1
Exhibit 10.43B
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 5, 1998
among
ACTION PERFORMANCE COMPANIES, INC.
as Borrower,
Certain Subsidiaries and Affiliates,
as Guarantors,
AND
FIRST UNION NATIONAL BANK
2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS ............................................................................................1
1.1 Definitions .........................................................................................1
1.2 Computation of Time Periods.........................................................................24
1.3 Accounting Terms ...................................................................................24
SECTION 2 CREDIT FACILITIES .....................................................................................24
2.1 Revolving Loans ....................................................................................24
2.2 Trade Letter of Credit Facility.....................................................................26
2.3 Bankers' Acceptances................................................................................28
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES.........................................................30
3.1 Default Rate .......................................................................................30
3.2 Extension and Conversion............................................................................30
3.3 Prepayments ........................................................................................31
3.4 Termination and Reduction of Commitments............................................................31
3.5 Fees ...............................................................................................31
3.6 Capital Adequacy ...................................................................................32
3.7 Inability To Determine Interest Rate................................................................33
3.8 Illegality .........................................................................................33
3.9 Requirements of Law.................................................................................33
3.10 Taxes .............................................................................................34
3.11 Indemnity .........................................................................................35
3.12 Payments, Computations, Etc........................................................................36
SECTION 4 GUARANTY ..............................................................................................37
4.1 The Guarantee ......................................................................................37
4.2 Obligations Unconditional...........................................................................37
4.3 Reinstatement ......................................................................................38
4.4 Certain Additional Waivers..........................................................................38
4.5 Remedies ...........................................................................................39
4.6 Rights of Contribution..............................................................................39
4.7 Continuing Guarantee................................................................................40
SECTION 5 CONDITIONS ............................................................................................40
5.1 Conditions to Closing...............................................................................40
5.2 Conditions to All Extensions of Credit..............................................................41
SECTION 6 REPRESENTATIONS AND WARRANTIES.........................................................................42
6.1 Financial Condition.................................................................................42
6.2 No Changes or Restricted Payments...................................................................42
6.3 Organization; Existence; Compliance with Law........................................................43
6.4 Power; Authorization; Enforceable Obligations.......................................................43
6.5 No Legal Bar .......................................................................................43
6.6 No Material Litigation..............................................................................44
6.7 No Default .........................................................................................44
6.8 Ownership of Property; Liens........................................................................44
3
6.9 Intellectual Property...............................................................................44
6.10 No Burdensome Restrictions.........................................................................44
6.11 Taxes .............................................................................................45
6.12 ERISA .............................................................................................45
6.13 Governmental Regulations, Etc. ....................................................................46
6.14 Subsidiaries ......................................................................................47
6.15 Purpose of Extensions of Credit....................................................................47
6.16 Environmental Matters..............................................................................47
SECTION 7 AFFIRMATIVE COVENANTS..................................................................................48
7.1 Financial Statements................................................................................48
7.2 Certificates; Other Information.....................................................................49
7.3 Notices ............................................................................................50
7.4 Payment of Obligations..............................................................................51
7.5 Conduct of Business and Maintenance of Existence....................................................51
7.6 Maintenance of Property; Insurance..................................................................52
7.7 Inspection of Property; Books and Records; Discussions..............................................52
7.8 Environmental Laws..................................................................................52
7.9 Financial Covenants.................................................................................53
7.10 Additional Guaranties..............................................................................53
7.11 Use of Proceeds ...................................................................................53
SECTION 8 NEGATIVE COVENANTS ....................................................................................54
8.1 Indebtedness .......................................................................................54
8.2 Liens ..............................................................................................55
8.3 Nature of Business..................................................................................55
8.4 Consolidation, Merger, Sale or Purchase of Assets, Capital Expenditures, etc. ......................55
8.5 Advances, Investments and Loans.....................................................................56
8.6 Transactions with Affiliates........................................................................56
8.7 Ownership of Equity Interests.......................................................................56
8.8 Fiscal Year ........................................................................................57
8.9 Prepayments of Indebtedness, etc. ..................................................................57
8.10 Restricted Payments................................................................................57
8.11 Sale Leasebacks ...................................................................................57
8.12 No Further Negative Pledges........................................................................57
SECTION 9 EVENTS OF DEFAULT .....................................................................................58
9.1 Events of Default...................................................................................58
9.2 Acceleration; Remedies..............................................................................60
SECTION 10 MISCELLANEOUS ........................................................................................61
10.1 Notices ...........................................................................................61
10.2 Right of Set-Off...................................................................................62
10.3 Benefit of Agreement...............................................................................62
10.4 No Waiver; Remedies Cumulative.....................................................................62
10.5 Payment of Expenses, etc. .........................................................................63
10.6 Amendments, Waivers and Consents...................................................................63
10.7 Counterparts ......................................................................................63
4
10.8 Headings ..........................................................................................64
10.9 Survival ..........................................................................................64
10.10 Governing Law; Submission to Jurisdiction; Venue..................................................64
10.11 Severability .....................................................................................64
10.12 Entirety .........................................................................................65
10.13 Binding Effect; Termination.......................................................................65
10.14 Conflict .........................................................................................65
5
SCHEDULES
Schedule 2.1(b) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(b) Form of Notice of Request for Letter of Credit
Schedule 2.3(b) Form of Notice of Request for Banker's Acceptance
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 5.1(f) Secretary's Certificate
Schedule 6.6 Description of Legal Proceedings
Schedule 6.8 Liens
Schedule 6.14 Subsidiaries
Schedule 7.2(b) Form of Officer's Compliance Certificate
Schedule 7.11-1 Form of Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 8.5 Existing Investments
6
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 5, 1998
(the "Credit Agreement"), is by and among ACTION PERFORMANCE COMPANIES, INC., an
Arizona corporation (the "Borrower"), the subsidiaries and affiliates identified
on the signature pages hereto and such other subsidiaries and affiliates as may
from time to time become Guarantors hereunder in accordance with the provisions
hereof (the "Guarantors") and FIRST UNION NATIONAL BANK (the "Bank").
