EXHIBIT 10.1
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AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
KIRKLAND HOLDINGS L.L.C.
THE BORROWERS SPECIFIED HEREIN,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
FLEET NATIONAL BANK
AS ADMINISTRATIVE AGENT
AND
LEHMAN COMMERCIAL PAPER INC.
AS ADVISOR AND ARRANGER
DATED AS OF JUNE 19, 2001
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS............................................................. 1
1.1 Defined Terms.................................................... 1
1.2 Other Definitional Provisions.................................... 22
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS......................................... 21
2.1 Tranche A Term Loans............................................. 22
2.2 Intentionally Omitted............................................ 22
2.3 Tranche B Term Loans............................................. 22
2.3A Intentionally Omitted............................................ 22
2.3B Intentionally Omitted............................................ 22
2.4 Intentionally Omitted............................................ 22
2.4A Intentionally Omitted............................................ 22
2.4B Intentionally Omitted............................................ 22
2.5 Revolving Credit Commitments..................................... 22
2.6 Procedure for Revolving Credit Borrowing......................... 23
2.7 Clean-Up......................................................... 23
2.8 Commitment Fees, etc............................................. 24
2.9 Repayment of Loans, Evidence of Debt............................. 24
2.10 Termination or Reduction of Revolving Credit Commitments......... 25
2.11 Optional Prepayments............................................. 25
2.12 Mandatory Prepayments and Commitment Reductions.................. 26
2.13 Conversion and Continuation Options.............................. 27
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches........ 28
2.15 Interest Rates and Payment Dates................................. 28
2.16 Computation of Interest and Fees................................. 29
2.17 Inability to Determine Interest Rate............................. 29
2.18 Pro Rata Treatment and Payments, Use of Proceeds................. 30
2.19 Illegality....................................................... 31
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2.20 Requirements of Law.............................................. 31
2.21 Taxes............................................................ 32
2.22 Indemnity........................................................ 33
2.23 Change of Lending Office......................................... 34
2.24 Right of Contribution............................................ 34
2.25 Swing Line Commitment............................................ 34
2.26 Procedure for Swing Line Borrowing............................... 35
2.27 Refunded Swing, Line Loans; Swing, Line Loan Participations...... 35
SECTION 3. LETTERS OF CREDIT....................................................... 36
3.1 L/C Commitment................................................... 36
3.2 Procedure for Issuance of Letter of Credit....................... 37
3.3 Fees, Commissions and Other Charges.............................. 37
3.4 L/C Participations............................................... 38
3.5 Reimbursement Obligation of the Borrowers........................ 39
3.6 Obligations Absolute............................................. 39
3.7 Letter of Credit Payments........................................ 39
3.8 Applications..................................................... 40
SECTION 4. REPRESENTATIONS AND WARRANTIES.......................................... 40
4.1 Financial Condition.............................................. 40
4.2 No Change........................................................ 41
4.3 Corporate Existence, Compliance with Law......................... 41
4.4 Corporate Power; Authorization; Enforceable Obligations.......... 41
4.5 No Legal Bar..................................................... 41
4.6 No Material Litigation........................................... 42
4.7 No Default....................................................... 42
4.8 Ownership of Property, Liens..................................... 42
4.9 Intellectual Property............................................ 42
4.10 No Burdensome Restrictions....................................... 42
4.11 Taxes............................................................ 42
4.12 Federal Regulations.............................................. 43
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4.13 ERISA............................................................ 43
4.14 Investment Company Act; Other Regulations........................ 43
4.15 Subsidiaries..................................................... 43
4.16 Purpose of Loans; Limitations on Use............................. 44
4.17 Environmental Matters............................................ 44
4.18 Accuracy of Information.......................................... 45
4.19 Security Documents............................................... 45
4.20 Solvency......................................................... 46
4.21 Purchase Agreement Representations and Warranties................ 46
SECTION 5. CONDITIONS PRECEDENT.................................................... 46
5.1 Conditions to Initial Extension of Credit........................ 46
5.2 Conditions to Effectiveness of this Agreement.................... 51
5.3 Conditions to Each Extension of Credit.......................... 53
SECTION 6. AFFIRMATIVE COVENANTS................................................... 53
6.1 Financial Statements............................................. 53
6.2 Certificates, Other Information.................................. 54
6.3 Payment of Obligations........................................... 56
6.4 Conduct of Business and Maintenance of Existence, etc............ 56
6.5 Maintenance of Property; Insurance............................... 56
6.6 Inspection of Property; Books and Records; Discussions........... 56
6.7 Notices.......................................................... 56
6.8 Environmental Laws............................................... 57
6.9 Interest Rate Protection......................................... 57
6.10 Further Assurances............................................... 57
6.11 Additional Collateral............................................ 58
6.12 Key Man Life Insurance........................................... 58
6.13 Store Locations.................................................. 58
6.14 Intentionally Omitted............................................ 59
6.15 Purchase Agreement Affirmative Covenants......................... 59
6.16 Intentionally Omitted............................................ 59
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SECTION 7. NEGATIVE COVENANTS...................................................... 59
7.1 Financial Condition Covenants.................................... 59
7.2 Limitation on Indebtedness....................................... 60
7.3 Limitation on Liens.............................................. 61
7.4 Limitation on Guarantee Obligations.............................. 62
7.5 Limitation on Fundamental Changes................................ 62
7.6 Limitation on Sale of Assets..................................... 63
7.7 Limitation on Restricted Payments................................ 63
7.8 Limitation on Capital Expenditures............................... 64
7.9 Limitation on Investments, Loans and Advances.................... 64
7.10 Limitation on Optional Payments and Modifications of Debt
Instruments and Preferred Stock, etc. ........................... 64
7.11 Limitation on Transactions with Affiliates....................... 65
7.12 Limitation on Sales and Leasebacks............................... 65
7.13 Limitation on Changes in Fiscal Year............................. 65
7.14 Limitation on Negative Pledge Clauses............................ 65
7.15 Limitation on Lines of Business.................................. 65
7.16 Limitation on Activities of the Parent........................... 65
7.17 Purchase Agreement Negative Covenants............................ 66
7.18 Limitations on Stores............................................ 66
SECTION 8. EVENTS OF DEFAULT....................................................... 66
SECTION 9. THE ADMINISTRATIVE AGENT................................................ 70
9.1 Appointment...................................................... 70
9.2 Delegation of Duties............................................. 70
9.3 Exculpatory Provisions........................................... 70
9.4 Reliance by Administrative Agent................................. 71
9.5 Notice of Default................................................ 71
9.6 Non-Reliance on Administrative Agent and Other Lenders........... 71
9.7 Indemnification.................................................. 72
9.8 Administrative Agent in Its Individual Capacity.................. 72
9.9 Successor Administrative Agent................................... 73
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SECTION 10. GUARANTEE.............................................................. 73
10.1 Guarantee........................................................ 73
10.2 No Subrogation, Contribution, Reimbursement or Indemnity......... 73
10.3 Amendments, etc. with respect to the Obligations................. 74
10.4 Guarantee Absolute and Unconditional............................. 74
10.5 Reinstatement.................................................... 75
10.6 Payments......................................................... 75
SECTION 11. MISCELLANEOUS.......................................................... 75
11.1 Amendments and Waivers........................................... 75
11.2 Notices.......................................................... 76
11.3 No Waiver; Cumulative Remedies................................... 77
11.4 Survival......................................................... 78
11.5 Payment of Expenses and Taxes.................................... 78
11.6 Successors and Assigns, Participations and Assignments........... 79
11.7 Adjustments; Set-off............................................. 82
11.8 Counterparts..................................................... 82
11.9 Severability..................................................... 82
11.10 Integration...................................................... 82
11.11 GOVERNING LAW.................................................... 83
11.12 Submission To Jurisdiction, Waivers.............................. 83
11.13 Acknowledgments.................................................. 83
11.14 WAIVERS OF JURY TRIAL............................................ 84
11.15 Confidentiality.................................................. 84
11.16 Reliance on Representations and Actions of Designated Borrower... 84
11.17 Amendment and Restatement........................................ 84
11.18 Waiver of Defaults............................................... 85
11.19 Waiver of Default Interest....................................... 85
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SCHEDULES:
1.1A Schedule of Borrowers
1.1B Commitments and Addresses of Lenders
1.1C Mortgaged Property
1.1D Tranche A Term Loan Amortization Schedule
1.1E Tranche B Term Loan Amortization Schedule
4.4 Consents, Authorizations, Filings and Notices
4.19(b) UCC Filing Jurisdictions
4.19(c) Mortgage Filing Jurisdiction
5.1(y) Prior Credit Facilities
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.4(a) Existing Guarantee Obligations
7.11 Transactions with Affiliates
EXHIBITS:
A-1 Form of Revolving Credit Note
A-2 Form of Tranche A Term Note
A-3 Form of Tranche B Term Note
A-4 Form of Swing Line Note
B Form of Borrowers Security Agreement
C Form of Mortgage
D Form of Assignment and Acceptance
E-1 Form of Parent Pledge Agreement
E-2 Form of Management Pledge Agreement
F Form of Assignment of Insurance
G Form of Closing Certificate
H-1 Legal Opinion of Pepper, Hamilton & Scheetz
H-2 Legal Opinion of Baker, Donelson, Bearman & Caldwell
I-1 Form of Alternative Revolving Credit Note
I-2 Form of Alternative Tranche A Term Note
I-3 Form of Alternative Tranche B Term Note
J Form of Swing Line Loan Participation Certificate
K Form of Lender Warrant
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 19, 2001, among
Kirkland Holdings L.L.C., a Delaware limited liability company (the "Parent"),
the entities listed on Schedule 1.1A hereto, as joint and several borrowers
hereunder (the "Borrowers"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "Lenders"), Fleet
National Bank, as Administrative Agent (as hereinafter defined) for the Lenders
hereunder, and Lehman Commercial Paper Inc., as advisor and arranger with
respect to the credit facilities contained herein.
W I T N E S S E T H
WHEREAS, the Parent, the Borrowers, the Lenders and the Administrative
Agent, among others, entered into a Credit Agreement dated as of June 12, 1996
(as amended and in effect, the "Existing Agreement"); and
WHEREAS, the Parent, the Borrowers, the Lenders and the Administrative
Agent have agreed to amend the Existing Agreement; and
WHEREAS, in order to implement such amendment, the Parent, the Borrowers,
the Lenders and the Administrative Agent desire to amend and restate the
Existing Agreement in its entirety, as provided herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Additional Interest": an amount equal to $972,594.00, provided that
if all Obligations are paid in full, all Letters of Credit cash
collateralized and all Commitments terminated (collectively, the
"Repayment") by the following dates and no Default shall have occurred,
the Additional Interest shall be reduced to the following amount:
Date of Repayment Additional Interest
On or before June 30, 2001 $583,556.00
After June 30, 2001 but on or
before September 30, 2001 $778,075.00
After September 30, 2001 $972,594.00
"Administrative Agent": Fleet National Bank, together with its
affiliates, as the administrative agent for the Lenders under this
Agreement and the other Loan Documents, and together with any of their
respective successors.
"Advent": Advent International Corporation.
"Advent Funds": Funds affiliated with Advent which own 64.26% of the
membership interests of the Parent.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"Aggregate Outstanding Revolving Extensions of Credit": as to any
Revolving Credit Lender at any time, an amount equal to the sum of (a) the
aggregate principal amount of all Revolving Credit Loans made by such
Lender then outstanding, (b) such Lender's Revolving Credit Percentage of
the L/C Obligations then outstanding and (c) such Lender's Revolving
Credit Percentage of the aggregate principal amount of Swing Line Loans
then outstanding.
"Agreement": this Amended and Restated Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Alternative Note": as defined in Section 11.6(d).
"Alternative Noteholder": as defined in Section 11.6(e).
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Loans Eurodollar Loans
Revolving Credit Loans 2.25% 3.25%
Tranche A Term Loans . 2.25% 3.25%
Tranche B Term Loans . 2.95% 3.95%
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Asset Sale": any sale or other disposition by the Parent, any
Borrower or any of their Subsidiaries of any asset or assets of the
Parent, such Borrower or such Subsidiary (including any sale and leaseback
of assets and any mortgage of real property other than pursuant to a
Mortgage); provided, that any sale of assets expressly permitted by
clauses (a), (b), (c) or (d) of Section 7.6 shall not constitute an "Asset
Sale" hereunder.
"Assignee": as defined in Section 11.6(c).
"Assignment of Insurance": the Assignments of Insurance, each
executed and delivered by the appropriate Borrower, substantially in the
form of Exhibit F, as the same may be amended, supplemented or otherwise
modified from time to time.
"Available Revolving Credit Commitment": as to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment over (b) such Lender's Aggregate Outstanding
Revolving Extensions of Credit; provided,
that in calculating any Lender's Aggregate Outstanding Revolving
Extensions of Credit for the purpose of determining such Lender's
Available Revolving Credit Commitment pursuant to Section 2.8(a), the
aggregate unpaid principal amount of Swing Line Loans then outstanding
shall be deemed to be zero.
"Base Line Projection Utilization": The amounts set forth below for
the periods indicated:
Base Line Projection Utilization (at all times
Month during the month, except where indicated)
May,. 2001 $14,500,000
June, 2001 $18,000,000
July, 2001 $19,000,000
August, 2001 $20,000,000
September, 2001 $20,000,000*
October, 2001 $20,000,000*
November, 2001 $20,000,000*
December, 2001 $15,000,000**
January, 2002 $10,000,000**
February, 2002 $12,000,000
March, 2002 $14,500,000
April, 2002 $15,500,000
May, 2002 $16,000,000
June, 2002 $18,000,000
*provided that, (i) the Borrower may increase the Base Line Projection
Utilization in the months of September, October, and/or November, 2001 by
an amount not to exceed an additional $5,000,000 in the aggregate in any
month provided that the Increased Base Line Conditions are satisfied, and
**(ii) the Base Line Projection Utilization for the months of December,
2001 and January, 2002 shall be required to be achieved at the end of each
such month only and during such months the Base Line Projection
Utilization shall not exceed the Base Line Projection Utilization in
effect on the last day of the previous month, that is, $20,000,000
(subject to increase as set forth in the first proviso hereto) for
December, 2001 and $15,000,000 for January, 2002.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day, and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime or base rate in effect at its
principal
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office in Boston, Massachusetts; and "Federal Funds Effective Rate" shall
mean, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for the
day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrowers Security Agreement": the Borrowers Security Agreement
date June 12, 1996 executed and delivered by each Borrower, substantially
in the form of Exhibit B, as the same has been or may be amended,
supplemented or otherwise modified from time to time.
"Borrowing Base": at any time of calculation, an amount equal to the
lesser of:
(a) the Inventory Advance Rate multiplied by the Borrowers'
Eligible Inventory at the lesser of cost or market value (determined in
accordance with GAAP) minus such reserves as the Administrative Agent may
reasonably establish; or
(b) the Base Line Projection Utilization for the applicable
month at the time of calculation.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.2, 2.4, 2.6 or 2.26 as a date on which the Designated Borrower
requests the Lenders to make Loans hereunder.
"Business": as defined in Section 4.17.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts are authorized or required
by law to close.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a combined balance sheet of such Person and its
Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
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"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of six months or
less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $250,000,000;
and (c) commercial paper of (i) an issuer rated at least A-1 by Standard &
Poor's Ratings Services or P-1 by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of
commercial paper issuers generally or (ii) the holding company of any
Lender, and, in either case, maturing within six months from the date of
acquisition.
"Certificate of Designations": the Certificate of Designations,
dated June 7, 1996 and effective as of June 12, 1996 at 12:01 a.m., of
each Borrower.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.2 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Loan Parties or the Individual
Shareholders, now owned or hereafter acquired, upon which a Lien is
purported to be created by any Security Document.
"Combined Current Assets": at a particular date, all amounts (other
than cash and Cash Equivalents) which would, in conformity with GAAP, be
set forth opposite the caption "total current assets" (or any like
caption) on a combined balance sheet of the Borrowers and their
Subsidiaries at such date.
"Combined Current Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a combined balance
sheet of the Borrowers and their Subsidiaries at such date, but excluding
(a) the current portion of any Funded Debt of the Borrowers and their
Subsidiaries and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Credit Loans or Swing Line Loans to
the extent otherwise included therein.
"Combined EBITDA": for any period, Combined Net Income for such
period plus, without duplication and to the extent reflected as a charge
in the statement of such Combined Net Income for such period, the sum of
(a) total income tax expense, (b) interest expense, amortization or
writeoff of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness
(including the Loans), (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of
such Combined Net Income for such period, losses on
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sales of assets outside of the ordinary course of business), (f) any other
noncash charges (excluding inventory writedowns and LIFO charges) and (g)
if applicable, restructuring charges, write-off of goodwill and licensing
agreements and minus, to the extent included in the statement of such
Combined Net Income for such period, the sum of (a) non-cash interest
income, (b) any extraordinary income or gains (including, whether or not
otherwise includable as a separate item in the statement of such Combined
Net Income for such period, gains on the sales of assets outside of the
ordinary course of business) and (c) any other noncash income, all as
determined on a combined basis.
"Combined Fixed Charge Coverage Ratio": for any period, the ratio of
(a) (i) the sum of (without duplication) (A) Combined EBITDA for such
period, (B) any Management Fee accrued and paid during such period and (C)
Combined Lease Expense minus (ii) the sum of (without duplication) (A) any
cash income taxes paid by the Borrowers or any of their Subsidiaries on a
combined basis in respect of such period, and (B) Capital Expenditures
actually paid in cash for such period to (b) the sum (without duplication)
of (i) Combined Interest Expense for such period, (ii) any Management Fee
accrued and paid during such period, (iii) scheduled payments required to
have been made during such period on account of principal of Indebtedness
of the Borrowers or any of their Subsidiaries (including the Loans but
excluding optional principal prepayments in respect of Revolving Credit
Loans) and (iv) Combined Lease Expense, determined without duplication of
items included in Combined Interest Expense.
"Combined Interest Coverage Ratio": for any period, the ratio of (a)
Combined EBITDA for such period to (b) Combined Interest Expense for such
period.
"Combined Interest Expense": for any period, total interest expense
(including that attributable to Capital Lease Obligations but excluding
interest on account of Series C Preferred and the Additional Interest),
both expensed and capitalized, of the Borrowers and their Subsidiaries for
such period with respect to all outstanding Indebtedness of the Borrowers
and their Subsidiaries (including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of
credit and bankers' acceptance financing) determined on a combined basis
in accordance with GAAP.
"Combined Lease Expense": for any period, the aggregate amount of
fixed and contingent rentals payable by the Borrowers and their
Subsidiaries, determined on a combined basis in accordance with GAAP, for
such period with respect to leases of real and personal property; provided
that amounts included in Capital Lease Obligations shall be excluded from
Combined Lease Expense.
