999 600,000 105,000
July 15, 1999 600,000 105,000
October 15, 1999 800,000 140,000
January 15, 2000 2,000,000 350,000
April 15, 2000 1,200,000 105,000
July 15, 2000 1,200,000 105,000
October 15, 2000 1,600,000 140,000
January 15, 2001 4,000,000 350,000
April 15, 2001 1,800,000 105,000
July 15, 2001 1,800,000 105,000
October 15, 2001 2,400,000 140,000
January 15, 2002 6,000,000 350,000
April 15, 2002 2,100,000 105,000
July 15, 2002 2,100,000 105,000
October 15, 2002 2,800,000 140,000
December 29, 2002 7,000,000 0
January 15, 2003 0 350,000
April 15, 2003 0 105,000
July 15, 2003 0 105,000
October 15, 2003 0 140,000
January 15, 2004 0 350,000
April 15, 2004 0 16,450,000
July 15, 2004 0 16,450,000
October 15, 2004 0 16,450,000
December 29, 2004 0 16,450,000
----------- -----------
$40,000,000 $70,000,000
=========== ===========