W I T N E S S E T H
WHEREAS, a $16 million credit facility was established in favor of the
Borrower pursuant to the terms of a Credit Agreement dated as of January 2, 1997
(as amended and modified, the "Original Credit Agreement");
WHEREAS, the Borrower has requested that the credit facility be
increased and that multicurrency borrowings be made available thereunder; and
WHEREAS, the Bank has agreed to make the requested changes on the terms
and conditions set forth in this Credit Agreement which is given in amendment
to, restatement of and substitution for the Original Credit Agreement;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding ten percent (10%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
1
7
"Alternate Base Rate" means for any day, a rate per annum
equal to the greatest 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, at any time, the rate
of interest per annum publicly announced from time to time by the Bank
at its principal office in Charlotte, North Carolina as its prime rate.
Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties
hereto acknowledge that the rate announced publicly by the Bank as its
Prime Rate is an index or base rate and shall not necessarily be its
lowest or best rate charged to its customers or other banks; 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
on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Bank from three federal
funds brokers of recognized standing selected by it. If for any reason
the Bank shall have determined (which determination shall be conclusive
in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability
or failure of the Bank to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition,
as appropriate, until the circumstances giving rise to such inability
no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the opening of business on the date of such change.
"Alternate Base Rate Loan" means any Loan bearing interest at
a rate determined by reference to the Alternate Base Rate.
"Applicable Percentage" means for any day, the rate per annum
set forth below opposite the applicable Consolidated Senior Leverage
Ratio then in effect, it being understood that the Applicable
Percentage for (i) Alternate Base Rate Loans shall be the percentage
set forth under the column "Alternate Base Rate Margin", (ii) LIBOR
Rate Loans shall be the percentage set forth under the column "LIBOR
Rate Margin, Standby LOC Fee and BA Discount Rate", (iii) the Standby
LOC Fee shall be the percentage set forth under the column "LIBOR Rate
Margin, Standby LOC Fee and BA Discount Rate", (iv) the BA Discount
Rate shall be the percentage set forth under the column "LIBOR Rate
Margin, Standby LOC Fee and BA Discount Rate", and (v) the Commitment
Fee shall be the percentage set forth under the column "Commitment
Fee":
Consolidated Alternate LIBOR Rate
Pricing Senior Leverage Base Rate Margin, Commitment
Level Ratio Margin Standby LOC Fee and BA Fee
Discount Rate
I < 0.75 0% .875% .25%
-
II > 0.75 but < 1.25 0% 1.00% .25%
-
III > 1.25 but < 1.75 .25% 1.25% .35%
-
IV > 1.75 .50% 1.50% .40%
The Applicable Percentage shall be determined and adjusted quarterly on
the date (each a "Rate Determination Date") five (5) Business Days
after the date by which the annual
2
8
and quarterly compliance certificates and related financial statements
and information are required in accordance with the provisions of
Sections 7.1(a) and (b) and Section 7.2(b), as appropriate; provided
that in the event an annual or quarterly compliance certificate and
related financial statements and information are not delivered timely
to the Bank by the date required by Sections 7.1(a) and (b) and Section
7.2(b), as appropriate, the Applicable Percentages shall be based on
Pricing Level IV until such time as an appropriate compliance
certificate and related financial statements and information are
delivered, whereupon the applicable Pricing Level shall be adjusted
based on the information contained in such compliance certificate and
related financial statements and information.
Each Applicable Percentage shall be effective from a Rate Determination
Date until the next such Rate Determination Date. The Bank shall
determine the appropriate Applicable Percentages in the pricing matrix
promptly upon receipt of the quarterly or annual compliance certificate
and related financial information and shall promptly notify the
Borrower and the Lenders of any change thereof. Such determinations by
the Bank shall be conclusive absent manifest error. Adjustments in the
Applicable Percentages shall be effective as to existing Extensions of
Credit as well as new Extensions of Credit made thereafter.