"Combined Net Income": for any period, the combined net income (or
loss) of the Borrowers and their Subsidiaries, determined on a combined
basis in accordance with GAAP; provided that there shall be excluded (a)
the income (or deficit) of any Person accrued prior to the date it becomes
a Subsidiary of the Borrowers or is merged into or combined with the
Borrowers or any of their Subsidiaries, (b) the income (or deficit) of any
Person (other than a Subsidiary of the Borrowers) in which the Borrowers
or any of their Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by the Borrowers or such
Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of the Borrowers to the extent
that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any
Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.
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"Combined Net Worth": at a particular date, all amounts which would,
in conformity with GAAP, be included on a combined balance sheet of the
Borrowers and their Subsidiaries as at such date for Preferred Stock plus
any increase or decrease in retained earnings between the Original Closing
Date and such date.
"Combined Total Debt": at any date, the aggregate principal amount
of all Funded Debt (other than Revolving Credit Loans, Swing Line Loans,
and Reimbursement Obligations) of the Borrowers and their Subsidiaries at
such date, determined on a combined basis in accordance with GAAP.
"Combined Total Debt Ratio": as of the last day of any period, the
ratio of (a) Combined Total Debt as of such day to (b) Combined EBITDA for
such period.
"Combined Working Capital": the excess of Combined Current Assets
over Combined Current Liabilities.
"Commercial Letter of Credit": as defined in Section 3.1(a).
"Commitment": as to any Lender, the sum of the Tranche A Term Loan,
Commitment, the Tranche B Term Loan Commitment and the Revolving Credit
Commitment of such Lender.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with any Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes any
Borrower and which is treated as a single employer under Section 414 of
the Code.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated as of May, 1996 with respect to the Borrowers and the
credit facilities provided for herein.
"Consulting Agreement": the consulting agreement dated June 12,
1996, between Kirkland's Inc. and Robert Kirkland.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Designated Borrower": Kirkland's, Inc., a Tennessee corporation, on
behalf of itself or any of the other Borrowers in accordance with the
terms hereof.
"Dollars" and "$": dollars in lawful currency of the United States.
"Eligible Inventory": such of the Borrowers' finished goods
inventory as the Administrative Agent in its reasonable discretion deems
eligible for inclusion in the calculation of Borrowing Base. Without
limiting the foregoing, Eligible Inventory shall not include the
following:
(a) Inventory which is not merchantable and readily saleable to the
public in the ordinary course of business, or which are damaged, defective
or to be returned to vendor;
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(b) Inventory that is not solely owned by the Borrowers or is on
consignment to the Borrowers;
(c) Inventory that is not located at a property that is owned or
leased by the Borrowers other than Inventory in transit between properties
owned or leased by the Borrowers;
(d) Inventory that is not subject to a perfected first-priority
security interest in favor of the Administrative Agent for the benefit of
the Lenders; (e) Inventory that consists of samples, labels, bags,
packaging and other similar non-merchandise categories.
(f) Inventory which has been sold but not yet delivered or as to
which any Borrower has accepted a deposit.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning the protection of human
health or the environment, as now or may at any time hereafter be in
effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate of interest
determined on the basis of the rate for deposits in dollars for a period
equal to such Interest Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Telerate Service as of 10:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period. In the event that such rate does not appear on Page 3750 of the
Telerate Service (or otherwise on such service), the "Eurodollar Base
Rate" shall be determined by reference to such other publicly available
service for displaying eurodollar rates as may be agreed upon by the
Administrative Agent and the Designated Borrower or, in the absence of
such agreement, the "Eurodollar Base Rate" shall instead be the rate per
annum equal to the rate at which the Administrative Agent is offered
Dollar deposits at or about 10:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loans to be outstanding during such Interest Period.
8
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
that are Tranche A Term Loans, Tranche B Term Loans or Revolving Credit
Loans, as the case may be, the then current Interest Periods with respect
to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same
day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excess Cash Flow": for any period, Combined Net Income for such
period, plus the sum of (i) depreciation expense and amortization expense
deducted from earnings in determining such Combined Net Income, (ii) the
net increase during such period (if any) in deferred tax accounts, (iii)
any proceeds received by the Borrowers during such period in respect of
the key man life insurance policies required hereunder and (iv) the
decrease during such period (if any) in Combined Working Capital minus the
sum of (i) the net decrease during such period (if any) in deferred tax
accounts, (ii) the aggregate amount actually paid in cash during such
period on account of Capital Expenditures permitted hereunder (but only to
the extent not financed by Indebtedness or capital contributions), in each
case, determined on a consolidated basis in accordance with GAAP, (iii)
the increase during such period (if any) in Combined Working Capital and
(iv) scheduled principal payments on Indebtedness of the Borrowers and
their Subsidiaries not prohibited hereunder during such period (not
including optional principal prepayments in respect of Revolving Credit
Loans or Swing Line Loans or prepayments required pursuant to Section 2.12
hereof).
"Excess Cash Flow Application Date": as defined in Section 2.12(c).
"Existing Agreement": as defined in the Recitals hereto.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including, without limitation, all current maturities and
current sinking fund payments in respect of such Indebtedness whether or
not required to be paid within one year from the date of its creation and,
in the case of the Borrowers, all current maturities in respect of the
Loans.
9
"GAAP": generally accepted accounting principles in the United
States in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (1) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency 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 owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Borrowers in good faith.
"Increased Base Line Conditions": The furnishing by all of the
Lenders of their prior written consent to an increase in the Base Line
Projection Utilization by an amount not to exceed $5,000,000.00 in the
aggregate, which consent shall not be unreasonably withheld or delayed.
The Lenders' consent shall not be deemed to have been unreasonably
withheld or delayed unless each of the following conditions is satisfied
on the date of, and at the time the Borrowers request, an increase:
(a) No Lender shall be obligated to participate in such increase.
(b) No Default or Event of Default shall then exist.
(c) The Borrowers shall furnish the Administrative Agent with fifteen
(15) days prior written notice of the requested increase in the Base
Line Projection Utilization for any month.
(d) The Person (which need not necessarily be a Lender) funding the
increase in the Baseline Project Utilization (the "Increased
Advance") shall agree (i) that any lien on the Parent's and the
Borrowers' assets granted to such Person shall either be
10
subordinate to that held by the Administrative Agent and the Lenders
or shall be pari passu with the liens of the Administrative Agent
and the Lenders, (ii) that the proceeds of the Increased Advance
shall be utilized solely for working capital purposes, including the
purchase of inventory, but shall not be utilized to pay the Term
Loans, (iii) that all payments made by or on behalf of the Borrowers
on account of the Obligations due to the Revolving Credit Lenders
and the Increased Advance shall be applied pro rata to the
Obligations due to the Revolving Credit Lenders and the Increased
Advance, based upon the outstanding Revolving Credit Commitments and
the commitments under the Increased Advance, (iv) that such Person
shall have no voting rights or other ability to direct, limit, or
prohibit actions with respect to the administration of the Loan
Documents and the Collateral, including without limitation, with
respect to waivers, amendments, sale, release and foreclosure of the
Collateral or otherwise; (v) that the Person providing the Increased
Advance shall enter into a standstill agreement with the
Administrative Agent and the Lenders pursuant to which such Person
agrees not to exercise any remedies upon default against the
Borrowers and Parent until all Obligations have been irrevocably
paid in full; (vi) that after the Borrowers comply with the
provisions of Section 2.7 of this Agreement (at which point all
Increased Advances must also have been repaid in full), such Person
shall not make any further loans or advances to the Borrowers (other
than as a Revolving Credit Lender) until the Obligations have been
irrevocably paid in full; and (vii) to such other intercreditor
provisions as the Administrative Agent and the Lenders may
reasonably require.
(e) The principal payment due in December, 2001 on account of the
Tranche B Term Loan shall be increased automatically to an amount
equal to $8,000,000.
(f) In consideration of the Lenders' consent to the increase in the Base
Line Utilization Projection, the Borrowers shall pay the Lenders a
fee in such amount as the Lenders may reasonably require.
The foregoing list of conditions ((a) through (f)) shall not be deemed to
be an exclusive list of the reasons the Lenders may withhold their
consent; rather, such list is illustrative only and will not limit or
restrict the bases upon which such consent may be withheld.
"Incur": as defined in Section 7.2.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other
than current trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement 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), (e) all Capital Lease Obligations (and not operating lease
obligations) of such Person, (f) all obligations, contingent or otherwise,
of such Person as an account party under acceptance, letter of credit or
similar facilities, (g) all obligations of such Person to purchase,
redeem, retire or otherwise acquire for value any Capital Stock of such
Person, (h) all Guarantee Obligations of such Person and (i) all
obligations of the kind referred to in clauses (a) through (h) above
secured by any Lien on property (including, without limitation, accounts
and contract rights) owned by such
11
Person, whether or not such Person has assumed or become liable for the
payment of such obligation.
"Individual Shareholders": collectively, Carl Kirkland, Robert
Alderson, and Robert Kirkland.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Insurance Policies": (i) key man life insurance policies on each of
the Management Shareholders in the amount of $3,000,000 per person, on
terms satisfactory to the Administrative Agent, (ii) the insurance
policies the Borrowers are required to maintain pursuant to Sections 6.5
and 6.12 and (iii) the insurance policies the Borrowers are required to
maintain pursuant to Section 4.2 of the Borrowers Security Agreement.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each month to occur while such Loan is outstanding, (b) as to any
Eurodollar Loan, the last day of each month and on the last day of such
Interest Period.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrowers in their notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and (b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrowers by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Revolving Credit Termination Date (in the case of Revolving
Credit Loans) or beyond the date final payment is due on the Tranche
A Term Loans or the Tranche B Term Loans (in the case of the Term
Loans) shall end on the Revolving Credit Termination Date or such
date of final payment, as applicable;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrowers shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
12
"Inventory Advance Rate": The following percentages for the periods
indicated:
Period Inventory Advance Rate
January 1 through June 30 of each year 62.5%
July 1 through December 31 of 2001 72.5%
"Issuing Lender": Fleet National Bank, in its capacity as issuer of
any Letter of Credit and any other Lender designated as "Issuing Lender"
hereunder by the Designated Borrower with the consent of the
Administrative Agent and such Lender.
"L/C Commitment": $5,000,000.
"L/C Fee Payment Date": the last day of each month and the last day
of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"Lender Affiliates": (a) with respect to any Lender, (i) an
Affiliate of such Lender or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is administered or managed by a
Lender that is engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the
ordinary course of its business and (b) with respect to any Lender that is
a fund which invests in bank loans and similar extensions of credit, any
other fund that invests in bank loans and similar extensions of credit and
is managed by the same investment advisor as such Lender or by an
Affiliate of such Lender.
"Lender Warrants": warrants in favor of the Lenders (in the form of
Exhibit K hereto), pursuant to which the Lenders may acquire five percent
(5%) of the equity interests of the Parent (on a fully diluted basis) for
nominal consideration.
"Lender Warrants Alternative": payment in cash to the Administrative
Agent for the pro rata benefit of the Lenders of $2,000,000.00 at the
option of Parent, in lieu of Lender Warrants.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
13
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications and
the Security Documents.
"Loan Parties": the Parent, the Borrowers and each other Subsidiary
of the Parent or the Borrowers which is a party to a Loan Document.
"Management Contracts": the collective reference to the letter
agreements, each dated June 12, 1996, between Kirkland's, Inc. and each of
the Management Shareholders.
"Management Fee": the amount payable to (a) the Management
Shareholders pursuant to clause (b) of the third sentence of Section 2 of
the Management Contracts and (b) to Robert Kirkland pursuant to Section 3
of the Consulting Agreement.
"Management Pledge Agreement": the Pledge Agreement executed and
delivered by the Management Shareholders dated as of June 12, 1996
substantially in the form of Exhibit E-2, as the same may be amended,
supplemented or otherwise modified from time to time.
"Management Shareholders": Carl Kirkland and Robert Alderson
"Material Adverse Effect": a material adverse effect on (a) the
consummation of the Recapitalization in accordance with the
Recapitalization Documents, (b) the business, assets, results of
operations, financial condition or prospects of the Parent. the Borrowers
and their Subsidiaries taken as a whole or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Material Environmental Amount": an amount payable by the Borrowers
and/or their Subsidiaries in excess of $250,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Mortgage": the mortgages or deeds of trust made by the appropriate
Loan Party in favor of, or for the benefit of, the Administrative Agent
for the benefit of the Lenders, substantially in the form of Exhibit C
(with such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded),
as the same may be amended, supplemented or otherwise modified from time
to time.
"Mortgaged Property": the real property listed on Schedule 1.1C, as
to which the Administrative Agent for the benefit of the Lenders has been
granted a Lien pursuant to each Mortgage.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
14
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds 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) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien in favor of the Administrative Agent for the
benefit of the Lenders) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and
(b) in connection with any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the cash proceeds
received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"Non-Excluded Taxes": as defined in Section 2.21 (a).
"Non-U.S. Lender": as defined in Section 2.21(b).
"Notes": the collective reference to the Tranche A Term Notes, and
the Tranche B Term Notes, the Revolving Credit Notes, and the Swing Line
Notes.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrowers, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Notes and all other obligations and liabilities of the
Borrowers to the Administrative Agent or to any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any other Loan Document, the Letters of Credit, or any
other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrowers pursuant hereto).
"Original Closing Date": June 12, 1996.
"Parent Pledge Agreement": the Parent Pledge Agreement dated as of
June 12, 1996 executed and delivered by the Parent, substantially in the
form of Exhibit E-1, as the same may be amended, supplemented or otherwise
modified from time to time.
"Participant": as defined in Section 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
15
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrowers or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": the collective reference to the Management
Pledge Agreement and the Parent Pledge Agreement.
"Preferred Stock": the collective reference to the Series A
Preferred, the Series B Preferred, the Series C Preferred and the Series D
Preferred.
"Prior Credit Facilities": the debt obligations referred to on
Schedule 5.1 (y).
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": the collective reference to the real property owned,
leased or operated by the Parent, the Borrowers or any of their
Subsidiaries.
"Purchase Agreement": the Senior Subordinated Note and Warrant
Purchase Agreement dated as of June 12, 1996 among the Subordinated Debt
Holders and the Borrowers, as amended and in effect.
"Recapitalization": as defined in the Recapitalization Agreement.
"Recapitalization Agreement": the Recapitalization Agreement dated
April 26, 1996 among the Parent, the Borrowers and the Individual
Shareholders, together with such amendments, waivers, supplements and
other modifications thereto as shall be reasonably satisfactory to the
Administrative Agent and the Lenders (the consent of the Administrative
Agent and the Lenders shall only be required with respect to material
amendments, waivers, supplements and other modifications).
"Recapitalization Documents": the Recapitalization Agreement and any
agreement or other document entered into or executed by any Loan Party in
connection with the Recapitalization Agreement.
"Recovery Event": any settlement of or payment in respect of a
property or casualty insurance claim relating to any asset of the Parent,
the Borrowers or any of their Subsidiaries.
"Refunded Swing Line Loans": as defined in Section 2.27(a).
"Register": as defined in Section 11.6(g).
"Registration Rights Agreement": the Registration Rights Agreement
dated as of June 12, 1996 among the Parent, Kirkland's Inc., the other
corporations listed on the signature pages thereto, the Subordinated Debt
Holders and the Individual Shareholders, as amended, supplemented or
otherwise modified from time to time.
16
"Reimbursement Obligation": the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Parent, the
Borrowers or any of their Subsidiaries in connection therewith which are
not applied to prepay the Term Loans or reduce the Revolving Credit
Commitments pursuant to Section 2.12(b) as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event": any Recovery Event in respect of which the
Designated Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer of the Designated Borrower to the Administrative Agent within 30
days of the Reinvestment Event to which it relates stating that no Event
of Default has occurred and is continuing and that the Borrowers (directly
or indirectly through another Subsidiary), in good faith, intend and
expect to use all or a specified portion of the Net Cash Proceeds of a
Recovery Event to restore or replace the assets in respect of which such
Recovery Event occurred within twelve months from the date of receipt of
such Net Cash Proceeds (provided that if the affected assets constituted
Collateral, such restored or replacement assets shall also constitute
Collateral).
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to restore or
replace the assets in respect of which a Recovery Event has occurred.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earliest of (a) the first date occurring after such
Reinvestment Event on which an Event of Default shall have occurred, (b)
the date occurring twelve months after such Reinvestment Event and (c) the
date on which the applicable Borrower shall have determined not to, or
shall have otherwise ceased to, restore or replace the assets in respect
of which a Recovery Event has occurred.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period
is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Reg.ss.2615.
"Required Lenders": at any date shall mean the holders of 66-2/3% or
more of the sum of (i) the aggregate unpaid principal amount of the Term
Loans and (ii) the aggregate Revolving Credit Commitments, or, if the
Revolving Credit Commitments have been terminated, the Aggregate
Outstanding Revolving Extensions of Credit of the Revolving Credit
Lenders.
"Requirement of Law": 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.
17
"Responsible Officer": the chief executive officer, president or
chief financial officer of the Parent, the Designated Borrower or any
other Borrower, as the case may be, but in any event, with respect to
financial matters, the chief financial officer of the Parent, the
Designated Borrower or any other Borrower, as the case may be.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans to and/or issue or
participate in Letters of Credit issued on behalf of a Borrower hereunder
in an aggregate principal and/or face amount not to exceed the amount set
forth under the heading "Revolving Credit Commitment" opposite such
Lender's name on Schedule 1.1B, as the same may be changed from time to
time pursuant to the terms hereof.
"Revolving Credit Commitment Period": the period from and including
the Original Closing Date to but not including the Revolving Credit
Termination Date, or such earlier date on which the Revolving Credit
Commitments shall have been terminated.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.5(a).
"Revolving Credit Note": as defined in Section 2.9(c).
"Revolving Credit Percentage": as to Revolving Credit Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"Revolving Credit Termination Date": June 30, 2002.
"Security Documents": the collective reference to each Mortgage, the
Borrowers Security Agreement, the Pledge Agreements, the Assignments of
Insurance and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any asset or assets of any Person
to secure the obligations and liabilities of the Borrowers hereunder
and/or under any of the other Loan Documents or to secure any guarantee of
any such obligations and liabilities.
"Series A Preferred": the Class A preferred stock, the terms of
which are set forth in the Amended and Restated Charter of Kirkland's,
Inc. dated as of August 8, 2000 as filed with the Secretary of State of
Tennessee.
"Series B Preferred": the Class B preferred stock, the terms of
which are set forth in the Amended and Restated Charter of Kirkland's,
Inc. dated as of August 8, 2000 as filed with the Secretary of State of
Tennessee.
"Series C Preferred": the Class C preferred stock, the terms of
which are set forth in the Amended and Restated Charter of Kirkland's,
Inc. dated as of August 8, 2000 as filed with the Secretary of State of
Tennessee.
18
"Series D Preferred": the Class D preferred stock, the terms of
which are set forth in the Amended and Restated Charter of Kirkland's,
Inc. dated as of August 8, 2000 as filed with the Secretary of State of
Tennessee.
"Shareholders Agreement": the Shareholders Agreement dated as of
June 12, 1996 among the Parent, the Borrowers, the Individual Shareholders
and the Subordinated Debt Holders, as amended, supplemented or otherwise
modified from time to time.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets
of such Person will, as of such date, be greater than the amount that will
be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Standby Letter of Credit": as defined in Section 3.1(a).
"Subordinated Debt": the $20,000,000.00 of 12.25% to 12.50% senior
subordinated notes issued by the Borrowers to the Subordinated Debt
Holders as of June 12, 1996.
"Subordinated Debt Holders": collectively, Capital Resource Lenders
II, L.P., Allied Capital Corporation, and The Marlborough Capital
Investment Fund, L.P. and Capital Trust Investments, Ltd.
"Subordination Agreement": the Subordination and Intercreditor
Agreement dated as of June 12, 1996 by and among the Administrative Agent,
on behalf of the Lenders, and the Subordinated Debt Holders, as amended
and in effect.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of a
Borrower.
19
"Swing Line Commitment": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.25 in an aggregate principal
amount at any one time outstanding not to exceed $2,500,000.
"Swing Line Lender": as defined in Section 2.25.
"Swing Line Loan Participation Certificate": a certificate
substantially in the form of Exhibit J.
"Swing Line Loans": as defined in Section 2.25.
"Swing Line Note": as defined in Section 2.9(e).
"Swing Line Participation Amount": as defined in Section 2.27(c).
"Term Loan Lenders": the collective reference to the Tranche A Term
Loan Lenders and the Tranche B Term Loan Lenders.
"Term Loans": the collective reference to the Tranche A Term Loans
and the Tranche B Term Loans.
"Tranche A Loans": the collective reference to the Tranche A Term
Loans, the Revolving Credit Loans and Swing Line Loans.
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Loan Commitment": as to any Lender, the obligation
of such Lender, if any, to make a Tranche A Term Loan to the Borrowers
hereunder in a principal amount not to exceed the amount set forth under
the heading "Tranche A Term Loan Commitment" opposite such Lender's name
on Schedule 1.1B.
"Tranche A Term Loan Lender": each Lender which has a Tranche A Term
Loan Commitment or which has made a Tranche A Term Loan.
"Tranche A Term Loan Percentage": as to any Tranche A Term Loan
Lender at any time, the percentage which such Lender's Tranche A Term Loan
Commitment then constitutes of the aggregate Tranche A Term Loan
Commitments (or, at any time after the Original Closing Date, the
percentage which the aggregate principal amount of such Lender's Tranche A
Term Loans then outstanding constitutes of the aggregate principal amount
of the Tranche A Term Loans then outstanding).
"Tranche A Term Note": as defined in Section 2.9(e).
"Tranche B Term Loan": as defined in Section 2.3.
"Tranche B Term Loan Commitment": as to any Lender, the obligation
of such Lender, if any, to make a Tranche B Term Loan to the Borrowers
hereunder in a principal amount not to exceed the amount set forth under
the heading "Tranche B Term Loan Commitment" opposite such Lender's name
on Schedule 1.1B.
"Tranche B Term Loan Lender": each Lender which has a Tranche B Term
Loan Commitment or which has made a Tranche B Term Loan.
20
"Tranche B Term Loan Percentage": as to any Lender at any time, the
percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of the aggregate Tranche B Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche B Term Loans then outstanding constitutes
of the aggregate principal amount of the Tranche B Term Loans, then
outstanding).
"Tranche B Term Note": as defined in Section 2.9(e).
"Tranche B Termination Date": June 30, 2002.
"Transferee": as defined in Section 11.6(i).
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"United States": the United States of America.
"U.S. Taxes": as defined in Section 11.6(d).
"Warrants": collectively (a) the warrants to purchase shares of the
common stock of the Designated Borrower issued pursuant to (i) the
Purchase Agreement, (ii) the Capital Investment Commitment and Stock
Purchase Agreement dated July 7, 1999, (iii) the Securities Purchase
Agreement dated August 8, 2000, and (b) the Lender Warrants
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Parent, the Borrowers and their Subsidiaries
not defined in Section 1.1 and accounting terms partly defined in Section 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP.
(c) The words "hereof', "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Tranche A Term Loans. Each Tranche A Term Loan Lender made term loans
(a "Tranche A Term Loan") to the Borrowers, jointly and severally, on the
Original Closing Date. On the date hereof, the outstanding principal balance of
the Tranche A Term Loans is $833,333.33. The Tranche A Term Loans may from time
to time be (a) Eurodollar Loans, (b) Base Rate Loans or (c) a combination
thereof, as determined by the Designated Borrower and notified to the
Administrative Agent in accordance with Section 2.13.
2.2 Intentionally Omitted.
2.3 Tranche B Term Loans. Pursuant to the Existing Agreement, certain
Tranche B Term Loan Lenders made tranche B term loans, supplemental tranche B
term loans and second supplemental tranche B term loans to the Borrowers,
jointly and severally. On the date hereof, after giving effect to the payment
required pursuant to Section 5.2(k) below, the aggregate outstanding principal
balance of such term loans shall be $45,427,272.10. On the Closing Date, such
loans will be amended, restated and consolidated into a term loan (a "Tranche B
Term Loan") to the Borrowers, jointly and severally in an amount not to exceed
the amount of the Tranche B Term Loan Commitment of such Lender. The Tranche B
Term Loans may from time to time be (a) Eurodollar Loans, (b) Base Rate Loans or
(c) a combination thereof, as determined by the Designated Borrower and notified
to the Administrative Agent in accordance with Sections 2.4 and 2.13.
2.3A Intentionally Omitted.
2.3B Intentionally Omitted.
2.4 Intentionally Omitted.
2.4A Intentionally Omitted.
2.4B Intentionally Omitted.
2.5 Revolving Credit Commitments. (a) The Borrowers acknowledge that as of
the Closing Date, immediately prior to the effectiveness of this Agreement, the
outstanding principal balance of the Revolving Credit Loans is $20,000,000.00.
Subject to the terms and conditions hereof, each Revolving Credit Lender
severally agrees to make revolving credit loans ("Revolving Credit Loans") to
the Borrowers, jointly and severally, from time to time during the Revolving
Credit Commitment Period in an aggregate principal amount at any one time
outstanding which, when added to such Lender's Revolving Credit Percentage of
the sum of (A) the L/C Obligations then outstanding and (B) the aggregate
principal amount of the Swing Line Loans then outstanding, does not exceed the
amount of such Lender's Revolving Credit Commitment, provided, however, that all
such Revolving Credit Loans, when added to the sum of (A) the L/C Obligations
then outstanding and (B) the aggregate principal amount of the Swing Line Loans
then outstanding, shall not exceed the lesser of (x) the Borrowing Base, or (y)
the Revolving Credit Commitments of all Revolving Credit Lenders. During the
Revolving Credit
22
Commitment Period, the Borrowers may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Designated Borrower and notified to the Administrative Agent
in accordance with Sections 2.6 and 2.13, provided that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date.
2.6 Procedure for Revolving Credit Borrowing. The Borrowers may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Designated Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be Eurodollar Loans or (b) one Business Day prior
to the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to
be of Eurodollar Loans, Base Rate Loans, or a combination thereof, (iv) the
identity of the Borrower or Borrowers to which the proceeds of the Revolving
Credit Loan should be made available and (v) if the borrowing is to be entirely
or partly of Eurodollar Loans, the respective amounts of each such Type of Loan
and the respective lengths of the initial Interest Periods therefor; provided
that prior to the date which is 60 days after the Closing Date no Revolving
Credit Loan may be made, converted or continued as a Eurodollar Loan having an
Interest Period in excess of one month. Each borrowing under the Revolving
Credit Commitments shall be in an amount equal to (x) in the case of Base Rate
Loans, $1,000,000 or a whole multiple thereof (or, if the then Available
Revolving Credit Commitments are less than $1,000,000, such lesser amount) and
(y) in the case of Eurodollar Loans, $2,500,000 or a whole multiple of
$1,000,000 in excess thereof, provided, that the Swing Line Lender may request,
on behalf of the Borrowers, borrowings under the Revolving Credit Commitments
which are Base Rate Loans in other amounts pursuant to Section 2.27(a). Upon
receipt of any such notice from the Designated Borrower, the Administrative
Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving
Credit Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the appropriate
Borrower at the office of the Administrative Agent specified in Section 11.2
prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the
Designated Borrower in funds immediately available to the Administrative Agent.
The aggregate of the amounts made available to the Administrative Agent by the
Revolving Credit Lenders will then be made available to the appropriate Borrower
by the Administrative Agent in accordance with the instructions of the
Designated Borrower in like funds as received by the Administrative Agent.
2.7 Clean-Up. Notwithstanding the foregoing provisions of this Section 2
for a period of not less than 30 consecutive days during the period from January
1 to March 1, 2002 the aggregate outstanding principal amount of the Revolving
Credit Loans and Swing Line Loans shall be reduced to zero, provided that
notwithstanding the foregoing, such clean up may commence at any time after
December 1, 2001 if all of the payments of principal on account of the Term
Loans due or to become due through December 31, 2001 have been paid prior to
such commencement date, and further provided that , without waiving or modifying
the obligation of
23
the Borrowers to so clean up the Revolving Credit Loans and Swing Line Loans, in
no event shall such clean up commence until all of the payments of principal on
account of the Term Loans due through December 31, 2001 have been paid in full.
2.8 Commitment Fees, etc. (a) The Borrowers jointly and severally agree to
pay to the Administrative Agent for the account of each Revolving Credit Lender
a commitment fee for the period from and including the Original Closing Date to
the last day of the Revolving Credit Commitment Period, computed at the rate of
1/2 of 1% per annum on the average daily amount of the Available Revolving
Credit Commitment of such Lender during the period for which payment is made,
payable monthly in arrears on the last day of each month and on the last day of
the Revolving Credit Commitment Period, commencing on the first of such dates to
occur after the date hereof. The Lenders acknowledge receipt of such fees for
the period commencing on the Original Closing Date through April 30, 2001.
(b) The Borrowers jointly and severally agree to pay to the
Administrative Agent the fees in the amounts and on the dates previously agreed
to in writing by the Administrative Agent and the Borrowers.
2.9 Repayment of Loans, Evidence of Debt. (a) The Borrowers jointly and
severally hereby unconditionally promise to pay to the Administrative Agent for
the account of the appropriate Lender (i) the then unpaid principal amount of
each Revolving Credit Loan of such Revolving Credit Lender on the last day of
the Revolving Credit Commitment Period (or such earlier date on which the
Revolving Credit Loans become due and payable pursuant to Section 8), (ii) the
principal amount of the Tranche A Term Loans of such Tranche A Term Loan Lender,
in consecutive quarterly installments, according to the amortization schedule
set forth on Schedule 1.1D (or on such earlier date on which the then unpaid
principal amount of the Tranche A Term Loans become due and payable pursuant to
Section 8), and (iii) the principal amount of the Tranche B Term Loans of such
Tranche B Term Loan Lender, in consecutive quarterly installments, according to
the amortization schedule set forth on Schedule 1.1E (or on such earlier date on
which the then unpaid principal amount of such Tranche B Term Loans become due
and payable pursuant to Section 8). The Borrowers jointly and severally hereby
further agree to pay interest on the unpaid principal amount of the Loans from
time to time outstanding from the date hereof until payment in full thereof at
the rates per annum, and on the dates, set forth in Section 2.15.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrowers, shall
maintain the Register pursuant to Section 11.6(g), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Revolving Credit
Loan, Tranche A Term Loan and Tranche B Term Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrowers to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrowers and each Lender's share
thereof.
24
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.9(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrowers to repay (with applicable interest) the Loans made
to such Borrowers by such Lender in accordance with the terms of this Agreement.
(e) Each of the Borrowers agrees that, upon the request to the
Administrative Agent by any Lender, the Borrowers will execute and deliver to
such Lender (i) a promissory note of the Borrowers evidencing any Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A-1 with
appropriate insertions as to the date and principal amount (together with any
alternative note substantially in the form of Exhibit I-1 issued in lieu thereof
or in exchange therefor, a "Revolving Credit Note"), and/or (ii) a promissory
note of the Borrowers evidencing any Tranche A Term Loan of such Lender,
substantially in the form of Exhibit A-2 with appropriate insertions as to date
and principal amount (together with any alternative more substantially in the
form of Exhibit I-2 issued in lieu thereof or in exchange therefor, a "Tranche A
Term Note") and/or (iii) a promissory note of the Borrowers evidencing any
Tranche B Term Loans of such Lender, substantially in the form of Exhibit A-3
with appropriate insertions as to date and principal amount (together with any
alternative note substantially in the form of Exhibit I-3 issued in lieu thereof
or in exchange therefor, a "Tranche B Term Note") and/or (iv) in the case of a
request by the Swing Line Lender, a promissory note of the Borrowers evidencing
any Swing Line Loans of the Swing Line Lender, substantially in the form of
Exhibit A-4 with appropriate insertions as to the date and principal amount (a
"Swing Line Note").
2.10 Termination or Reduction of Revolving Credit Commitments. The
Designated Borrower shall have the right, upon not less than three Business
Days' notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction of Revolving Credit
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans and Swing Line Loans made on the
effective date thereof, the sum of the Aggregate Outstanding Revolving
Extensions of Credit of all Revolving Credit Lenders would exceed the Revolving
Credit Commitments then in effect. Any such reduction shall be in an amount
equal to $500,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Credit Commitments then in effect.
2.11 Optional Prepayments. The Borrowers may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon at
least three Business Days' irrevocable notice to the Administrative Agent by the
Designated Borrower, specifying the date and amount of prepayment and whether
the prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to each, provided, that
if a Eurodollar Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrowers shall also pay any amounts
owing pursuant to Section 2.22. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments of the Term Loans shall be applied first to
the Tranche B Term Loans until paid in full and then to the Tranche A Term Loans
until paid in full, all such payments to be applied to installments of principal
in inverse order of scheduled maturity.
25
Notwithstanding the foregoing, so long as any Tranche A Term Loans are
outstanding, each Tranche B Term Loan Lender shall have the right to refuse all
or any portion of any prepayment pursuant to this Section 2.11 allocable to such
Lender's Tranche B Term Loans, and the amount so refused shall be applied to
prepay the Tranche A Term Loans in accordance with the preceding sentence.
Amounts prepaid on account of the Term Loans may not be reborrowed. Partial
prepayments of Term Loans and Revolving Credit Loans shall be in an aggregate
principal amount of $500,000 or a whole multiple thereof. Partial prepayments of
Swing Line Loans shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof."
2.12 Mandatory Prepayments and Commitment Reductions. (a) If any class of
equity or debt securities or instruments of the Parent, the Borrowers or any of
their Subsidiaries shall be issued or sold or the Parent, the Borrowers or any
of their Subsidiaries shall incur or permit the incurrence of loans (except (i)
any Capital Stock issued pursuant to the Recapitalization or to an employee of a
Borrower in connection with a Guarantee Obligation or a loan or advance
permitted by Sections 7.4(e) or 7.9(c)(ii), respectively, (ii) any debt
securities or instruments issued or loans incurred in accordance with Section
7.2 and (iii) so long as such equity investment is not for the purpose of and
does not have the effect of curing a Default or Event of Default, any Person who
owns Capital Stock in the Parent, the Borrowers or any of their Subsidiaries on
the date hereof (subsequent to the Recapitalization) may make a one-time equity
investment in the Parent, which the Parent shall invest in the equity of the
Borrowers, in the aggregate amount of up to $5,000,000), an amount equal to 100%
of the Net Cash Proceeds thereof shall be applied on the date of such issuance
or incurrence toward the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in paragraph (e) of this Section 2.12.
(b) If on any date the Parent, the Borrowers or any of their
Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or from any
Recovery Event (other than, if no Event of Default shall have occurred and be
continuing, to the extent that such Net Cash Proceeds are to be used to restore
or replace the assets in respect of which such Recovery Event occurred within
twelve months from the date of such Recovery Event, as certified by a
Responsible Officer of the Designated Borrower pursuant to a Reinvestment
Notice), such Net Cash Proceeds shall be applied on such date toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in paragraph (e) of this Section 2.12; provided, that,
notwithstanding the foregoing, on each Reinvestment Prepayment Date, an amount
equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments as set forth in paragraph (e)
of this Section 2.12.
(c) If, for any fiscal year of the Borrowers ending after the
Original Closing Date, there shall be Excess Cash Flow, the Borrowers shall, on
the relevant Excess Cash Flow Application Date, apply toward the prepayment of
the Term Loans and the reduction of the Revolving Credit Commitments as set
forth in paragraph (e) of this Section 2.12 a percentage of such Excess Cash
Flow equal to 75%. Each such prepayment and commitment reduction shall be made
on a date (an "Excess Cash Flow Application Date"') no later than five days
after the earlier of (i) the date on which the financial statements of the
Borrowers referred to in Section 6.1(a), for the fiscal year with respect to
which such prepayment is made, are required to be delivered to the Lenders and
(ii) the date such financial statements are actually delivered.
26
(d) Daily, upon the request of the Administrative Agent at any time,
whether or not an Event of Default exists, the Borrowers shall deliver or cause
to be delivered to the Administrative Agent (or as the Administrative Agent may
direct) all cash receipts from the sale of inventory and other assets, all
collections of accounts and other cash payments received by the Borrowers from
any Person or from any source or on account of any sale or other transaction or
event. Except as otherwise provided in this Section 2.12, all such amounts so
delivered to the Administrative Agent or its designee shall be applied in
reduction of the outstanding Revolving Credit Loans and, subject to the terms of
this Agreement, may be reborrowed.
(e) Except as provided in Section 2.12(d) hereof, amounts to be
applied in connection with prepayments and Commitment reductions made pursuant
to this Section 2.12 shall be applied, first, to the prepayment of the Term
Loans and, second, to reduce permanently the Revolving Credit Commitments. Any
such reduction of the Revolving Credit Commitments shall be accompanied by
prepayment of the Revolving Credit Loans and/or Swing Line Loans to the extent,
if any, that the sum of the Aggregate Outstanding Revolving Extensions of Credit
of all Revolving Credit Lenders exceeds the amount of the aggregate Revolving
Credit Commitments as so reduced, provided that if the aggregate principal
amount of Revolving Credit Loans and Swing Line Loans then outstanding is less
than the amount of such excess (because L/C Obligations constitute a portion
thereof), the Borrowers shall, to the extent of the balance of such excess,
replace outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions satisfactory to the Administrative Agent.
The application of any prepayment pursuant to this Section 2.12 shall be made,
within each category of Loans to be prepaid as provided above, first to Base
Rate Loans and second to Eurodollar Loans. Each prepayment of the Loans under
this Section 2.12 shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid. All prepayments of the Term Loans pursuant to
this Section 2.12 shall be applied first to the Tranche B Term Loans until paid
in full and then to the Tranche A Term Loans until paid in full, all such
payments to be applied to installments of principal in inverse order of
scheduled maturity. Notwithstanding the foregoing, so long as any Tranche A Term
Loans are outstanding, each Tranche B Term Loan Lender shall have the right to
refuse all or any portion of any prepayment pursuant to this Section 2.12
allocable to such Lender's Tranche B Term Loans and the amount so refused shall
be applied first pro rata to prepay the Tranche A Term Loans and second to
reduce permanently the Revolving Credit Commitments as provided above. Amounts
prepaid on account of the Term Loans may not be reborrowed.