"Attributed Principal Amount" means, on any day, with respect
to any Securitization Transaction entered into by any member of the
Consolidated Group, the aggregate amount (with respect to any such
transaction, the "Invested Amount") paid to, or borrowed by, such
Person as of such date under such Securitization Transaction, minus the
aggregate amount received by the applicable Receivables Financier and
applied to the reduction of the Invested Amount under such
Securitization Transaction.
"Available Foreign Currency" means (i) British Pounds
Sterling, French Francs, Swiss Francs, Deutsche Marks, Japanese Yen,
Netherlands Guilders and Italian Lire and (ii) any other freely
available currency which is freely transferrable and freely convertible
into Dollars and in which dealings in deposits are carried on in the
London interbank market, which shall be requested by the Borrower and
approved by the Bank.
"BA Commitment" means the commitment of the Bank to create and
discount Bankers' Acceptances, and to honor payment obligations
relating thereto.
"BA Discount Reference Rate" shall mean, with respect to any
Bankers' Acceptance, the current quoted discount rate for bankers'
acceptances of the Bank on the date of creation of such Bankers'
Acceptance for bankers' acceptances in an amount substantially equal to
the face amount of such Bankers' Acceptance and having the same
maturity as such Bankers' Acceptance.
"BA Documents" shall mean, with respect to any Bankers
Acceptance such documents and agreements as the Bank reasonably may
require in connection with the creation of such Bankers' Acceptance.
3
9
"BA Obligations" means, at any time, without duplication, the
sum of (i) the maximum aggregate amount which is, or at any time
thereafter may become, payable by the Bank under all Bankers'
Acceptances then outstanding, plus (ii) the aggregate BA Reimbursement
Obligations at such time.
"BA Reimbursement Obligation" means, at any time, with respect
to any Bankers' Acceptance, the obligation of the Borrower to reimburse
the Bank for the face amount of a matured Bankers' Acceptance.
"Bankers' Acceptance" means a draft drawn by the Borrower, on
and accepted and discounted by, the Bank in accordance with the
provisions of Section 2.3.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or
Phoenix, Arizona are authorized or required by law to close, except
that when used in connection with LIBOR Rate Loans, such day shall also
be a day on which dealings between banks are carried on in London,
England in deposits of Dollars or Available Foreign Currency, as
applicable.
4
10
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Capital Lease Obligation" means the capital lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) the Bank, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P
is at least A-1 or the equivalent thereof or from Moody's is at least
P-1 or the equivalent thereof (any the Bank being an "Approved Bank"),
in each case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent corporation thereof) and
maturing within six months of the date of acquisition, (d) repurchase
agreements entered into by a Person with the Bank or trust company
(including any of the Banks) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which
such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations, (e) obligations of any State of the United
States or any political subdivision thereof, the interest with respect
to which is exempt from federal income taxation under Section 103 of
the Code, having a long term rating of at least AA- or Aa-3 by S&P or
Moody's, respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated AAA (or the equivalent thereof) or better by S&P or Aaa
(or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days and (g) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Borrower Act of
1940, as amended, which are administered by reputable financial
institutions having capital of at least $100,000,000 and the portfolios
of which are limited to Investments of the character described in the
foregoing subdivisions (a), (b), (c), (e) and (f).
"Change of Control" shall be deemed to have occurred in the
event that:
(i) the Principal Shareholder shall cease to own,
directly or indirectly, at least 1,000,000 shares of Voting
Stock of the Borrower free and clear of Liens; or
(ii) the Principal Shareholder shall cease to be the
chief executive officer of the Borrower (a) for any reason
other than his death or legal disability, or (b) due to his
death or legal disability, and a successor satisfactory to the
Bank
5
11
does not assume his responsibilities and position within
thirty (30) days of such cessation.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Commitment" means the Revolving Commitment, the LOC
Commitment and the BA Commitment.
"Commitment Fee" shall have the meaning given such term in
Section 3.5(a).
"Commitment Period" means the period from and including the
Closing Date to but not including the earlier of (i) the Termination
Date, or (ii) the date on which the Revolving Commitment terminates in
accordance with the provisions of this Credit Agreement.
"Consolidated" means, when used with reference to Fixed
Charges or Funded Debt, the aggregate of Fixed Charges or Funded Debt,
as the case may be, of the Borrower and its Subsidiaries, after
eliminating all offsetting debts and credits between the Borrower and
its Subsidiaries and all other terms required to be eliminated in
accordance with GAAP. Calculations of Consolidated EBITDA, Consolidated
Revenues, Consolidated Fixed Charges and Consolidated Income Available
for Fixed Charges shall be made on a consolidating pro forma basis, as
if (i) any consolidation or merger with or into any Person by the
Borrower or any Subsidiary, any Transfer of all or substantially all of
the assets of the Borrower or any Subsidiary to any Person or any
Transfer of all or substantially all of the assets of any Person to the
Borrower or any Subsidiary that has occurred during the preceding four
Fiscal Quarters had occurred at the commencement of such period and
(ii) any Indebtedness incurred or assumed by the Borrower and its
Subsidiaries during the preceding four Fiscal Quarters (other than any
refinancing of Indebtedness to the extent that the principal amount of
such Indebtedness did not increase) had been in effect at the
commencement of such period.