2.13 Conversion and Continuation Options. (a) The Borrowers may elect from
time to time to convert Eurodollar Loans to Base Rate Loans by the Designated
Borrower giving the Administrative Agent at least two Business Days' prior
irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrowers may elect from time to time to convert Base Rate
Loans to Eurodollar Loans by the Designated Borrower giving the Administrative
Agent at least three Business Days' prior irrevocable notice of such election.
Any such notice of conversion to Eurodollar Loans shall specify the length of
the initial Interest Period therefor. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each Lender thereof. All or any part
of outstanding Eurodollar Loans and Base Rate Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a Eurodollar Loan when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Required Lenders have determined in its or their sole discretion not
to permit such a
27
conversion and (ii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to (i) the Revolving Credit Termination Date, with
respect to the Tranche A Loans and (ii) the Tranche B Termination Date, with
respect to the Tranche B Term Loans.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Designated Borrower giving irrevocable notice to the Administrative Agent, in
accordance with the applicable provisions of the term "Interest Period" set
forth in Section 1. 1, of the length of the next Interest Period to be
applicable to such Loans, provided that no Eurodollar Loan may be continued as
such (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined in its or their
sole discretion not to permit such a continuation or (ii) after the date that is
one month prior to (A) the Revolving Credit Termination Date, with respect to
the Tranche A Loans or (B) the Tranche B Termination Date, with respect to the
Tranche B Term Loans, and provided, further, that if the Designated Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period.
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the Loans comprising each Eurodollar Tranche shall
be equal to $2,500,000 or a whole multiple of $1,000,000 in excess thereof, (b)
no more than two Eurodollar Tranches in respect of the Revolving Credit Loans
shall be outstanding at any one time and (c) no more than seven Eurodollar
Tranches in respect of all Loans (including the Revolving Credit Loans) shall be
outstanding at any one time.
2.15 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan or
Reimbursement Obligations, (ii) any interest payable thereon, (iii) any
commitment fee or (iv) any other amount payable hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), the
principal of the Loans and Reimbursement Obligations and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% and (y) in the case of Reimbursement Obligations, and any
overdue interest, commitment fee or other amount, the rate applicable to Tranche
A Loans which are Base Rate Loans plus 2%, in each case from the date of such
non-payment unfit such overdue principal, interest, commitment fee or other
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c,) of this Section
2.15 shall be payable from time to time on demand.
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(e) Additional Interest shall be payable on the date that the
Obligations become due and payable in full (whether by acceleration or
otherwise), which payment shall be allocated to the Lenders pro rata based upon
the weighted outstanding loan balances due to each of them from the date hereof
through June 30, 2002.
2.16 Computation of Interest and Fees. (a) Interest on Loans and
Reimbursement Obligations, commitment fees, letter of credit commissions and
interest on overdue interest, commitment fees and other amounts payable
hereunder shall be calculated on the basis of a 360-day year for the actual days
elapsed, except that, with respect to Base Rate Loans the rate of interest on
which is calculated on the basis of the Prime Rate, the interest thereon shall
be calculated on the basis of a 365- (or 366-, as the case may be) day year for
the actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Designated Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Designated Borrower and the Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Designated Borrower, deliver
to the Designated Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.15(a).
2.17 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost
to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Designated Borrower and the Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no
29
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrowers have the right to convert Loans to Eurodollar Loans.
2.18 Pro Rata Treatment and Payments, Use of Proceeds. (a) Each borrowing
by the Borrowers from the Lenders hereunder, each payment by the Borrowers on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Tranche A Term Loan
Percentages, Tranche B Term Loan Percentages, or Revolving Credit Percentages as
the case may be, of the relevant Lenders. Except as provided in Section 2.11 and
2.12, each payment (including each prepayment) by the Borrowers on account of
principal of and interest on the Term Loans shall be made pro rata according to
the respective outstanding principal amounts of the Term Loans then held by the
Term Loan Lenders (or, in the case of installment payments made pursuant to
Section 2.9 or payments of accrued interest in respect thereof, the affected
Term Loans then held by the relevant Term Loan Lenders). Each payment (including
each prepayment) by the Borrowers on account of principal of and interest on the
Revolving Credit Loans shall be made pro rata according to the respective
outstanding principal amounts of the Revolving Credit Loans then held by the
Revolving Credit Lenders. All payments (including prepayments) to be made by the
Borrowers hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 12:00 Noon, New York City time, on the due date thereof
to the Administrative Agent, for the account of the Lenders, at the
Administrative Agent's office specified in Section 11.2, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received,
provided that payments received by the Administrative Agent pursuant to Section
2.12(d) shall be settled weekly (or more frequently in the Administrative
Agent's discretion). If any payment hereunder (other than payments on the
Eurodollar Loans) becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day. If any
payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day. In the case of any extension of any payment
of principal pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.18(b) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount
30
with interest thereon at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrowers.
(c) The Borrowers shall use the proceeds of the Loans only in the
manner expressly contemplated by Section 4.16.
2.19 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrowers shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.22.
2.20 Requirements of Law. (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 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, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 2.21 and changes in the rate of tax
on the overall net income of such Lender);
(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 Eurodollar 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 Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrowers 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
to claim any additional amounts pursuant to this Section 2.20, it shall promptly
notify the Designated Borrower (with a copy to the Administrative Agent) of the
event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application
31
thereof or compliance by such Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof 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 or in respect of 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 the
Designated Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Designated Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Designated Borrower
(with a copy to the Administrative Agent) of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable pursuant
to this Section 2.20 submitted by any Lender to the Designated Borrower (with a
copy to the Administrative Agent) shall be conclusive in the absence of manifest
error. The obligations of the Borrowers pursuant to this Section 2.20 shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
2.21 Taxes. (a) All payments made by the Borrowers under this Agreement
and the Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (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 or any other Loan Document). If any
such non-excluded taxes, levies, imposts, duties, charges, fee deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under the Notes,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes, provided, however, that the Borrowers shall make
payments net of and after deduction for Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Lender if, (i) at the time
such Lender becomes a party to this Agreement such Lender fails to establish a
complete exemption from such withholding, or (ii) such Lender fails to comply
with its obligations under subsection 2.21(b) on an ongoing basis. Whenever any
Non-Excluded Taxes are payable by the Borrowers, as promptly as possible
thereafter the Designated Borrower shall send to the Administrative Agent for
its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Borrowers showing
payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Administrative Agent
the required receipts or other required documentary evidence, the
32
Borrowers shall indemnify the Administrative Agent and the Lenders for any
incremental Non-Excluded Taxes and related interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.21 shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder.
(b) Each Lender (or Transferee) that is not a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States, or any estate or trust that
is subject to federal income taxation regardless of the source of its income (a
"Non-U.S. Lender") shall deliver to the Designated Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) two copies of either U.S.
Internal Revenue Service Form 1001 or Form 4224, or any subsequent versions
thereof or successors thereto or, in the case of a Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8 claiming the payments constitute "portfolio interest", an
annual certificate representing that such Non-U.S. Lender is not a "bank" (or
other prohibited recipient, as may be defined in the Code or regulations
promulgated under the Code for purposes of Section 881(c) of the Code, is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code)
of any Borrower and is not a controlled foreign corporation related to the
Borrowers (within the meaning of Section 864(d)(4) of the Code) (such Sections
to include any successor Sections covering similar items)), properly completed
and duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrowers
under this Agreement and the other Loan Documents. Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Designated Borrower at any time it determines that it
is no longer in a position to provide any previously delivered certificate to
the Borrowers (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
Section 2.21(b), a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.21(b) that such Non-U.S. Lender is not legally able
to deliver.
2.22 Indemnity. The Borrowers agree 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 (a) default by the Borrowers in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Designated
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrowers in making any
prepayment after the Designated Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however,
33
the Applicable Margin included therein, if any) over (ii) the amount of interest
(as reasonably determined by such Lender) which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section 2.22 submitted to the Designated
Borrower by any Lender shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
2.23 Change of Lending Office. Each Lender (or Transferee) agrees that,
upon the occurrence of any event giving rise to the operation of Section 2.19,
2.20(a) or 2.21 with respect to such Lender (or Transferee), it will, if
requested by the Designated Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender (or Transferee)) to designate another
lending office for any Loans affected by such event with the object of avoiding
the consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no material economic, legal or regulatory disadvantage, and
provided, further, that nothing in this Section 2.23 shall affect or postpone
any of the obligations of any Borrowers or the rights of any Lender (or
Transferee) pursuant to Section 2.19, 2.20(a) or 2.21.
2.24 Right of Contribution. Each Borrower hereby agrees that to the extent
a Borrower shall have paid more than its proportionate share of any payment made
hereunder, such Borrower shall be entitled to seek and receive contribution from
and against any other Borrower hereunder who has not paid its proportionate
share of such payment; provided however such Borrower shall not seek any such
contribution from any other Borrower until all Obligations have been paid in
full and all Commitments of the Lenders hereunder have been terminated. The
provisions of this Section 2.24 shall in no respect limit the obligations and
liabilities of any Borrower to the Administrative Agent and the Lenders, and
each Borrower shall remain liable to the Administrative Agent and the Lenders
for the full amount of its obligations hereunder.
2.25 Swing Line Commitment. Subject to the terms and conditions hereof,
Fleet National Bank (in such capacity, the "Swing Line Lender") agrees to make a
portion of the credit otherwise available to the Borrowers under the Revolving
Credit Lenders' Revolving Credit Commitments from time to time during the
Revolving Credit Commitment Period by making swing line loans ("Swing Line
Loans") to the Borrowers in an aggregate principal amount not to exceed at any
one time outstanding the Swing Line Commitment; provided that (a) the aggregate
principal amount of Swing Line Loans outstanding at any time shall not exceed
the Swing Line Commitment then in effect (notwithstanding that the Swing Line
Loans outstanding at any time, when aggregated with the Swing Line Lender's
other outstanding Loans hereunder, may exceed the Swing Line Commitment then in
effect) and (b) the Designated Borrower shall not request, and the Swing Line
Lender shall not make, any Swing Line Loan if, after giving effect to the making
of such Swing Line Loan, the aggregate amount of the Available Revolving Credit
Commitments would be less than zero. During the Revolving Credit Commitment
Period, the Borrowers may use the Swing Line Commitment by borrowing, repaying
and reborrowing, all in accordance with the terms and conditions hereof.
34
Swing Line Loans shall be Base Rate Loans only. The Borrower shall repay all
outstanding Swing Line Loans on the last day of the Revolving Credit Commitment
Period.
2.26 Procedure for Swing Line Borrowing. Whenever the Designated Borrower
desires that the Swing Line Lender make Swing Line Loans under Section 2.25 it
shall give the Swing Line Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swing Line
Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing
Date), specifying (a) the amount to be borrowed, (b) the requested Borrowing
Date (which shall be a Business Day during the Revolving Credit Commitment
Period) and (c) the identity of the Borrower or Borrowers to which the proceeds
of the Swing Line Loans should be made available. Each borrowing under the Swing
Line Commitment shall be in an amount equal to $100,000 or a whole multiple
thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date
specified in the notice in respect of Swing Line Loans, the Swing Line Lender
shall make available to the Administrative Agent at its office specified in
Section 11.2 an amount in immediately available funds equal to the amount of the
Swing Line Loan to be made by the Swing Line Lender. The Administrative Agent
shall make the proceeds of such Swing Line Loan available to the appropriate
Borrower on such Borrowing Date in accordance with the instructions of the
Designated Borrower in like funds as received by the Administrative Agent.
2.27 Refunded Swing, Line Loans; Swing, Line Loan Participations. (a) The
Swing Line Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrowers (which hereby irrevocably direct the
Swing Line Lender to act on their behalf), on one Business Day's notice given by
the Swing Line Lender no later than 10:00 A.M., New York City time, request each
Revolving Credit Lender to make, and each Revolving Credit Lender hereby agrees
to make, a Revolving Credit Loan, in an amount equal to such Revolving Credit
Lender's Revolving Credit Percentage of the aggregate amount of the Swing Line
Loans (the "Refunded Swing Line Loans") outstanding on the date of such notice,
to repay the Swing Line Lender. Unless any of the events described in Section
8(f) shall have occurred and be continuing (in which case the procedures of
Section 2.27(c) shall apply), each Revolving Credit Lender shall make the amount
of such Revolving Credit Loan available to the Administrative Agent at its
office set forth in Section 11.2 in immediately available funds, not later than
10:00 A.M., New York City time, one Business Day after the date of such notice.
The proceeds of such Revolving Credit Loans shall be immediately applied by the
Swing Line Lender to repay the Refunded Swing Line Loans. Effective on the day
such Revolving Credit Loans are made, the portion of the Swing Line Loans so
paid shall no longer be outstanding as Swing Line Loans and shall be due as
Revolving Credit Loans in accordance with their respective Revolving Credit
Percentages. The Borrowers irrevocably authorize the Swing Line Lender to charge
the Borrowers' accounts with the Administrative Agent (up to the amount
available in each such account) to immediately pay the amount of such Refunded
Swing Line Loans to the extent amounts received from the Revolving Credit
Lenders are not sufficient to repay in full such Refunded Swing Line Loans.
(b) The making of any Swing Line Loan hereunder shall be subject to
the satisfaction of the applicable conditions precedent thereto set forth in
Section 5 (unless otherwise waived in accordance with Section 11.1). The Swing
Line Lender shall notify the Designated Borrower of its election not to make
Swing Line Loans hereunder as a result of the
35
failure to satisfy such conditions precedent, unless an Event of Default of the
type specified in Section 8(f) shall have occurred and be continuing.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.27(a), one of the events described in
Section 8(f) shall have occurred and be continuing, each Revolving Credit Lender
shall, on the date such Revolving Credit Loan was to have been made pursuant to
the notice referred to in Section 2.27(a) (the "Refunding Date"), purchase an
undivided participating interest in an amount equal to (i) its Revolving Credit
Percentage times (ii) the aggregate principal amount of Swing Line Loans then
outstanding which were to have been repaid with such Revolving Credit Loans (the
"Swing Line Participation Amount"). On the Refunding Date, each Revolving Credit
Lender shall transfer to the Swing Line Lender, in immediately available funds,
such Lender's Swing Line Participation Amount and upon receipt thereof the Swing
Line Lender shall deliver to such Lender a Swing Line Loan Participation
Certificate dated the date of the Swing Line Lender's receipt of such funds and
in such Swing Line Participation Amount.
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.27(a) and to purchase participating interests pursuant
to Section 2.27(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrowers may have against the Swing Line Lender, the Borrowers or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrowers; (iv) any breach of this Agreement or
any other Loan Document by the Borrowers, any other Loan Party or any other
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("Letters
of Credit") for the account of the Borrowers on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
aggregate amount of the aggregate Available Revolving Credit Commitments would
be less than zero. Each Letter of Credit shall (i) be denominated in Dollars,
(ii) be either (x) a standby letter of credit issued to support (A)
36
obligations of the Borrowers or any of their Subsidiaries, contingent or
otherwise, which finance the working capital and business needs of the Borrowers
or their Subsidiaries or (B) performance obligations of the Borrowers and their
Subsidiaries, in each case, incurred in the ordinary course of business (a
"Standby Letter of Credit"), or (y) a commercial letter of credit in respect of
the purchase of goods or services by the Borrowers or any of their Subsidiaries
in the ordinary course of business (a "Commercial Letter of Credit"), (iii)
expire no later than five Business Days prior to the Revolving Credit
Termination Date and (iv) expire no later than 365 days after its date of
issuance, provided that any Letter of Credit with a 365-day duration may provide
for the renewal thereof at the election of the Designated Borrower (in
accordance with procedures to be established by the Issuing Lender) for
additional 365-day periods (which shall not expire later than the Revolving
Credit Termination Date).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the Commonwealth of
Massachusetts.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Designated Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Designated Borrower. The Issuing Lender shall furnish a
copy of such Letter of Credit to the Designated Borrower promptly following the
issuance thereof. The Issuing Lender shall promptly furnish to the
Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Standby Letter of Credit (including the amount
thereof). On each L/C Fee Payment Date, the Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the aggregate face amount of the Commercial Letters of Credit
outstanding on such date.
3.3 Fees, Commissions and Other Charges. (a) The Borrowers jointly and
severally agree that they will pay a commission on all outstanding Standby
Letters of Credit at the rate of 3-1/2% per annum of the face amount of each
such Letter of Credit, of which 1/4 of 1% per annum will be a fronting fee for
the account of the Issuing Lender, and the remainder will be shared ratably
among the Revolving Credit Lenders in accordance with their Revolving Credit
Percentage, payable monthly in arrears on each L/C Fee Payment Date after the
issuance date. The Borrowers jointly and severally agree that they will pay a
commission on all outstanding Commercial Letters of Credit at the rate of 3-1/2%
per annum of the average daily face amount
37
of such Letters of Credit during the period for which such payment is made, of
which 1/4 of 1% per annum will be a fronting fee for the account of the Issuing
Lender, and the remainder will be shared ratably among the Revolving Credit
Lenders in accordance with the Revolving Credit Percentage, payable monthly in
arrears on each L/C Fee Payment Date.
(b) In addition to the foregoing fees and commissions, the Borrowers
jointly and severally agree that they shall pay or reimburse the Issuing Lender
for such normal and customary costs and expenses as are incurred or charged by
the Issuing Lender in issuing, negotiating, effecting payment under, amending or
otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this Section.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's Revolving
Credit Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrowers
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Credit
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans hereunder. A certificate of the Issuing Lender
submitted to any L/C Participant with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Designated Borrower or otherwise, including
38
proceeds of collateral applied thereto by the Issuing Lender), or any payment of
interest on account thereof, the Issuing Lender will distribute to such L/C
Participant its pro rata share thereof, provided, however that in the event that
any such payment received by the Issuing Lender shall be required to be returned
by the Issuing Lender, such L/C Participant shall return to the Issuing Lender
the portion thereof previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrowers. The Borrowers jointly and
severally agree to reimburse the Issuing Lender on each date on which the
Issuing Lender notifies the Designated Borrower of the date and amount of a
draft presented under any Letter of Credit and paid by the Issuing Lender for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with such
payment. Each such payment shall be made to the Issuing Lender at its address
for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrowers under this Section from the date such amounts
become payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate set forth in Section 2.15(c). Each drawing under any
Letter of Credit shall constitute a request by the Designated Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.6 of Base Rate Loans
(or, at the option of the Administrative Agent and the Swing Line Lender in
their sole discretion, a borrowing pursuant to Section 2.25 of Swing Line Loans)
in the amount of such drawing, the proceeds of such Loans to be applied to
reimburse such drawing. The Borrowing Date with respect to such borrowing shall
be the date of such drawing.
3.6 Obligations Absolute. The Borrowers' obligations under this Section 3
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrowers may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrowers jointly and severally also
agree with the Issuing Lender that the Issuing Lender shall not be responsible
for, and the Borrowers' Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among any Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of any Borrower against
any beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrowers jointly and severally agree that any action
taken or omitted by the Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards or care
specified in the Uniform Commercial Code of the Commonwealth of Massachusetts,
shall be binding on the Borrowers jointly and severally and shall not result in
any liability of the Issuing Lender to the Borrowers.
3.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Designated Borrower of the date
39
and amount thereof. The responsibility of the Issuing Lender to the Borrowers in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Parent and the Borrowers hereby jointly and severally represent and
warrant to the Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma combined balance
sheet of the Borrowers as at April 30, 1996 (including the notes thereto) (the
"Pro Forma Balance Sheet"), copies of which have heretofore been furnished to
each Lender, was prepared giving effect (as if such events had occurred on such
date) to (i) the Recapitalization, (ii) the borrowings under this Agreement made
on the Original Closing Date and the use of proceeds thereof, (iii) the
incurrence of the Subordinated Debt, (iv) the issuance of the Preferred Stock,
(v) the other transactions contemplated by the Recapitalization Agreement and
(vi) the payment of fees and expenses in connection with the foregoing. The Pro
Forma Balance Sheet has been prepared based on the best information available to
the Borrowers as of the date of delivery thereof, and presents fairly on a pro
forma basis the estimated combined financial position of the Borrowers as of
April 30, 1996, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The combined balance sheet of the Borrowers as at December 31,
2000 and the related combined statements of income and of cash flows for the
fiscal years ended on such dates, reported on by PriceWaterhouseCoopers LLP,
copies of which have heretofore been furnished to each Lender, are complete and
correct and present fairly the combined financial condition of the Borrowers as
at such dates, and the combined results of their operations and their combined
cash flows for the fiscal years then ended. The unaudited combined balance sheet
of the Borrowers as at May 5, 2001 and the related unaudited combined statements
of income and of cash flows for the three-month period ended on such date,
certified by a Responsible Officer of the Designated Borrower, copies of which
have heretofore been furnished to each Lender, are complete and correct and
present fairly the combined financial condition of the Borrowers as at such
date, and the combined results of their operations and their combined cash flows
for the three-month period then ended (subject to normal year-end audit
adjustments (including adjustments for inventory capitalization and
depreciation). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer of the Designated Borrower, as the case may
be, and as disclosed therein). None of the Borrowers had, at the date of the
most recent balance sheet referred to above, any undisclosed liabilities, any
material Guarantee Obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or
40
exchange transaction, which is not reflected in the foregoing statements or in
the notes thereto and not required to be disclosed by GAAP. During the period
from December 31, 2000 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrowers or any of their combined
Subsidiaries of any material part of their business or property and no purchase
or other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the combined financial condition of
the Borrowers at December 31, 2000.
4.2 No Change. (a) Since December 31, 2000, there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect, and (b) during the period from December 31, 2000 to and
including the date hereof no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Parent, the Borrowers or
any Subsidiary nor has any of the Capital Stock of the Parent, the Borrowers or
any Subsidiary been redeemed, retired, purchased or otherwise acquired for value
by the Parent, the Borrowers any or any of their Subsidiaries.
4.3 Corporate Existence, Compliance with Law. Each of the Parent, the
Borrowers and their Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the power and authority, and the legal right, to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently engaged, (c) is duly qualified and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each Loan
Party has the power and authority, and the legal right, to make, deliver and
perform each Loan Document to which it is a party and, in the case of the
Borrowers, to borrow hereunder. Each Loan Party has taken all necessary action
to authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrowers, to authorize the
borrowings on the terms and conditions of this Agreement and the Notes. No
material consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the Recapitalization, the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.19(b). Each Loan Document has been duly
executed and delivered on behalf of each Loan Party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party thereto, enforceable
against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
41
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or Contractual Obligation of the Parent, the Borrowers or of
any of their Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation (other than
the Liens created by the Security Documents).
4.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Parent or the Borrowers, threatened by or against the Parent,
the Borrowers or any of their Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Except for the defaults being waived as of the date
hereof, neither the Parent, the Borrowers nor any of their Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
Except for the defaults being waived as of the date hereof, no Default or Event
of Default has occurred and is continuing.
4.8 Ownership of Property, Liens. Each of the Parent, the Borrowers and
their Subsidiaries has title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in, all
its other property, and none of such property is subject to any Lien except as
permitted by Section 7.3. The Parent, the Borrowers and their Subsidiaries have
title in fee simple to no real property other than the Mortgaged Property.
4.9 Intellectual Property. The Parent, the Borrowers and each of their
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted, except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect
("Intellectual Property"). No material claim has been asserted and is pending by
any Person challenging or questioning the use of any Intellectual Property or
the validity or effectiveness of any Intellectual Property, nor does the Parent
or any of the Borrowers know of any valid basis for any such claim. The use of
Intellectual Property by the Parent, the Borrowers and their Subsidiaries does
not infringe on the rights of any Person in any material respect.
4.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Parent, the Borrowers or any of their Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.11 Taxes. Each of the Parent, the Borrowers and their Subsidiaries has
filed or caused to be filed all Federal, state and other material tax returns
which are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are
42
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 the Borrowers); no tax Lien has been filed, and, to the knowledge of
the Parent and the Borrowers, no claim is being asserted, with respect to any
such tax, fee, or other charge.
4.12 Federal Regulations. No part of the proceeds of any Loans will be
used for "Purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of the Board. If requested by any
Lender or the Administrative Agent, the Borrowers will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the Original Closing
Date, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither any Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan which has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither any Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
any Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the liability of the Borrowers and
each Commonly Controlled Entity for post retirement benefits to be provided to
their current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(l) of ERISA) does not, in the aggregate, exceed the
assets under all such Plans allocable to such benefits by an amount in excess of
$50,000.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Federal or State statute or regulation
(other than Regulation X of the Board) which limits its ability to incur
Indebtedness.
4.15 Subsidiaries. The Borrowers listed on Schedule 1.1A, as the same may
be amended from time to time with consent of the Administrative Agent,
constitute all of the direct or indirect Subsidiaries of the Parent.
43
4.16 Purpose of Loans; Limitations on Use. The proceeds of the Term Loans
were initially used to finance the Recapitalization and to pay related fees and
expenses. The proceeds of Tranche B Term Loan shall be used to refinance the
term loans under the Existing Agreement (other than the Tranche A Term Loans).
The Revolving Credit Loans shall be used to finance the working capital needs of
the Borrowers and their Subsidiaries (provided that the proceeds of the
Revolving Credit Loans may not be utilized to prepay the principal balance of
the Term Loans) and to pay regularly scheduled Tranche B Term Loan payments,
provided that the Borrowers may use the proceeds of the Revolving Credit Loans
to make the December 31, 2001 Tranche B Term Loan principal payment only if and
to the extent that, after giving effect to such borrowing as a Revolving Credit
Loan, the aggregate principal balance of all Revolving Credit Loans does not
exceed $15,000,000.00, and, after making such principal payment on account of
the Tranche B Term Loan, the aggregate principal balance of all Revolving Credit
Loans may not thereafter exceed $15,000,000.00 through January 30, 2002.
4.17 Environmental Matters.
(a) The Properties do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law, except in either
case insofar as such violation or liability, or any aggregation thereof, could
not reasonably be expected to result in the payment of a Material Environmental
Amount.
(b) The Properties and all operations at the Properties are in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by the
Parent, the Borrowers or any of their Subsidiaries (the "Business") which could
reasonably be expected to materially interfere with the continued operation of
the Properties or materially impair the fair saleable value thereof. Neither the
Parent, the Borrowers nor any of their Subsidiaries has assumed any liability of
any other Person under Environmental Laws.
(c) Neither the Parent, the Borrowers nor any of their Subsidiaries
has received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the Business, nor does the Parent, the Borrowers or any of their Subsidiaries
have knowledge or reason to believe that any such notice will be received or is
being threatened, except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that could reasonably
be expected to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law, except insofar as any such violation or liability
referred to
44
in this paragraph, or any aggregation thereof, could not reasonably be expected
to result in the payment of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Parent, the Borrowers or any of their
Subsidiaries, threatened, under any Environmental Law to which the Parent, the
Borrowers or any of their Subsidiaries is or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business, except insofar as such
proceeding, action, decree, order or other requirement, or any aggregation
thereof, could not reasonably be expected to result in the payment of a Material
Adverse Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Parent, the Borrowers or any of their Subsidiaries in
connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws, except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, could not reasonably
be expected to result in the payment of a Material Environmental Amount.
4.18 Accuracy of Information. No statement or information contained in
this Agreement, any other Loan Document, the Confidential Information Memorandum
or any other document, certificate or statement furnished to the Administrative
Agent or the Lenders, by or on behalf of any Loan Party for use in connection
with the transactions contemplated by the Existing Agreement, this Agreement or
the other Loan Documents, contained as of the date such statement, information,
document or certificate was so furnished any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
contained herein or therein not misleading. The projections and pro forma
financial information contained in the materials referenced above are based upon
good faith estimates and assumptions believed by management of the Parent, the
Borrowers and their Subsidiaries 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. There is no fact known
to the Parent, the Borrowers or any of their Subsidiaries that could reasonably
be expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents, or in such other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.19 Security Documents. (a) Each of the Pledge Agreements is effective to
create in favor of the Administrative Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Stock described
therein and proceeds thereof and, when the stock certificates representing the
Pledged Stock described therein are delivered to the Administrative Agent, each
such Pledge Agreement shall constitute a fully perfected first priority Lien on,
and security interest in, all right, title and interest of the relevant pledgor
in
45
such Pledged Stock and the proceeds thereof, as security for the Obligations (as
defined in the relevant Pledge Agreement), in each case prior and superior in
right to any other Person.
(b) The Borrowers Security Agreement is effective to create in favor
of the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof, and when financing statements in appropriate form are filed in the
offices specified on Schedule 4.19(b), the Borrowers Security Agreement
constitutes a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Borrowers Security
Agreement), in each case prior and superior in right to any other Person, other
than with respect to Liens expressly permitted by Section 7.3.
(c) Each Mortgage is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Property described therein and proceeds
thereof, and each Mortgage constitutes a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the Mortgaged
Property and the proceeds thereof, as security for the Obligations (as defined
in the relevant Mortgage), in each case prior and superior in right to any other
Person, other than with respect to Liens expressly permitted by Section 7.3.
4.20 Solvency. The Borrowers and their Subsidiaries, on a consolidated
basis, are and after giving effect to the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and will
continue to be, taking into account the provisions of Section 2.24, Solvent.
4.21 Purchase Agreement Representations and Warranties. On the Original
Closing Date, each of the representations and warranties of the Borrowers set
forth in Article VI of the Purchase Agreement are true and correct in all
material respects.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it was
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Original Closing Date, of the following conditions
precedent, each of which was satisfied or waived on the Original Closing Date:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Parent and each of the Borrowers, with a counterpart for each Lender, (ii)
for the account of any Lender requesting Notes in accordance with Section
2.9(e), Notes conforming to the requirements hereof and executed and
delivered by a duly authorized officer of the Borrowers, (iii) each of the
Pledge Agreements, each executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for
each Lender, (iv) the Borrowers Security Agreement, executed and delivered
by a duly authorized officer of each Borrower, with a counterpart or a
conformed copy for each Lender, (v) (except as provided in subsection
6.12) each of the Assignments of Insurance,
46
each executed and delivered by a duly authorized officer of each party
thereto, with a counterpart or a conformed copy for each Lender, and (vi)
each Mortgage, executed and delivered by a duly authorized officer of each
party thereto, with a counterpart for each Lender.
(b) Related Agreements. The Administrative Agent shall have
received, in form and substance satisfactory to it, with a copy for each
Lender, true and correct copies, certified as to authenticity by the
Designated Borrower, of (i) the Recapitalization Agreement and any of the
other Recapitalization Documents reasonably requested by the
Administrative Agent (ii) the Management Contracts, (iii) the Shareholders
Agreement, (iv) the Certificate of Designations for each series of the
Preferred Stock, (v) the Registration Rights Agreement (vi) the Purchase
Agreement, (vii) the limited liability company agreement for the Parent,
and (viii) the Subordination Agreement. Except as provided in subsection
6.12, the Administrative Agent shall have received (in a form reasonably
satisfactory to the Administrative Agent), with a copy for each Lender,
true and correct copies, certified as to authenticity by the Designated
Borrower, of the Insurance Policies (or certificates evidencing the
effectiveness of such Insurance Policies and the material terms thereof)
and such other documents or instruments as may be reasonably requested by
the Administrative Agent, including, without limitation, a copy of any
other debt instrument, security agreement or other material contract to
which any Borrower may be a party.
(c) Recapitalization. On or prior to the Original Closing Date, the
Recapitalization shall have been consummated for an aggregate purchase
price not exceeding $125,000,000 (which amount may be increased or
decreased in accordance with certain purchase price adjustments described
in section 4.3 of the Recapitalization Agreement, including all fees,
costs, and expenses incurred in connection therewith, pursuant to the
Recapitalization Documents, any conditions precedent set forth in the
Recapitalization Agreement shall have been satisfied or waived, and no
material provision of the Recapitalization Documents shall have been
amended, supplemented, waived or otherwise modified without the prior
written consent of the Lenders.
(d) Capitalization; Capital Structure. The Borrowers shall have
received (i) at least $30,780,000 from the issuance of the Series A
Preferred, (ii) at least $20,000,000 from the issuance of the Subordinated
Debt pursuant to the Purchase Agreement and (iii) at least $14,200,000 and
at least $20,000,000 from the issuance of the Series B Preferred and the
Series C Preferred, respectively, to the Individual Shareholders. The
capital structure of the Parent, the Borrowers and each of their
Subsidiaries after the Recapitalization shall be satisfactory to the
Lenders in all respects.
(e) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, which Pro Forma Balance
Sheet shall be in form and substance satisfactory to the Lenders and (ii)
satisfactory unaudited interim combined financial statements of the
Borrowers for each fiscal month of the Borrowers ended in the 1996 fiscal
year of the Borrowers as to which such financial statements are available
prior to the Original Closing Date and such financial statements shall not
reflect
47
any material adverse change in the combined financial condition of the
Borrowers as reflected in the financial statements previously delivered to
the Lenders.
(f) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary or advisable in connection with
the Recapitalization, the transactions contemplated hereby and the
continuing operations of the Borrowers shall have been obtained and be in
full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse
conditions on the Recapitalization, the financing thereof, the financing
contemplated hereby or the continuing operations of the Borrowers.
Notwithstanding the foregoing requirement with respect to third party
approvals, the Borrowers shall not be required to have obtained landlords'
waivers in form and substance satisfactory to the Administrative Agent
relating to the Lender's security interest in the Borrower's assets for
more than 20% of the Borrowers' leases on the Original Closing Date.
(g) Business Plan. The Lenders shall have received a satisfactory
detailed business plan of the Borrowers for fiscal years 1996 - 2002 and a
satisfactory written analysis of the business and prospects of the
Borrowers for the period from the Original Closing Date through the final
maturity of the Term Loans.
(h) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the relevant jurisdictions
where assets of the Borrowers are located, and such search shall reveal no
liens on any of the assets of the Borrowers except for liens permitted by
Section 7.3 or liens to be discharged on or prior to the Original Closing
Date pursuant to documentation satisfactory to the Administrative Agent.
(i) Expenses. The expenses incurred in connection with the
Recapitalization and the financing thereof shall not exceed $7,000,000 in
the aggregate.
(j) Valuation of Inventory. The Lenders shall have received copies
of a valuation, prepared by a firm satisfactory to the Administrative
Agent and in form and substance satisfactory to the Administrative Agent,
of the inventory of the Borrowers.
(k) Management. The Lenders shall be satisfied that senior managers
acceptable to them shall be available to manage the Borrowers.
(l) Working Capital. The Lenders shall be satisfied with the
sufficiency of amounts available to the Borrowers pursuant to the
aggregate Revolving Credit Commitments to meet the ongoing working capital
needs of the Borrowers following the Recapitalization and the consummation
of the other transactions contemplated hereby.
(m) Officers. The Lenders shall be satisfied with the results of an
independent background investigation concerning certain key officers,
directors and managers of the Borrowers.
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(n) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party (other than the Individual Shareholders), dated the Original Closing
Date, substantially in the form of Exhibit G, with appropriate insertions
and attachments, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Loan Party.
(o) Corporate Proceedings of Loan Parties. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions of the Board of Directors of each Loan Party authorizing (i)
the execution, delivery and performance of the Loan Documents to which it
is a party, and (ii) in the case of the Borrowers, the borrowings
contemplated hereunder.
(p) Fees. The Administrative Agent shall have received all fees,
expenses and other consideration required to be paid on or before the
Original Closing Date.
(q) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Pepper Hamilton LLP, counsel
to the Parent, substantially in the form of Exhibit H-1;
(ii) the executed legal opinion of Baker, Donelson, Bearman &
Caldwell, counsel of the Borrowers and the other Loan Parties,
substantially in the form of Exhibit H-2; and
(iii) the executed legal opinion of Simpson Thacher &
Bartlett, in form and substance satisfactory to the Administrative
Agent;
Each such legal opinion shall be in form and substance satisfactory to the
Lenders and shall cover such matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably
require.
(r) Pledged Stock; Stock Powers. The Administrative Agent shall have
received the certificates representing the shares pledged pursuant to each
of the Pledge Agreements, together with an undated stock power for each
such certificate executed in blank by a duty authorized officer of the
pledgor thereof.
(s) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested.
49
(t) Surveys. The Administrative Agent shall have received, and the
title insurance company issuing the policy referred to in Section 5.1(u)
(the "Title Insurance Company") shall have received, maps or plats of an
as-built survey of the sites of the property covered by each Mortgage
certified to the Administrative Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the surveys
on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (i) the locations on such sites of
all the buildings, structures and other improvements and the established
building setback lines; (ii) the lines of streets abutting the sites and
width thereof, (iii) all access and other easements appurtenant to the
sites or necessary or desirable to use the sites; (iv) all roadways,
paths, driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (v)
any encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on a
filed map, a legend relating the survey to said map.
(u) Title Insurance Policy. The Administrative Agent shall have
received in respect of each parcel covered by each Mortgage a mortgagee's
title policy (or policies) or marked up unconditional binder for such
insurance dated the Original Closing Date. Each such policy shall (i) be
in an amount satisfactory to the Administrative Agent; (ii) be issued at
ordinary rates; (iii) insure that the Mortgage insured thereby creates a
valid first Lien on such parcel free and clear of all defects and
encumbrances, except such as may be approve by the Administrative Agent;
(iv) name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (v) be in the form of ALTA Loan Policy - 1992; (vi)
contain issued by title companies satisfactory to the Administrative Agent
(including any such title companies acting as co-insurers or reinsurers,
at the option of the Administrative Agent). The Administrative Agent shall
have received evidence satisfactory to it that all premiums in respect of
each such policy, and all charges for mortgage recording tax, if any, have
been paid.