"Consolidated EBITDA" means, with respect to any date of
determination, the sum of (a) Consolidated Net Income for the most
recently ended four Fiscal Quarters and (b) the amount of all Interest
Charges, depreciation, amortization, income taxes, deferred items and
other non-cash expenses of the Borrower and its Subsidiaries, but only
to the extent deducted in the determination of Consolidated Net Income
for the most recently ended four Fiscal Quarters;
"Consolidated Group" means the Borrower and its consolidated
subsidiaries, as determined in accordance with GAAP.
6
12
"Consolidated Income Available for Fixed Charges" means, with
respect to any period, Consolidated Net Income for such period plus all
amounts deducted in the computation thereof on account of (a) Fixed
Charges and (b) taxes imposed on or measured by income or excess
profits.
"Consolidated Net Income" means, with reference to any period,
the net income (or loss) of the Borrower and its Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with
GAAP, after eliminating all offsetting debits and credits between the
Borrower and its Subsidiaries and all other terms required to be
eliminated in the course of the preparation of consolidated financial
statements of the Borrower and its Subsidiaries in accordance with
GAAP; provided that there shall be excluded:
(a) subject to clause (i) of the definition of
"Consolidated" herein, the income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary or is merged
into or consolidated with the Borrower or a Subsidiary, and
the income (or loss) of any Person, substantially all of the
assets of which have been acquired in any manner, realized by
such other Person prior to the date of acquisition;
(b) the income (or loss) of any Person (other than a
Subsidiary) in which the Borrower or any Subsidiary has an
ownership interest, except to the extent that any such income
has been actually received by the Borrower or such Subsidiary
in the form of cash dividends or similar cash distributions;
(c) the undistributed earnings of any Subsidiary 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 its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary;
(d) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve
was made out of income accrued during such period;
(e) any aggregate net gain (but not any aggregate net
loss) during such period arising from the sale, conversion,
exchange or other disposition of capital assets (such term to
include, without limitation, (i) all non-current assets and,
without duplication, (ii) the following, whether or not
current: all fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed
assets, and all Securities);
(f) any gains resulting from any write-up of any
assets (but not any loss resulting from any writedown of any
assets);
(g) any net gain from the collection of the proceeds
of life insurance policies;
7
13
(h) any gain arising from the acquisition of any
Security, or the extinguishment, under GAAP, of any
Indebtedness, of the Borrower or any Subsidiary;
(i) any net income or gain (but not any net loss)
during such period from (i) any change in accounting
principles in accordance with GAAP, (ii) any prior period
adjustments resulting from any change in accounting principles
in accordance with GAAP, (iii) any extraordinary items, or
(iv) any discontinued operations or the disposition thereof;
(j) any deferred credit representing the excess of
equity in any Subsidiary at the date of acquisition over the
cost of the investment in such Subsidiary; and
(k) any portion of such net income that cannot be
freely converted into United States Dollars.
"Consolidated Net Worth" means, at any time, (a) Consolidated
Total Assets minus (b) the total liabilities of the Borrower and its
Subsidiaries which would be shown as liabilities on a consolidated
balance sheet of the Borrower and its Subsidiaries as of such time
prepared in accordance with GAAP.
"Consolidated Revenues" means the revenue of the Borrower and
its Subsidiaries for the applicable period, as determined in accordance
with GAAP, after eliminating all offsetting debits and credits between
the Borrower and its Subsidiaries and all other terms required to be
eliminated in the course of the preparation of consolidated financial
statements of the Borrower and its Subsidiaries in accordance with
GAAP.
"Consolidated Senior Leverage Ratio" means, as of the last day
of each fiscal quarter, the ratio of (i) Funded Debt of the Borrowers
and its Subsidiaries on such day determined on a consolidated basis to
(ii) Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of such day.
"Consolidated Total Assets" means, as of any date of
determination, the total assets of the Borrower and its Subsidiaries
which would be shown as assets on a consolidated balance sheet of the
Borrower and its Subsidiaries as of such time prepared in accordance
with GAAP, after eliminating all amounts properly attributable to
minority interests, if any, in the stock and surplus of Subsidiaries.
"Consolidated Total Tangible Assets" means Consolidated Total
Assets less and except goodwill and other intangible assets of the
Borrower and its Subsidiaries on a consolidated basis determined in
accordance with GAAP.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or undertaking to which such Person is a party or
by which it or any of its Property is bound.