(v) Flood Insurance. If requested by the Administrative Agent, the
Administrative Agent shall have received (i) a policy of flood insurance
which (A) covers any parcel of improved real property which is encumbered
by any Mortgage, (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (C)
has a term ending not earlier than the maturity of the indebtedness
secured by such Mortgage and (ii) confirmation that the Company has
received the notice requirement pursuant to Section 208(e)(3) of
Regulation H of the Board.
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(w) Copies of Documents. The Administrative Agent shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in
Section 5.1(u) and a copy, certified by such parties as the Administrative
Agent may deem appropriate, of all other documents affecting the property
covered by each Mortgage.
(x) Solvency Opinion. The Administrative Agent shall have received,
with a copy for each Lender, an opinion from an independent valuation firm
satisfactory to the Administrative Agent documenting the solvency of the
Borrowers after giving effect to the Recapitalization (including the fair
market value of the Borrower's assets) and the other transactions
contemplated hereby.
(y) Termination of Prior Credit Facilities. The Administrative Agent
shall have received evidence satisfactory to it that the Prior Credit
Facilities shall have been terminated and all amounts payable thereunder
shall have been paid in full.
5.2 Conditions to Effectiveness of this Agreement. This Amended and
Restated Credit Agreement shall not be effective until the Borrowers satisfy
each of the following conditions (as reasonably determined by the Administrative
Agent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Parent, each of the Borrowers, and each Lender, with a counterpart for
each Lender, and (ii) for the account of any Lender requesting Notes in
accordance with Section 2.9(e), Notes conforming to the requirements
hereof and executed and delivered by a duly authorized officer of the
Borrowers.
(b) Approvals. All governmental and third party approvals necessary
or advisable in connection with the transactions contemplated hereby and
the continuing operations of the Borrowers shall have been obtained and be
in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse
conditions on the financing contemplated hereby or the continuing
operations of the Borrowers.
(c) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party (other than the Individual Shareholders), dated the Closing Date,
substantially in the form of Exhibit G, with appropriate insertions and
attachments, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Loan Party.
(d) Corporate Proceedings of Loan Parties. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions of the Board of Directors of each Loan Party authorizing (i)
the execution, delivery and performance
51
of the Loan Documents to which it is a party, and (ii) in the case of the
Borrowers, the borrowings contemplated hereunder.
(e) Amendment Fees. The Administrative Agent shall have received
payment of an amendment fee for the pro rata account of the Lenders in the
sum of $421,000.00. The amendment fee shall be fully earned on the Closing
Date and shall not be subject to refund or rebate under any circumstances.
(f) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Pepper Hamilton LLP, counsel
to the Parent, substantially in the form of Exhibit H-1 as modified
to reflect the transactions effected pursuant to this Agreement; and
(ii) the executed legal opinion of Baker, Donelson, Bearman &
Caldwell, counsel of the Borrowers and the other Loan Parties,
substantially in the form of Exhibit H-2 as modified to reflect the
transactions effected pursuant to this Agreement.
Each such legal opinion shall be in form and substance satisfactory to the
Lenders and shall cover such matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably
require.
(g) Waiver of Claims. The Administrative Agent shall have received a
release and waiver of claims executed by the Loan Parties in favor of each
of the Lenders and the Administrative Agent, in such form as the
Administrative Agent may reasonably require.
(h) Amendment of Subordination Agreement. The Subordination
Agreement shall have been amended in form and substance satisfactory to
the Administrative Agent.
(i) No Default. No Default or Event of Default shall exist.
(j) No Material Adverse Change. The Lenders shall be satisfied that
there has been no material adverse change in the assets, business,
financial condition, or income of the Loan Parties since December 31,
2000.
(k) Principal Payment. On the Closing Date, the Borrowers shall make
a principal payment in such amount as may be necessary to reduce the
principal balance of the Tranche B Term Loans to $45,427,272.10 and shall
make such additional payments as may be necessary to reduce the principal
balance of the Revolving Credit Loans so that the Borrowers do not violate
the Borrowing Base limitation at the time of closing.
(l) Other Documents. There shall have been delivered to the
Administrative Agent such additional instruments and documents as the
Administrative Agent or counsel to the Administrative Agent reasonably may
require or request.
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5.3 Conditions to Each Extension of Credit. The agreement of each Lender
to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Additional Matters. All proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement, the other Loan Documents and the
Recapitalization shall be reasonably satisfactory in form and substance to
the Administrative Agent, and the Administrative Agent shall have received
such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrowers
hereunder shall constitute a representation and warranty by the Borrowers as of
the date of such extension of credit that the conditions contained in this
Section 5.3 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Parent and the Borrowers hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Note or Letter of Credit remains
outstanding and unpaid or any other amount is owing to any Lender or the
Administrative Agent hereunder, the Parent and the Borrowers shall and shall
cause each of their respective Subsidiaries to:
6.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrowers (provided that financial
statements for the year ended December 31, 2000 may be delivered on or
before June 30, 2001), a copy of the combined balance sheet of the
Borrowers and their Subsidiaries as at the end of such year and the
related combined statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification arising out of the scope
of the audit, by PriceWaterhouseCoopers LLP or other independent certified
public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrowers, the unaudited combined balance sheet of the
Borrowers and their Subsidiaries as at the end of such quarter and the
related unaudited combined statements of income and retained
53
earnings and of cash flows of the Borrowers and their Subsidiaries for
such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer of the Parent and of
the Designated Borrower as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days
after the end of each month occurring during each fiscal year of the
Borrowers (other than the third, sixth, ninth and twelfth such month), the
unaudited combined balance sheets of the Borrowers and their Subsidiaries
as at the end of such month and the related unaudited combined statements
of income and retained earnings and of cash flows of the Borrowers and
their Subsidiaries for such month and the portion of the fiscal year
through the end of such month, setting forth in each case in comparative
form the figures for the previous year;
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except for any change in accounting principle in accordance with GAAP
(A) as approved (i) by such accountants (in the case of audited financial
statements) or (ii) by a Responsible Officer of the Designated Borrower (in the
case of unaudited financial statements), (B) as disclosed therein, (C) as
approved in writing by the Required Lenders if such change results in a
significant increase in Combined EBITDA for the periods reflected therein and,
(D) in the case of interim financial statements, subject to normal year-end
adjustments, including adjustments for inventory capitalization and
depreciation).
6.2 Certificates, Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), (i) a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate and (ii) copies of all reports or written communications
providing advice, recommendations or analysis to the management of the
Borrowers from such independent certified public accountants with regard
to their audit of the financial statements referred to in Section 6.1 or
the internal financial controls and systems of the Borrowers;
(b) concurrently with the delivery of any financial statement
pursuant to Section 6.1, (y) a certificate of a Responsible Officer of
each of the Parent and the Designated Borrower stating that, to the best
of each such Responsible Officer's knowledge, during such period (i) no
Subsidiary has been formed or acquired (or, if any such Subsidiary has
been formed or acquired, the Borrowers have complied with the requirements
of Section 6.11 with respect thereto), (ii) neither the Parent, the
Borrowers nor any of their Subsidiaries has changed its name, its
principal place of business, its chief executive office or the location of
any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect
thereto and (iii) each Loan Party has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to which it is a party to
be observed, performed or satisfied by it,
54
and that such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate and (z) in the
case of quarterly or annual financial statements, a certificate containing
all information reasonably necessary for determining compliance by the
Parent, the Borrowers and their Subsidiaries with the provisions of this
Agreement (including but not limited to Sections 2.12 and 7.1) as of the
last day of such fiscal quarter or fiscal year of the Borrowers as the
case may be;
(c) as soon as available, and in any event no later than 30 days
after the end of each fiscal year of the Borrowers, a projected combined
balance sheet of the Borrowers as of the end of the following fiscal year,
and the related combined statements of projected cash flow, projected
changes in financial position and projected income for the following
fiscal year, together with an operating budget with respect to the
following fiscal year, and, as soon as available, significant revisions,
if any, of such projections with respect to such fiscal year (the
"Projections"), which Projections shall in each case be accompanied by a
certificate of a Responsible Officer of the Parent stating that such
Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect;
(d) within 45 days after the end of each month of each fiscal year
of the Parent, a narrative discussion and analysis of the financial
condition and results of operations of the Borrowers for such month and
for the period from the beginning of the then current fiscal year to the
end of such month, as compared to the portion of the Projections covering
such periods and to the comparable periods of the previous year;
(e) within five days after the same are filed, copies of all
financial statements and reports which the Parent or the Borrowers may
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority;
(f) monthly, on or before the tenth Business Day of each month, a
Borrowing Base certificate as of the last day of the immediately preceding
fiscal month, in form reasonably acceptable to the Administrative Agent;
(g) on or before March 31, 2002, evidence (reasonably satisfactory
to the Required Lenders) of the Borrowers' ability to repay the
Obligations in full by June 30, 2002. Such evidence shall reasonably
demonstrate to the Lenders that the Borrowers are progressing toward the
consummation of a sale, refinancing, equity infusion or other transaction,
the result of which will be the full repayment of the Lenders by June 30,
2002. The Borrowers shall keep the Administrative Agent advised at all
times of all material developments regarding any such transactions and,
subject to confidentiality provisions, shall furnish the Administrative
Agent with copies of all proposals, offers, offering memoranda, agreements
and other materials developed or received by the Borrowers in connection
therewith;
(h) within five Business Days prior to the commencement of each of
the Borrowers' fiscal quarters, a schedule of projected weekly cash flows
(including receipts
55
and disbursements) for such quarter commencing with the quarter beginning
May 6, 2001; and
(i) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Parent, the Borrowers or their Subsidiaries, as the case may
be.
6.4 Conduct of Business and Maintenance of Existence, etc. (a) Continue to
engage in business of the same general type as now conducted by it, (b)
preserve, renew and keep in full force and effect its existence and (c) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted pursuant to Section 7.5 and except, in the case of clause
(c) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and comply with all Contractual Obligations
and Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all material property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted; (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business; and (c) furnish to each Lender, upon written request, full information
as to the insurance carried.
6.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and upon reasonable
notice permit representatives of any Lender to visit, inspect and appraise any
of its properties (provided that, prior to the occurrence of an Event of
Default, such appraisals shall be limited to one per calendar year at the
expense of the Borrower) and examine and make abstracts from any of its books
and records at any reasonable time and as often as may reasonably be desired and
to discuss the business, operations, properties and financial and other
condition of the Parent, the Borrowers and their Subsidiaries with senior
officers of the Parent, the Borrowers and their Subsidiaries and with its
independent certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent of:
(a) the occurrence of any Default or Event of Default;
56
(b) any (i) default or event of default under any Contractual
Obligation of the Parent, the Borrowers or any of their Subsidiaries or
(ii) litigation, investigation or proceeding which may exist at any time
between the Parent, the Borrowers or any of their Subsidiaries and any
Governmental Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Parent, the Borrowers
or any of their Subsidiaries in which the amount involved is $250,000 or
more and not covered by insurance or in which injunctive or similar relief
is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Parent, the Borrowers or any of their
Subsidiaries knows or has reason to know thereof- (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrowers or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan; and
(e) any development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer of the Designated Borrower setting forth details of the
occurrence referred to therein and stating what action the Parent, the relevant
Borrower or the relevant Subsidiary proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 Interest Rate Protection. [Intentionally Omitted.]
6.10 Further Assurances. Upon the request of the Administrative Agent,
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Administrative Agent, for the
57
benefit of the Lenders, Liens on the Collateral that are duly perfected in
accordance with all applicable Requirements of Law.
6.11 Additional Collateral. (a) With respect to any assets acquired after
the Original Closing Date by the Parent, the Borrowers or any of their
Subsidiaries that are intended to be subject to the Lien created by any of the
Security Documents but which are not so subject (other than (y) any assets
described in paragraph (b) of this Section and (z) immaterial assets a Lien on
which cannot be perfected by filing UCC-1 financing statements), promptly (and
in any event within 30 days after the acquisition thereof): (i) execute and
deliver to the Administrative Agent such amendments to the relevant Security
Documents or such other documents as the Administrative Agent shall deem
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a Lien on such assets, (ii) take all actions necessary or advisable
to cause such Lien to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the Administrative
Agent, and (iii) if requested by the Administrative Agent, with respect to any
material fee real property acquired by the Parent, the Borrowers or their
Subsidiaries after the Original Closing Date, deliver to the Administrative
Agent legal opinions relating to the matters described in clauses (i) and (ii)
immediately preceding, which opinions shall be in form and substance and from
counsel reasonably satisfactory to the Administrative Agent.
(b) With respect to any Person that, subsequent to the Original
Closing Date, becomes a Subsidiary, promptly upon the request of the
Administrative Agent: (i) execute and deliver to the Administrative Agent, for
the benefit of the Lenders, a new pledge agreement or such amendments to the
relevant Pledge Agreement as the Administrative Agent shall deem necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a Lien on the Capital Stock of such Subsidiary which is owned by the Parent, the
Individual Shareholders, the Borrowers or any of their Subsidiaries, (ii)
deliver to the Administrative Agent the certificates representing such Capital
Stock, together with undated stock powers duly executed and delivered in blank,
(iii) cause such new Subsidiary (A) to become a Borrower party hereto or, with
the consent of the Administrative Agent or a party to a guarantee and a security
agreement, in each case pursuant to documentation which is in form and substance
satisfactory to the Administrative Agent, and (B) to take all actions necessary
or advisable to cause the Lien created by such security agreement to be duly
perfected in accordance with all applicable Requirements of Law, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by the Administrative Agent and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i), (ii) and (iii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
6.12 Key Man Life Insurance. Maintain at all times key man life insurance
policies in the amount of $3,000,000 on each of the Management Shareholders; and
upon obtaining such policies, execute and deliver all documents and take all
actions in respect thereof that would be required by subsection 5.1(b) if such
policies were in effect on the Original Closing Date.
6.13 Store Locations. Maintain leases in accordance with past practices
with respect to all store locations for the Borrowers and their Subsidiaries.
58
6.14 Intentionally Omitted.
6.15 Purchase Agreement Affirmative Covenants. Comply with Sections
7.01(a) - (o) and 7.03 of the Purchase Agreement, which Sections, together with
all definitions of defined terms used in such Sections, are hereby incorporated
by reference herein (without giving effect to any subsequent amendment or other
modification thereof not consented to by the Required Lenders) as if such
provisions were set forth in full herein.
6.16 Intentionally Omitted.
SECTION 7. NEGATIVE COVENANTS
The Parent and the Borrowers hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Note or Letter of Credit remains
outstanding and unpaid or any other amount is owing to any Lender or the
Administrative Agent hereunder, the Parent and the Borrowers shall not, and
shall not permit any of their respective Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
(a) Combined Total Debt Ratio. Permit the Combined Total Debt Ratio
of the Borrowers and their Subsidiaries for any period of four consecutive
fiscal quarters of the Borrowers ending with any fiscal quarter set forth below
to exceed the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Combined Total Debt Ratio
First Quarter 2001 4.76 to 1.0
Second Quarter 2001 4.89 to 1.0
Third Quarter 2001 4.79 to 1.0
Fourth Quarter 2001 3.62 to 1.0
First Quarter 2002 3.63 to 1.0
(b) Maintenance of Net Worth. Permit Combined Net Worth of the
Borrowers and their Subsidiaries at any time during any fiscal quarter of the
Borrowers set forth below to be less than the amount set forth below opposite
such fiscal quarter:
Fiscal Quarter Net Worth
First Quarter 2001 $85,400,000
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Fiscal Quarter Net Worth
Second Quarter 2001 $81,200,000
Third Quarter 2001 $75,900,000
Fourth Quarter 2001 $89,600,000
First Quarter 2002 $85,100,000
(c) Combined Interest Coverage Ratio. Permit the Combined Interest
Coverage Ratio of the Borrowers and their Subsidiaries for any period of four
consecutive fiscal quarters of the Borrowers ending with any fiscal quarter set
forth below to be less than the ratio set forth below opposite such fiscal
quarter:
Fiscal Quarter Combined Interest Coverage Ratio
First Quarter 2001 1.16 to 1.0
Second Quarter 2001 1.16 to 1.0
Third Quarter 2001 1.19 to 1.0
Fourth Quarter 2001 1.56 to 1.0
First Quarter 2002 1.62 to 1.0
(d) Combined Fixed Charge Coverage Ratio. Permit the Combined Fixed
Charge Coverage Ratio of the Borrowers and their Subsidiaries for any period of
four consecutive fiscal quarters of the Borrowers ending with any fiscal quarter
set forth below to be less than the ratio set forth below opposite such fiscal
quarter:
Fiscal Quarter Combined Fixed Charge Coverage Ratio
First Quarter 2001 0.72 to 1.00
Second Quarter 2001 0.67 to 1.00
Third Quarter 2001 0.66 to 1.00
Fourth Quarter 2001 0.76 to 1.00
First Quarter 2002 0.77 to 1.00
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
(in each case, to "Incur") any Indebtedness, except:
60
(a) Indebtedness of the Borrowers under the Loan Documents and the
Subordinated Debt;
(b) Indebtedness of a Borrower to a Borrower or a Wholly Owned
Subsidiary and of a Wholly Owned Subsidiary to a Borrower or any other
Wholly Owned Subsidiary;
(c) Without expanding the limitation imposed by Section 7.8 below,
Indebtedness of a Borrower or any Subsidiary incurred to finance the
acquisition of fixed or capital assets (whether pursuant to a loan, a
Financing Lease or otherwise) in an aggregate principal amount not
exceeding as to the Borrowers and their Subsidiaries $2,500,000.00 at any
time outstanding; and
(d) Indebtedness outstanding on the Original Closing Date and
outstanding on the date hereof and listed on Schedule 7.2(d).
7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Parent, the Borrowers
or their Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) 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;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Parent, the Borrowers or any Subsidiary;
(f) Liens in existence on the Original Closing Date and outstanding
on the date hereof listed on Schedule 7.3(f), securing Indebtedness
permitted by Section 7.2(d), provided that no such Lien is spread to cover
any additional property after the Original Closing Date and that the
amount of Indebtedness secured thereby is not increased;
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(g) Liens securing Indebtedness of a Borrower or any Subsidiary
incurred to finance the acquisition of fixed or capital assets, provided
that (i) such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the proceeds of the Indebtedness secured by any such
Lien shall at no time exceed 100% of the original purchase price of such
property;
(h) Liens created pursuant to the Security Documents; and
(i) Liens of landlords arising by operation of law, and Liens of a
lessor under any lease entered into by a Borrower or any Subsidiary in the
ordinary course of its business, to the extent the provisions of such
leases relating to such Liens are standard and customary in the relevant
market.
7.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer
to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the Original Closing Date
and outstanding on the date hereof or as listed on Schedule 7.4(a);
(b) guarantees made in the ordinary course of its business by the
Parent or any Borrower of obligations of any of their respective
Subsidiaries or a Borrower, as the case may be, which obligations are
otherwise permitted under this Agreement;
(c) Guarantee Obligations in respect of Standby Letters of Credit;
and
(d) the Guarantee Obligation of the Parent pursuant to Section 10.
7.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Wholly Owned Subsidiary of the Parent or Borrower may be
merged or combined with or into any Borrower (provided that such Borrower
shall be the continuing or surviving corporation);
(b) any Wholly Owned Subsidiary or Borrower may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to any Borrower or any other Wholly Owned
Subsidiary of a Borrower; and
(c) the Recapitalization, and
(d) the Parent may liquidate, wind-up or dissolve itself so long as
(i) at such time no Default or Event of Default shall have occurred and be
continuing, (ii) the Parent has no material assets at the time of such
transaction other than assets subject to the Lien
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of a Security Document and (iii) the distribution of such assets in such
transaction is made subject to the Liens of the Security Documents and at
the time of such transaction the Borrowers and such recipients enter into
such instruments and take such actions (including delivery to the
Administrative Agent of appropriate legal opinions) as shall be reasonably
requested by the Administrative Agent to ensure and evidence that the
Liens of the Security Documents on such assets are unaffected by such
transaction.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary of the Parent or any Borrower, issue
or sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the sale or other disposition of obsolete or worn out property
in the, ordinary course of business having a fair market value not to
exceed, in the aggregate, $500,000 in any period of twelve consecutive
months;
(b) the sale or other disposition of any property in the ordinary
course of business, provided that (other than inventory) the aggregate
book value of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed $500,000;
(c) the sale of inventory in the ordinary course of business; and
(d) as permitted by Section 7.5(b).
7.7 Limitation on Restricted Payments. Declare or pay any dividend (other
than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Parent, the Borrowers or any Subsidiary or any warrants or options to
purchase any such Capital Stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Parent, the Borrowers or
any Subsidiary (collectively, "Restricted Payments"), except:
(a) payments of interest in kind on the Subordinated Debt;
(b) so long as (i) no Default or Event of Default shall have
occurred and be continuing, (ii) all scheduled principal payments on the
Term Loans through December 31, 2001 have been paid as and when due,
payments of cash interest on the Subordinated Debt in an amount not to
exceed the lesser of (x) fifty percent (50%) of the interest accrued on
the Subordinated Debt from and after January 1, 2001, or (y)
$1,500,000.00; and
(c) so long as no Default or Event of Default shall have occurred
and be continuing, purchases or redemptions of the Capital Stock of the
Parent, the Borrowers or
63
their Subsidiaries held by employees of the Borrowers, other than the
Individual Shareholders, in an aggregate amount not to exceed $500,000 per
year and $1,000,000 in total.
7.8 Limitation on Capital Expenditures. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any Capital Expenditure
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrowers and their Subsidiaries during (a) the fiscal year of the
Borrowers ending on or about February 2, 2002, $6,025,000.00, and (b) the first
two fiscal quarters of the Borrowers commencing on February 3, 2002,
$3,000,000.00;
7.9 Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of a Borrower or Subsidiary for
(i) travel, entertainment and relocation expenses in the ordinary course
of business in an aggregate amount for the Borrowers and their
Subsidiaries not to exceed $250,000 at any one time outstanding and (ii)
the purchase of the Capital Stock of the Parent in an aggregate principal
amount not to exceed at any one time outstanding (A) $1,000,000 minus (B)
the aggregate principal amount of any loans guaranteed by the Parent or
the Borrowers pursuant to Section 7.4(e); and
(d) investments by any Borrower in any Borrower or a Wholly Owned
Subsidiary and investments by any Wholly Owned Subsidiary in any Borrower
and in other Wholly Owned Subsidiaries.
7.10 Limitation on Optional Payments and Modifications of Debt Instruments
and Preferred Stock, etc. (a) Make any optional payment or prepayment on or
redemption or purchase of any material Indebtedness (other than the Loans) or
preferred stock, including, without limitation, the Subordinated Debt and the
Preferred Stock, (b) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of any such Indebtedness,
including but not limited to the Subordinated Debt (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest or dividends thereon), (c) amend the
Subordination Agreement (other than as contemplated on the Closing Date), (d)
amend, modify or change in any material respect, or consent or agree to any
amendment, modification, or change in any material respect to the terms of the
Preferred Stock or any other capitalization or organizational documents, except
as contemplated by Section 6.4.2 of the amended and restated charter of the
Borrowers as in effect on the Original Closing Date; (e) amend, modify or
change, the Shareholders Agreement or the
64
Registration Rights Agreement in a manner that would adversely affect the lights
or interests of the Borrowers, the Administrative Agent or the Lenders or (f)
amend, modify, renew or extend the Management Contracts in a manner which (i)
would have the effect of increasing the compensation due the Management
Shareholders in the aggregate to an amount in excess of $750,000 in any fiscal
year or (ii) otherwise would adversely affect the rights or interests of the
Administrative Agent or the Lenders.
7.11 Limitation on Transactions with Affiliates. Except as set forth on
Schedule 7.11, enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate (other than the Parent or the Borrowers) unless such
transaction (a) is otherwise permitted under this Agreement, (b) is in the
ordinary course of the Parent's, the Borrowers or such Subsidiary's business,
(c) is upon fair and reasonable terms no less favorable to the Parent, the
Borrowers or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate and
(d) is (unless immaterial) disclosed in writing to the Administrative Agent.
7.12 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Parent, the Borrowers or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Parent, the Borrowers or such Subsidiary to such Person or to
any other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of the Parent, the Borrowers
or such Subsidiary.
7.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Parent, the Borrowers or any of their respective Subsidiaries to end on a day
other than the Saturday closest to January 31.
7.14 Limitation on Negative Pledge Clauses. Enter into with any Person, or
suffer to exist, any agreement, other than (a) this Agreement and the other Loan
Documents and the Purchase Agreement or (b) any industrial revenue bonds,
purchase money mortgages or Financing Leases permitted by this Agreement (in
which cases, any prohibition or limitation shall only be effective against the
assets financed thereby) which prohibits or limits the ability of the Parent,
the Borrowers or any of their Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
7.15 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrowers and their Subsidiaries are engaged on the date of this Agreement or
which are reasonably related thereto.
7.16 Limitation on Activities of the Parent. In the case of the Parent,
notwithstanding anything to the contrary in this Agreement or any other Loan
Document, (a) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than those
incidental to its ownership of the Capital Stock of the Borrowers, (b) incur,
create, assume or suffer to exist any Indebtedness or other liabilities or
financial obligations, except (i) nonconsensual obligations imposed by operation
of law, (ii) pursuant to
65
the Loan Documents to which it is a party and (iii) obligations with respect to
its Capital Stock (other than any such obligations constituting Indebtedness),
(c) own, lease, manage or otherwise operate any properties or assets (including
cash (other than cash received in connection with dividends made by the
Borrowers in accordance with Section 7.7 pending application in the manner
contemplated by said Section) and cash equivalents) other than the ownership of
shares of Capital Stock of the Borrowers or (d) create or permit to exist any
Subsidiary of the Parent or any Borrower other than a wholly owned Subsidiary.
7.17 Purchase Agreement Negative Covenants. Fail to comply with Section
7.02 of the Purchase Agreement, which Section, together with all definitions of
defined terms used in such Section, are hereby incorporated by reference herein
(without giving effect to any subsequent amendment or other modification thereof
not consented to by the Required Lenders) as if such provisions were set forth
in full herein.
7.18 Limitations on Stores. Permit the total number of retail stores to
exceed 240 as of the last day of the fiscal year ending on February 2, 2002 or
at any time thereafter through June 30, 2002 or such time as the Obligations are
satisfied in full and this Agreement has terminated.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrowers shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof, or
the Borrowers shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document within five days after any such interest or other amount becomes
due in accordance with the terms hereof, or
(b) Any representation or warranty made or deemed made by the
Parent, a Borrower or any other Loan Party herein or in any other Loan
Document or which is contained in any certificate, document or financial
or other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) (i) The Parent, a Borrower or any other Loan Party shall default
in the observance or performance of any agreement contained in Section
2.7, 6.1(a), 6.7, 6.9, or 7, Section 5(b) of the Parent Pledge Agreement,
Section 5(b) of the Management Pledge Agreement or Section 4.4 of the
Borrowers Security Agreement or (ii) an Event of Default (as defined in
the Mortgage) shall occur under any Mortgage; or
(d) The Parent, a Borrower or any other Loan Party shall default in
the observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days after notice
66
to the Parent, Borrower or other Loan Party, as applicable, from the
Administrative Agent or the Required Lenders; or
(e) The Parent, a Borrower or any Subsidiary shall (i) default in
making any payment of any principal of any Indebtedness (including,
without limitation, any Guarantee Obligation) on the scheduled or original
due date with respect thereto; or (ii) default in making any payment of
any interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder
or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
(in the case of any such Indebtedness constituting a Guarantee Obligation)
to become payable; provided, that a default, event or condition described
in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default under this Agreement unless, at such time,
one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and
be continuing with respect to Indebtedness and/or Guarantee Obligations of
the Parent, the Borrowers and all Subsidiaries the outstanding principal
amount of which exceeds in the aggregate $250,000; or
(f) (i) The Parent, a Borrower or any Subsidiary shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Parent, a Borrower or any
Subsidiary shall make a general assignment for the , benefit of its
creditors; or (ii) there shall be commenced against the Parent, a Borrower
or any Subsidiary any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Parent, a Borrower or any Subsidiary
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof-, or (iv)
the Parent, a Borrower or any Subsidiary shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
the Parent, a Borrower or any Subsidiary shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
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(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of a
Borrower, a Subsidiary or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) a Borrower, a Subsidiary or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could, in the sole judgment of
the Required Lenders, reasonably be expected to have a Material Adverse
Effect; or
(h) One or more judgments or decrees shall be entered against the
Parent, the Borrowers or any of their Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of $250,000
or more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or
(j) Section 10 shall cease, for any reason, to be in full force and
effect or the Parent shall so assert; or
(k) (i) The Parent and the Management Shareholders shall cease to
have the power (whether or not exercised) to elect a majority of the
directors of any of the Borrowers, which is a direct Subsidiary of the
Parent, or the Designated Borrower shall cease to have the power(whether
or not exercised) to elect all of the directors of any of the Borrowers
which is an indirect Subsidiary of the Parent, (ii) the Parent shall cease
to own and control, of record and beneficially, directly, 60% of the
capital stock of each Borrower which is a direct Subsidiary of the Parent,
or the Designated Borrower shall cease to own and control, of record and
beneficially, directly, 60% of the capital stock of each Borrower which is
an indirect Subsidiary of the Parent, (iii) the Advent Funds and the
Management Shareholders shall cease to own and control, directly or
indirectly, 60% of the outstanding Capital Stock of each Borrower, (iv)
the Advent Funds shall cease to own and control, of record and
beneficially, directly, 55% of the member interests of the Parent, (v) the
Advent Funds shall cease to own and control, directly or indirectly, 35%
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of the outstanding Capital Stock of each Borrower; provided, that (A) each
of the foregoing ownership percentages in respect of the Borrower will be
reduced to give effect to the dilution resulting from the exercise of the
Warrants and (B) each of the foregoing shall be amended by the
Administrative Agent and the Borrowers at the time of any transaction
permitted by Section 7.5(d) to provide for such transaction or (vi) a
"Change of Control" as defined in the Purchase Agreement shall occur and
be continuing; or
(l) (i) There shall have occurred any amendment, supplement or other
modification of the Purchase Agreement or the Subordination Agreement,
which in any such case shall not have been consented to in advance in
writing by the Administrative Agent and the Required Lenders, except to
the extent such amendment, supplement or modification is expressly
permitted by Section 7.10 or (ii) the Subordination Agreement shall cease,
for any reason, to be valid or any Loan Party or any of its Subsidiaries
shall so assert in waiting; or
(m) There shall have occurred an "Event of Default" as defined in
the Purchase Agreement;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Parent, a
Borrower or any Subsidiary, automatically the Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Designated Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Designated Borrower, declare the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrowers shall at such time
deposit in a cash collateral account opened by the Administrative Agent an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrowers hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrowers hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrowers (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
69
In addition to the foregoing, upon the first to occur of the failure of
the Borrowers to comply with any of Sections 2.7, 6.2(g), or paragraph (a) of
this Section 8 (with respect to the Tranche B Term Loan principal payment due on
December 31, 2001), as and when due, the Parent will immediately deliver to the
Administrative Agent (for the pro rata account of the Lenders) the Lender
Warrants or the Lender Warrants Alternative (at the option of the Parent);
provided that in the event that all Obligations are paid in full on or before
June 30, 2002, Lender Warrants authorizing the acquisition of 2 1/2% of the
equity interests shall be surrendered for no consideration and without having
been exercised (the balance of the Lender Warrants may, in such circumstances be
retained by the Lenders) or if the Lender Warrants Alternative has been
delivered to the Administrative Agent, in the event that all Obligations are
paid in full on or before June 30, 2002 the Lenders shall refund $1,000,000.00
of the Lender Warrants Alternative to the Parent.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to
70
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Parent or the Borrowers),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
9.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received written notice from a
Lender, the Parent or the Borrowers referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of a Loan Party or
any Affiliate of a Loan Party, shall be deemed to constitute any representation
or warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent 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 appraisal of and
investigation into the business,
71
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their Affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents 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 deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their Affiliates. Except for
notices, reports and other documents expressly required to be famished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party or any
Affiliate of a Loan Party which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Parent or the
Borrowers and without limiting the obligation of the Parent or the Borrowers to
do so), ratably according to their respective Revolving Credit Percentages,
Tranche A Term Loan Percentages and Tranche B Term Loan Percentages in effect on
the date on which indemnification is sought under this Section 9.7, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements which are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the
Administrative Agent's gross negligence or willful misconduct. The , agreements
in this Section 9.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Loan Party as though the Administrative
Agent were not the Administrative Agent hereunder and under the other Loan
Documents. With respect to its Loans made or renewed by it and any Note issued
to it and with respect to any Letter of Credit issued or participated in by it,
the Administrative Agent shall have the same lights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
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9.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall have been approved
by the Parent and the Borrowers (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent hereunder. Effective upon
such apportionment and approval, the term "Administrative Agent" shall mean such
successor agent and the former Administrative Agent's rights, powers and duties
as Administrative Agent shall be terminated, without any other or further act or
deed on the pail of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Notes. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents. The Required Lenders, with the consent of the Designated Borrower,
may replace the Administrative Agent, provided, however, that if a Default or an
Event of Default shall occur and be continuing the consent of the Designated
Borrower shall not be required.
SECTION 10. GUARANTEE
10.1 Guarantee. To induce the Administrative Agent and the Lenders to
execute and deliver this Agreement and to make or maintain the Loans hereunder,
and in consideration thereof, the Parent hereby unconditionally and irrevocably
guarantees to the Administrative Agent, for the ratable benefit of the Lenders,
the prompt and complete payment and performance by the Borrowers when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations,
and the Parent further agrees to pay any and all expenses (including, without
limitation, all reasonable fees, charges and disbursements of counsel) which may
be paid or incurred by the Administrative Agent or by the Lenders in enforcing,
or obtaining advice of counsel in respect of, any of their rights under the
guarantee contained in this Section 10. The guarantee contained in this Section
10, subject to Section 10.5, shall remain in full force and effect until the
Obligations are paid in full, the Revolving Credit Commitments are terminated
and no Letters of Credit are outstanding, notwithstanding that from time to time
prior thereto the Borrowers may be free from any Obligations.
10.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding any payment or payments made by the Parent hereunder or any
set-off or application of funds of the Parent by any Lender, the Parent shall
not be entitled to be subrogated to any of the rights of the Administrative
Agent or any Lender against the Borrowers or any collateral security or
guarantee or right of offset held by any Lender for the payment of the
Obligations, nor shall the Parent, seek or be entitled to seek any contribution
or reimbursement from the Borrowers in respect of payments made by the Parent
hereunder, until all amounts owing to the Administrative Agent and the Lenders
by the Borrowers on account of the Obligations are paid in full, no Letters of
Credit are outstanding and the Revolving Credit Commitments are terminated. If
any amount shall be paid to the Parent on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, any
Letter of Credit shall be outstanding or the Revolving Credit Commitments shall
not have been terminated, such
73
amount shall be held by the Parent in trust for the Administrative Agent and the
Lenders, segregated from other funds of the Parent, and shall, forthwith upon
receipt by the Parent, be turned over to the Administrative Agent in the exact
form received by the Parent (duly indorsed by the Parent to the Administrative
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Administrative Agent may determine. The Parent
hereby further irrevocably waives all contractual, common law, statutory and
other rights of reimbursement, contribution, exoneration or indemnity (or any
similar eight) from or against the Borrowers or any other Person which may have
arisen in connection with the guarantee contained in this Section 10.
10.3 Amendments, etc. with respect to the Obligations. The Parent shall
remain obligated under this Section 10 notwithstanding that, without any
reservation of rights against the Parent, and without notice to or further
assent by the Parent, any demand for payment of or reduction in the principal
amount of any of the Obligations made by the Administrative Agent or any Lender
may be rescinded by the Administrative Agent or such Lender, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement, any other Loan Document, and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Lenders (or the Required Lenders, as the
case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or any
Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or for the guarantee contained in
this Section 10 or any property subject thereto.
10.4 Guarantee Absolute and Unconditional. The Parent waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Administrative Agent or any Lender
upon the guarantee contained in this Section 10 or acceptance of the guarantee
contained in this Section 10; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this
Section 10; and all dealings between any Borrower or the Parent, on the one
hand, and the Administrative Agent and the Lenders, on the other, shall likewise
be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 10. The Parent waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrowers or the Parent with respect to the Obligations. The
guarantee contained in this Section 10 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of this Agreement or any other Loan Document, any of
the Obligations or any collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by the
Administrative Agent or any Lender, (b) any defense, setoff or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by
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any Borrower against the Administrative Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of any Borrower
or the Parent) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any Borrower for the Obligations, or of the
Parent under the guarantee contained in this Section 10, in bankruptcy or in any
other instance. When the Administrative Agent or any Lender is pursuing its
rights and remedies under this Section 10 against the Parent, the Administrative
Agent or any Lender may, but shall be under no obligation to, pursue such rights
and remedies as it may have against any Borrower or any other Person or against
any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Administrative Agent or any Lender
to pursue such other rights or remedies or to collect any payments from any
Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such light of offset, or any release of
the Borrowers or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve the Parent of any liability
under this Section 10, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent and the Lenders against the Parent.