8
14
"Credit Documents" means a collective reference to this Credit
Agreement, the Revolving Note, the LOC Documents, the BA Documents,
each Joinder Agreement and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Current Maturities of Funded Debt" means, at any time and
with respect to any item of Funded Debt, the portion of such Funded
Debt outstanding at such time which by the terms of such Funded Debt or
the terms of any instrument or agreement relating thereto is due on
demand or within one year from such time (whether by sinking fund,
other required prepayment or final payment at maturity) and is not
directly or indirectly renewable, extendible or refundable at the
option of the obligor under an agreement or firm commitment in effect
at such time to a date one year or more from such time.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Determination Date" means with respect to any Foreign
Currency Loan:
(a) in connection with the origination of any new
Loan advance, the Business Day which is the earliest of the
date such credit is extended, the date the rate is set or the
date the bid is accepted, as applicable;
(b) in connection with any extension or conversion or
continuation of an existing Loan, the last Business Day of
each month or the Business Day which is the earlier of the
date such advance is extended, converted or continued, or the
date the rate is set, as applicable, in connection with any
extension, conversion or continuation; or
(c) the date of any reduction of the Revolving
Committed Amount pursuant to the terms of Section 3.4; and
in addition to the foregoing, such additional dates not more frequently
than once a month as may be determined by the Bank. For purposes of
determining availability hereunder, the rate of exchange for Available
Foreign Currency shall be the spot rate for such Foreign Currency as
quoted by the Bank at or about 10:00 A.M. (Charlotte, North Carolina
time) on the day of determination.
"Dollar Amount" means (a) with respect to Obligations
denominated in Dollars, such amount and (b) with respect to Obligations
denominated in a Foreign Currency, (i) in the case of Loans, the Dollar
Equivalent of such amount on the applicable date contemplated in this
Credit Agreement and (ii) in the case of LOC Obligations, (A) if the
Borrower has entered into a Hedging Agreement with respect to such LOC
Obligations, the Dollar Equivalent of such amount on the applicable
date contemplated in this Credit Agreement or (B) if the Borrower has
not entered into a Hedging Agreement with
9
15
respect to such LOC Obligations, an amount equal to 120% of the Dollar
Equivalent of such amount on the applicable date contemplated in this
Credit Agreement.
"Dollar Equivalent" means, on any date, with respect to an
amount denominated in a Foreign Currency, the amount of Dollars into
which the Bank could, in accordance with its practice from time to time
in the interbank foreign exchange market, convert such amount of such
Foreign Currency at its spot rate of exchange (inclusive of all
reasonable related costs of conversion, if any, that are actually
incurred) at or about 10:00 A.M., Charlotte, North Carolina time, on
such date.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Credit Party" means any Credit Party which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Domestic Subsidiary" means any Subsidiary which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Eligible Bankers' Acceptance" means a Bankers' Acceptance
which meets the requirements of 12 U.S.C. Section 372(a).
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Transaction" means, with respect to the Borrower or
any of its Subsidiaries, any issuance of shares of capital stock or
other equity interest, including stock and equity interests issued in
connection with acquisitions permitted hereunder, other than an
issuance (i) to the Borrower or a Subsidiary of the Borrower, or (ii)
in connection with the exercise by a present or former employee,
officer or director under a stock incentive plan, stock option plan or
other equity based compensation plan or arrangement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group
10
16
which includes the Borrower and which is treated as a single employer
under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (vi) the complete or
partial withdrawal of the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect
to any Plan; or (vii) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Eurodollar Reserve Percentage" for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next
higher 1/100th of 1%), which is in effect for such day as prescribed by
the Federal Reserve Board (or any successor) for determining the
maximum reserve requirement (including without limitation any basic,
supplemental or emergency reserves) in respect of Eurocurrency
liabilities, as defined in Regulation D of such Board as in effect from
time to time, or any similar category of liabilities for a member bank
of the Federal Reserve System in New York City.
"Event of Default" means such term as defined in Section 9.1.
"Extension of Credit" means the making of any Revolving Loan
(including the extension of, or conversion into, a LIBOR Rate Loan) or
the issuance or extension of any Letter of Credit or the creation and
discount of a Banker's Acceptance hereunder.
"Fees" means all fees payable pursuant to Section 3.5.
"First Union" means First Union National Bank and its
successors.
"Fiscal Quarter" means a fiscal quarter of the Borrower or any
of its Subsidiaries which shall be any quarterly period ending on March
31, June 30, September 30 or December 31 of any year.
"Fiscal Year" means, with respect to any Person, a fiscal year
of such Person.. The term "Fiscal Year, " when used without reference
to any Person, shall mean a Fiscal Year of the Borrower ending on
September 30, of any year.
11
17
"Fixed Charges" means, with respect to any date of
determination, the sum of (a) Interest Charges for the most recently
ended four Fiscal Quarters and (b) Lease Rentals for the most recently
ended four Fiscal Quarters.
"Fixed Charges Coverage Ratio" means, as of any date of
determination thereof, the ratio of (a) Consolidated Income Available
for Fixed Charges for the most recently ended four Fiscal Quarters to
(b) Consolidated Fixed Charges for such period.
"Foreign Credit Party" means a Credit Party which is not a
Domestic Credit Party.
"Foreign Currency" means Available Foreign Currency.
"Foreign Currency Equivalent" means, on any date, with respect
to an amount denominated in Dollars, the amount of any applicable
Available Foreign Currency into which the Bank could, in accordance
with its practice from time to time in the interbank foreign exchange
market, convert such amount of Dollars at its spot rate of exchange
(inclusive of all reasonable related costs of conversion, if any are
actually incurred) applicable to the relevant transaction at or about
10:00 A.M., Charlotte, North Carolina time, on such date.
"Foreign Currency Loan" means any Loan denominated in an
Available Foreign Currency.
"Foreign Subsidiary" means a Subsidiary which is not a
Domestic Subsidiary.
"Funded Debt" means, with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any
instrument or agreement relating thereto matures, or which is otherwise
payable or unpaid, one year or more from, or is directly or indirectly
renewable or extendible at the option of the obligor in respect thereof
to a date one year or more (including, without limitation, an option of
such obligor under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of one year or
more) from, the date of the creation thereof; provided that Funded Debt
shall include, as at any date of determination, Current Maturities of
Funded Debt; provided further that Funded Debt shall not include any
Indebtedness which by its terms is expressly subordinated in right of
payment to the prior payment of the obligations under the Credit
Agreement and other Credit Documents on terms and conditions
satisfactory to the Bank, including, without limitation, the
Subordinated Notes.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
12
18
"Guarantor" means each of those other Persons identified as a
"Guarantor" on the signature pages hereto, and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranteed Obligations" means, as to each Guarantor, without
duplication, (i) all obligations of the Borrower to the Bank, whenever
arising, under this Credit Agreement , the Revolving Note or the other
Credit Documents relating to the Obligations hereunder, and (ii) all
liabilities and obligations, whenever arising, owing from the Borrower
to the Bank, or any Affiliate of the Bank, arising under any Hedging
Agreement relating to Obligations hereunder.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and the Bank, or any Affiliate of the Bank.
"Indebtedness" of any Person means (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of
Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
13
19
obligations secured thereby have been assumed, provided that for
purposes hereof the amount of such Indebtedness shall be limited to the
greater of (A) the amount of such Indebtedness as to which there is
recourse to such Person and (B) the fair market value of the property
which is subject to the Lien, (vii) all Guaranty Obligations of such
Person, (viii) the principal portion of all obligations of such Person
under Capital Leases, (ix) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements (including, but
not limited to, the Hedging Agreements), (x) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (xi) all
preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due,
by a fixed date, (xii) the outstanding Attributed Principal Amount
under any Securitization Financing and (xiii) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
to which such Person is a party, where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP. The Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in
which such Person is a general partner or a joint venturer, but only to
the extent to which there is recourse to such Person for payment of
such Indebtedness.
"Interest Charges" means, with reference to any period, the
sum (without duplication) of the following (in each case, eliminating
all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the
Borrower and its Subsidiaries in accordance with GAAP): (a) all
interest in respect of Indebtedness of the Borrower and its
Subsidiaries (including imputed interest on Capital Lease Obligations)
deducted in determining Consolidated Net Income for such period,
together with all interest capitalized or deferred during such period
and not deducted in determining Consolidated Net Income for such
period, and (b) all debt discount and expense amortized or required to
be amortized in the determination of Consolidated Net Income for such
period.
"Interest Payment Date" (a) as to any Alternate Base Rate
Loan, the last day of each March, June, September and December to occur
while such Loan is outstanding, (b) as to any LIBOR Rate Loan having an
Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any LIBOR Rate Loan having an Interest Period
longer than three months, each day which is three months after the
first day of such Interest Period and the last day of such Interest
Period.
"Interest Period" with respect to any LIBOR Rate Loan,
(i) initially, the period commencing on the borrowing
date or conversion date, as the case may be, with respect to
such LIBOR Rate Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in the notice of
borrowing or notice of conversion given with respect thereto;
and
14
20
(ii) thereafter, each period commencing on the last day
of the immediately preceding Interest Period applicable to
such LIBOR Rate Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice
to the Bank not less than three Business Days prior to the
last day of the then current Interest Period with respect
thereto;
provided that the foregoing provisions are subject to the following:
(A) if any Interest Period pertaining to a LIBOR Rate
Loan 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;
(B) any Interest Period pertaining to a LIBOR Rate
Loan 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 the relevant calendar
month;
(C) if the Borrower shall fail to give notice as
provided above, the Borrower shall be deemed to have selected
an Alternate Base Rate Loan to replace the affected LIBOR Rate
Loan;
(D) any Interest Period in respect of any Loan that
would otherwise extend beyond the Termination Date shall end
on the Termination Date; and
(E) in the case of LIBOR Rate Loans which are
denominated in Dollars, no more than four (4) LIBOR Rate Loans
may be in effect at any time, and in the case of LIBOR Rate
Loans which are denominated in Available Foreign Currencies,
no more than four (4) LIBOR Rate Loans may be in effect at any
time. For purposes hereof, LIBOR Rate Loans with different
Interest Periods shall be considered as separate LIBOR Rate
Loans, even if they shall begin on the same date and have the
same duration, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at
the end of existing Interest Periods to constitute a new LIBOR
Rate Loan with a single Interest Period.