10.5 Reinstatement. The guarantee contained in this Section 10 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any Lender upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, any Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
10.6 Payments. The Parent hereby agrees that any payments in respect of
the Obligations pursuant to this Section 10 will be paid to the Administrative
Agent without setoff or counterclaim in Dollars at the office of the
Administrative Agent specified in Section 11.2.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.1. The
Required Lenders and each Loan Party to the relevant Loan Documents may, or,
with the written consent of the Required Lenders, the Administrative Agent and
each Loan Party to the relevant Loan Document may, from time to time, (a) enter
into written amendments, supplements or modifications hereto and to the other
Loan Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences, provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Note, or reduce the stated rate of any
interest, fee or letter of credit commission payable hereunder or extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Revolving Credit Commitment, or
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make any change in the application of any prepayment of the Loans specified in
the first sentence of Section 2.12(e) or in Section 2.18(a), in each case
without the consent of each Lender directly affected thereby, (ii) extend the
scheduled date of any amortization payment in respect of the Tranche A Term
Loans referred to in Section 2.9 without the consent of each Lender affected
thereby or extend the scheduled date of any amortization payment in respect of
the Tranche B Term Loans referred to in Section 2.9 without the consent of each
Lender affected thereby, (iii) amend, modify or waive any provision of this
Section 11.1. I or reduce any percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by any Loan Party of any of
its rights and obligations under this Agreement and the other Loan Documents or
release all or a substantial portion of the Collateral (other than in connection
with any sale or other disposition of assets permitted by Section 7.6) or any
guarantee of the Obligations, in each case without the written consent of all
the Lenders, (iv) amend, modify or waive any provision of Section 9 without the
written consent of the Administrative Agent, (v) amend, modify or waive any
provision of Section 3 without the written consent of the Issuing Lender, (vi)
amend, modify or waive any provision of Section 2.25, 2.26, or 2.27 without the
written consent of the Swing Line Lender or (vii) amend, modify or waive any
provision of Section 2.7 without the written consent of (A) the holders of 85%
or more of the aggregate Revolving Credit Commitments, or, if the Revolving
Credit Commitments have been terminated, the aggregate outstanding Revolving
Extensions of Credit and (B) the Required Lenders. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Loan Parties, the Lenders, the Administrative
Agent and all future holders of the Notes. In the case of any waiver, the Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered, or three Business Days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Parent, the Designated Borrower and the
Administrative Agent, and as set forth in Schedule 1.1B in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:
The Parent: Kirkland Holdings L.L.C.
Advent International Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: David M. Mussafer
Telecopy: (617) 951-0566
Telephone: (617) 951-9469
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The Designated Borrower: Kirkland's, Inc.
805 North Parkway
Jackson, Tennessee 38305
Attention: Reynolds Faulkner,
Lowell Pugh, Esquire
Telecopy: (901) 664-9345
Telephone: (901) 668-2444
with a copy to: Baker, Donelson, Bearman & Caldwell
Tennessee Building
165 Madison Avenue, 20th Floor
Memphis, TN 38103
Attention: Robert Walker, Esq.
Telecopy: (901) 577-2303
Telephone: (901) 577-2719
and
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Attention: Cary S. Levinson, Esq.
Telecopy: (215) 981-4750
Telephone: (215) 981-4000
The Administrative Agent: Fleet National Bank
100 Federal Street
Boston, Massachusetts 02110
Attention: Sanghamitra Dutt
Telecopy: (617) 434-4775
Telephone: (617) 434-4540
with a copy to: Riemer & Braunstein, LLP
Three Center Plaza
Boston, Massachusetts 02108
Attention: David S. Berman, Esq.
Telecopy: (617) 880-3456
Telephone: (617) 523-9000
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.2, 2.4, 2.6, 2.10, 2.11, 2.13 or 2.26 shall
not be effective until received. Any notice or delivery to or from or consent
required of the Borrowers hereunder or pursuant to any other Loan Document may
be made to or by the Designated Borrower on behalf of the Borrowers.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
77
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
11.4 Survival. All representations and warranties made hereunder, in the
other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans hereunder.
11.5 Payment of Expenses and Taxes. The Borrowers jointly and severally
agree (a) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, trustees,
employees, affiliates, agents and controlling persons (each, an "indemnitee")
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of
the foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Parent, the Borrowers any of their Subsidiaries or any of the
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities") provided, that the Borrowers shall have no obligation hereunder to
any indemnitee with respect to indemnified liabilities to the extent such
indemnified liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such indemnitee. The agreements in this Section 11.5 shall
survive repayment of the Notes and all other amounts payable hereunder 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 survive the making of such assignment, notwithstanding that such assigning
Lender may cease to be a "Lender" hereunder.
78
11.6 Successors and Assigns, Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Parent, the
Borrowers, the Lenders, the Administrative Agent, all future holders of the
Notes and their respective successors and assigns, except that neither the
Parent nor the Borrowers may assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrowers, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks, financial institutions or funds that regularly
invest in loans and/or loan participations or, with the consent of the Borrowers
and the Administrative Agent (which, in each case, shall not be unreasonably
withheld or delayed), any other entities (each, a "Participant") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this Agreement
and the other Loan Documents, and the Borrowers and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Notes or any fees payable hereunder, postpone the date of
the final maturity of the Notes, consent to the assignment or transfer by any
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents, release all or a substantial portion of the Collateral (other
than in connection with any sale or other disposition of assets permitted by
Section 7.6) or any guarantee of the Obligations, in each case to the extent
subject to such participation. The Borrowers agree that if amounts outstanding
under this Agreement and the Notes are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the maximum extent permitted by applicable
law, be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any Note to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement or any Note, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in Section 11.7(a) as fully as
if it were a Lender hereunder. The Borrowers also agree that each Participant
shall be entitled to the benefits of Sections 2.20, 2.21 and 2.22 with respect
to its participation in the Commitments and the Loans outstanding from time to
time as if it was a Lender; provided that, in the case of Section 2.21, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any Lender Affiliate or, with the consent of the Designated Borrower
and the Administrative Agent (which, in each case, shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations under this
Agreement, the Letters of Credit and the Notes pursuant to an Assignment and
Acceptance,
79
substantially in the form of Exhibit D, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender or
an affiliate thereof, by the Designated Borrower and the Administrative Agent)
and delivered to the Administrative Agent for its acceptance and recording in
the Register; provided that no such assignment to an Assignee (other than any
Lender or any affiliate thereof) shall be in an aggregate principal amount of
less than $2,000,000 (other than in the case of an assignment of all of a
Lender's interests under this Agreement and the Notes). Such assignment need not
be ratable as among any Tranche A Term Loan Commitments and/or Tranche A Term
Loans, Tranche B Term Loan Commitments and/or Tranche B Term Loans and Revolving
Credit Commitments and/or Revolving Credit Loans of the assigning Lender. Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this paragraph (c) and paragraph
(g) of this Section 11.6, the consent of the Designated Borrower shall not be
required, and, unless requested by the Assignee and/or the assigning Lender, new
Notes shall not be required to be executed and delivered by the Borrowers, for
any assignment which occurs at any time when any Event of Default shall have
occurred and be continuing.
(d) Any Non-U.S. Lender that could become completely exempt from
withholding of any tax, assessment or other charge or levy imposed by or on
behalf of the United States or any taxing authority thereof ("U.S. Taxes") in
respect of payment of any Obligations due to such Non-U.S. Lender under this
Agreement if the Obligations were in registered form for U.S. federal income tax
purposes may request the Borrowers (through the Administrative Agent), and the
Borrowers agree thereupon, to exchange any promissory note(s) evidencing such
Obligations for promissory note(s) registered as provided in paragraph (f) below
and substantially in the form of Exhibit I-1 (in the case of Obligations in
respect of Tranche A Term Loans), Exhibit I-2 (in the case of Obligations in
respect of Tranche B Term Loans), or Exhibit I-3 (in the case of Obligations in
respect of Revolving Credit Loans) (each, an "Alternative Note"). Alternative
Notes may not be exchanged for promissory notes that are not Alternative Notes.
(e) Each Non-U.S. Lender that holds Alternative Note(s) (an
"Alternative Noteholder") (or, if such Alternative Noteholder is not the
beneficial owner thereof, such beneficial owner) shall deliver to the Borrowers
prior to or at the time such Non-U.S. Lender becomes an Alternative Noteholder
each of the forms and certifications required by Section 2.21(b).
(f) An Alternative Note and the Obligation(s) evidenced thereby may
be assigned or otherwise transferred in whole or in part only by registration of
such assignment or transfer of such Alternative Note and the Obligation(s)
evidenced thereby on the Register (and each Alternative Note shall expressly so
provide). Any assignment or transfer of all or part of such Obligation(s) and
the Alternative Note(s) evidencing the same shall be registered on the Register
only upon surrender for registration of assignment or transfer of the
Alternative Note(s) evidencing such Obligation(s), duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the Alternative Noteholder thereof, and thereupon one or more new Alternative
Note(s) in the same aggregate principal amount shall be issued to the designated
Assignee(s). No assignment of an Alternative Note and the
80
Obligation(s) evidenced thereby shall be effective unless it has been recorded
in the Register as provided in this Section 11.6(f).
(g) The Administrative Agent shall maintain at its address referred
to in Section 11.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders (including Alternative Noteholders) and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Loan recorded
therein for all purposes of this Agreement. The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(h) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Designated Borrower and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $2,000 (except that no such registration and
processing fee shall be payable in the case of an Assignee which is already a
Lender or is a Lender Affiliate), the Administrative Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Designated
Borrower. On or prior to such effective date, the Borrowers, at their own
expense, shall execute and deliver to the Administrative Agent (in exchange for
the Revolving Credit Note, Tranche A Term Note and/or Tranche B Term Note, as
the case may be, of the assigning Lender) a new Revolving Credit Note, Tranche A
Term Note and/or Tranche B Term Note, as the case may be, to the order of such
Assignee (or, in the case of any Alternative Note, payable to such Assignee or
its registered assigns) in an amount equal to the Revolving Credit Commitment,
Tranche A Loan and/or Tranche B Loan, as the case may be, assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained a
Revolving Credit Commitment, Tranche A Loan and/or Tranche B Loan, as the case
may be, a new Revolving Credit Note, Tranche A Term Note and/or Tranche B Term
Note, as the case may be, to the order of the assigning Lender (or, in the case
of any Alternative Note, payable to such assigning Lender or its registered
assigns) in an amount equal to the Revolving Credit Commitment, Tranche A Loan
and/or Tranche B Loan, as the case may be, retained by it hereunder. Such new
Notes shall be dated the Original Closing Date and shall otherwise be in the
form of the Note replaced thereby.
(i) Each of the Parent and the Borrowers authorizes each Lender to
disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Parent, the Borrowers and their respective Affiliates
which has been delivered to such Lender by or on behalf of the Parent or the
Borrowers pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Parent or the Borrowers in connection with such Lender's
credit evaluation of the Parent, the Borrowers and their respective Affiliates
prior to becoming a party to this Agreement.
(j) Nothing herein shall prohibit or restrict any Lender from (i)
pledging or assigning any Note to any Federal Reserve Bank in accordance with
applicable law or (ii) with the prior consent of the Administrative Agent and
the Borrowers (which, in each case, shall not be unreasonably withheld or
delayed), pledging its rights in connection with any Loan or Note to any other
Person.
81
11.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans or the
Reimbursement Obligations owing to such other Lender, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a participating
(or, at the option of such Lender, a direct) interest in such portion of each
such other Lender's Loan and/or of the Reimbursement Obligations owing to each
such other Lender, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
Benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Parent or
the Borrowers, any such notice being expressly waived by the Parent and the
Borrowers to the extent permitted by applicable law, upon any amount becoming
due and payable by the Parent or the Borrowers hereunder or under the Notes
(whether at the stated maturity, by acceleration or otherwise) to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Parent or the Borrowers without regard to the adequacy of any
other Collateral. Each Lender agrees promptly to notify the Parent, the
Designated Borrower and the Administrative Agent after any such setoff and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.
11.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrowers and the
Administrative Agent.
11.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.10 Integration. This Agreement and the other Loan Documents represent
the agreement of the Parent, the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or
82
warranties by the Administrative Agent or any Lender relative to subject matter
hereof not expressly set forth or referred to herein or in the other Loan
Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS.
11.12 Submission To Jurisdiction, Waivers. Each of the Parent and the
Borrowers hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents 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 for the Southern
District of New York and the courts of the Commonwealth of Massachusetts
and the courts of the United States for the District of Massachusetts, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Parent or the Borrowers, as the case may be at its address set forth in
Section 11.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 11.12 any special, exemplary, punitive or consequential
damages.
11.13 Acknowledgments. Each of the Parent and the Borrowers hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Parent or any Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between
83
Administrative Agent and Lenders, on one hand, and the Parent and the
Borrowers, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Parent, the Borrowers and the
Lenders.
11.14 WAIVERS OF JURY TRIAL. THE PARENT, THE BORROWERS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 Confidentiality. Each of the Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Transferee or prospective Transferee which agrees to comply with the
provisions of this Section 11.15, (c) to the employees, directors, agents,
attorneys, accountants and other professional advisors of such Lender or its
affiliates, (d) upon the request or demand of any Governmental Authority having
jurisdiction over the Administrative Agent or such Lender, (e) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (f) if requested or required to do
so in connection with any litigation or similar proceeding, (g) which has been
publicly disclosed other than in breach of this Section 11.15, or (h) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.
11.16 Reliance on Representations and Actions of Designated Borrower. The
Borrowers hereby appoint the Designated Borrower as the Borrowers' agent to
execute, deliver and perform, on behalf of the Borrowers, any and all notices,
certificates, documents and actions to be executed, delivered or performed
hereunder or under any of the other Loan Documents, and the Borrowers hereby
agree that the Administrative Agent and the Lenders may rely upon any
representation, warranty, certificate, notice, document or telephone request
which purports to be executed or made or which the Administrative Agent or the
Lenders in good faith believe to have been executed or made by the Designated
Borrower or any of its executive officers, and the Borrowers hereby further,
jointly and severally, agree to indemnify and hold the Administrative Agent and
the Lenders harmless for any action, including the making of Loans hereunder,
and any loss or expense, taken or incurred by any of them as a result of their
good faith reliance upon any such representation, warranty, certificate, notice,
document or telephone request.
11.17 Amendment and Restatement. This Agreement amends and restates the
Existing Agreement in its entirety. All of the other Loan Documents executed in
connection with the Existing Agreement remain in full force and effect, provided
that in the event of any inconsistency between the terms hereof and the terms of
the Loan Documents, this Agreement
84
shall control. The Parent and the Borrowers specifically acknowledge and agree
that any and all Collateral previously granted to secure the Obligations under
the Existing Agreement shall continue to secure all Obligations hereunder.
11.18 Waiver of Defaults. Upon the execution of this Agreement, the
Lenders shall be deemed to have waived (i) any defaults which may have occurred
through the date hereof under Sections 6.1, 6.2, 6.3, 6.7(a) (as it relates to
defaults under the sections identified herein), 6.11 (as it relates to the
opening of stores for which UCC-1 Financing Statements have been delivered in
connection with the execution of this Agreement), 6.15, 7.1, 7.8, 7.10 and 7.17
of the Existing Agreement, and (ii) Section 7.10 as it relates to the charter
amendment contemplated by the waiver and amendment to the Purchase Agreement
dated as of the date hereof. The Borrowers warrant and represent that, except
for the foregoing sections specifically enumerated in this Section 11.18, there
are no other defaults under the Existing Agreement. Based on this
representation, upon the execution of this Agreement, the Lenders shall be
deemed to have waived any other defaults which may have occurred under the
Existing Agreement through the date hereof. Nothing contained herein shall be
deemed to constitute a waiver by the Lenders of any default of any term,
covenant or provision of this Agreement.
11.19 Waiver of Default Interest. Upon the effectiveness of this
Agreement, the Lenders shall be deemed to have waived all accrued and unpaid
interest under the Existing Agreement which was in excess of the rates of
interest set forth in Sections 2.15(a) and (b) thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KIRKLAND HOLDINGS L.L.C.
By: /s/ David M. Mussafer
--------------------------------------------
Title: President
KIRKLAND'S, INC.
KIRKLAND'S STORES, INC.
kirklands.com, inc.
By: /s/ Robert E. Alderson
--------------------------------------------
Title: President and Chief Executive Officer
FLEET NATIONAL BANK,
as Administrative Agent and as a Lender
By: /s/ Sanghamitra Dutt
--------------------------------------------
Name: Sanghamitra Dutt
Title: Authorized Officer
85
LEHMAN COMMERCIAL PAPER INC.,
as advisor and arranger
By: /s/ Michelle Swanson
--------------------------------------------
Name: Michelle Swanson
Title: Authorized Signatory
86
SYNDICATED LOAN FUNDING TRUST
By: LEHMAN COMMERCIAL PAPER INC.
not in its individual capacity but solely
as asset manager
By: /s/ Michelle Swanson
--------------------------------------------
Name: Michelle Swanson
Title: Authorized Signatory
HIBERNIA NATIONAL BANK
By: /s/ Howard M. Guidry
--------------------------------------------
Name: Howard M. Guidry
Title: Vice President
AMSOUTH BANK
By: /s/ Robert I. Hart
--------------------------------------------
Name: Robert I. Hart
Title: SVP of Special Assets
MITSUI LEASING CAPITAL CORPORATION
By: /s/ Seiichiro Nozaki
--------------------------------------------
Name: Seiichiro Nozaki
Title: President
UNION PLANTERS BANK OF JACKSON, TENNESSEE
By: /s/ Frank Hudacek
--------------------------------------------
Name: Frank Hudacek
Title: EVP
BANCORPSOUTH BANK
By: /s/ Christopher Keefe Edwards
--------------------------------------------
Name: Christopher Keefe Edwards
Title: First Vice Present
87
CRESCENT/MACH I PARTNERS, L.P.
By: TCW ASSET MANAGEMENT COMPANY,
as Investment Manager
By: /s/ Richard F. Kurth
--------------------------------------------
Name: Richard F. Kurth
Title: Vice President
TCW LEVERAGED INCOME TRUST, II, L.P.
By: TCW ADVISERS (BERMUDA), LTD.,
as General Partner
By: /s/ Mark L. Gold
--------------------------------------------
Name: Mark L. Gold
Title: Managing Director
By: TCW INVESTMENT MANAGEMENT COMPANY,
as Investment Advisor
By: /s/ Richard F. Kurth
--------------------------------------------
Name: Richard F. Kurth
Title: Vice President
INDOSUEZ CAPITAL FUNDING IIA, LTD.
By: INDOSUEZ CAPITAL
as Portfolio Advisor
By: /s/ Melissa Marano
--------------------------------------------
Name: Melissa Marano
Title: Vice President
VAN KAMPEN PRIME RATE INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By: /s/ Darvin D. Pierce
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Name: Darvin D. Pierce
Title: Principal
VAN KAMPEN SENIOR FLOATING RATE FUND
By: Van Kampen Investment Advisory Corp.
By: /s/ Darvin D. Pierce
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Name: Darvin D. Pierce
Title: Principal
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