"Invested Amount" shall have the meaning given such term in
the definition of Attributed Principal Amount.
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person.
15
21
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.10 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.10.
"Lease Rentals" means, with reference to any period, the sum
of rental and other obligations required to be paid during such period
by the Borrower or any Subsidiary as lessee under all leases of real or
personal property (other than Capital Leases), excluding any amount
required to be paid by the lessee (whether or not therein designated as
rental or additional rental) on account of maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges;
provided that, if at the date of determination, any such rental or
other obligations (or portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) (i) shall be assumed to
be equal to the amount of such obligations for the period of 12
consecutive calendar months immediately preceding the date of
determination or (ii) if the related lease was not in effect during
such preceding 12-month period, shall be the amount estimated by the
chief financial officer or controller of the Borrower on a reasonable
basis and in good faith.
"Letter of Credit" means any Standby Letter of Credit or Trade
Letter of Credit.
"Letter of Credit Fee" shall have the meaning given such term
in Section 3.5(b).
"LIBOR" means, for any LIBOR Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) appearing on Telerate Page 3750 (or any
successor or equivalent page) as the London interbank offered rate for
deposits in Dollars or applicable Available Foreign Currency, as
appropriate, at approximately 11:00 a.m. (London time) two Business
Days prior to (or, in the case of British Pounds Sterling, on) the
first day of such Interest Period for a term comparable to such
Interest Period; plus, in the case of British Pounds Sterling, the
applicable MLA Cost. If for any reason such rate is not available, the
term "LIBOR" shall mean, for any LIBOR Rate Loan for any Interest
Period therefor, (i) the rate per annum (rounded upwards, if necessary,
to the nearest 1/100th of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars or applicable
Available Foreign Currency, as appropriate, at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided that if
more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates, or (ii)
if the no rate is available on the Reuters Screen, then the rate
determined by the Bank at which Dollars or applicable Available Foreign
Currency, as appropriate, is offered by leading banks at approximately
11:00 a.m. (London time) two Business days prior to the first day of
the applicable Interest Period; plus, in the case of British Pounds
Sterling, the applicable MLA Cost.
16
22
"LIBOR Rate" means a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the Bank
pursuant to the following formula:
LIBOR Rate = LIBOR
----------------------------------------------
1.00 minus Eurodollar Reserve Percentage
"LIBOR Rate Loan" means Loans the rate of interest applicable
to which is based on the LIBOR Rate.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans.
"LOC/BA Committed Amount" means such term as defined in
Section 2.2.
"LOC Commitment" means the commitment of the Bank to issue,
and to honor payment obligations under, Letters of Credit hereunder.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
"LOC Obligations" means, collectively, the Standby LOC
Obligations and the Trade LOC Obligations.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Consolidated Group taken as a
whole, (ii) the ability of the Credit Parties taken as a whole to
perform any material obligation under the Credit Documents to which it
is a party or (iii) the rights and remedies of the Bank under the
Credit Documents.
"Materials of Environmental Concern" means 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 Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"MLA Cost" means, with respect to any Foreign Currency Loan
denominated in British Pounds Sterling, the cost of compliance imputed
to the Bank with respect to the
17
23
Mandatory Liquid Assets requirements of the Bank of England, expressed
as a rate per annum. Determination of the MLA Cost by the Bank shall be
assumed correct and conclusive absent manifest error.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such Borrower in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"Non-Excluded Taxes" means such term as is defined in Section
3.10.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b), as required by Section
2.1(b).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Obligations" means, collectively, the Revolving Loans, the
LOC Obligations and the BA Obligations.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Organizational Documents" means, as to any Person, the
certificate of incorporation and by-laws or other organizational or
governing documents of such Person.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; (iii) Investments consisting
of stock, obligations, securities or other property received in
settlement of accounts receivable (created in the ordinary course of
business) from bankrupt obligors; (iv) Investments existing as of the
Closing Date and set forth in Schedule 8.5, (v) Guaranty Obligations
permitted by Section 8.1; (vi) acquisitions permitted by Section
8.4(d); (vii) transactions permitted by Section 8.6, (viii) loans to
employees, directors or officers in connection with the award of
convertible bonds or stock under a stock incentive plan, stock option
plan or other equity-based compensation plan or
18
24
arrangement in the aggregate not to exceed $1,000,000 (calculated on
the exercise price for any such shares) in the aggregate at any time
outstanding; (ix) other advances or loans to employees, directors,
officers or agents not to exceed $500,000 in the aggregate at any time
outstanding; (x) advances or loans to customers or suppliers that do
not exceed $2,000,000 in the aggregate at any one time outstanding,
(xi) Investments by members of the Consolidated Group and their
Subsidiaries and Affiliates existing on the Closing Date, (xii)
Investments by a Credit Party in and to a Domestic Credit Party, (xiii)
other loans, advances and investments of a nature not contemplated in
the foregoing subsections in an amount not to exceed in the aggregate
at any time outstanding an amount equal to the sum of $4,500,000 plus
an amount equal to the "unused" portion of Restricted Payments which
are permitted, but not made, in any fiscal year and (xiv) any other
Investments consented to in writing by the Bank.
"Permitted Liens" means:
(i) Liens in favor of the Bank;
(ii) Liens (other than Liens created or
imposed under ERISA) for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes being
contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(iii) statutory Liens of landlords and Liens
of carriers, warehousemen, mechanics, materialmen and
suppliers and other Liens imposed by law or pursuant to
customary reservations or retentions of title arising in the
ordinary course of business, provided that such Liens secure
only amounts not yet due and payable or, if due and payable,
are unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or
imposed under ERISA) incurred or deposits made by the Borrower
and its Subsidiaries in the ordinary course of business in
connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the
performance of tenders, statutory obligations, bids, leases,
government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for
the payment of borrowed money);
(v) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that
the judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
19
25
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens securing purchase money and
sale/leaseback Indebtedness (including Capital Leases) to the
extent permitted under Section 8.1(d), provided that any such
Lien attaches only to the Property financed or leased and such
Lien attaches thereto concurrently with or within 90 days
after the acquisition thereof in connection with the purchase
money transactions and within 30 days after the closing of any
sale/leaseback transaction;
(viii) leases or subleases granted to others
not interfering in any material respect with the business of
any member of the Consolidated Group;
(ix) any interest of title of a lessor
under, and Liens arising from UCC financing statements (or
equivalent filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this Credit
Agreement;
(x) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
(xi) Liens deemed to exist in connection
with Investments in repurchase agreements permitted under
Section 8.5;
(xii) normal and customary rights of setoff
upon deposits of cash in favor of banks or other depository
institutions; and
(xiii) Liens existing as of the Closing Date
and set forth on Schedule 6.8; provided that no such Lien
shall at any time be extended to or cover any Property other
than the Property subject thereto on the Closing Date.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Principal Shareholder" means Fred W. Wagenhals, the president
and chief executive officer of the Borrower.
20
26
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Receivables Financier" means, in connection with a
Securitization Transaction, the Person which provides financing for
such transaction whether by purchase, loan or otherwise in respect of
Receivables.
"Regulation T, U, or X" means Regulation T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Requirement of Law" means, as to any Person, 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 material property is subject.
"Responsible Officer" means the Chief Financial Officer and
the Controller.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock now or hereafter outstanding, except (A) a dividend payable
solely in shares of that class to the holders of that class and (B)
dividends and other distributions payable to a Credit Party, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of stock now or hereafter outstanding, and (iii) any payment made
to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock now or
hereafter outstanding.
"Revolving Commitment" means the commitment of the Bank to
make Revolving Loans hereunder.
"Revolving Committed Amount" means such term as defined in
Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term
in Section 2.1(a).
"Revolving Note" means the promissory note of the Borrower in
favor of the Bank evidencing the Revolving Loans in substantially the
form attached as Schedule 2.1(e), as such promissory note may be
amended, modified, supplemented, extended, renewed or replaced from
time to time.
21
27
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Securitization Transaction" means any financing transaction
or series of financing transactions that have been or may be entered
into by a member of the Consolidated Group pursuant to which such
member of the Consolidated Group may sell, convey or otherwise transfer
to (i) a Subsidiary or affiliate, or (ii) any other Person, or may
grant a security interest in, any Receivables or interests therein
secured by merchandise or services financed thereby (whether such
Receivables are then existing or arising in the future) of such member
of the Consolidated Group, and any assets related thereto, including
without limitation, all security interests in merchandise or services
financed thereby, the proceeds of such Receivables, and other assets
which are customarily sold or in respect of which security interests
are customarily granted in connection with securitization transactions
involving such assets.
"Security" shall have the meaning set forth in Section 2(1) of
the Securities Act of 1933, as amended from time to time.
"Senior Note Agreement" means the Note Purchase Agreement
dated as of January 2, 1997 issued by the Borrower in connection with
the Senior Notes, as modified, supplemented, renewed and replaced from
time to time.
"Senior Notes" means those $20,000,000, 8.05% Senior Notes of
the Borrower due January 2, 1999, as amended, modified, supplemented,
renewed and replaced from time to time.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"Standby Letter of Credit" means any standby or direct-pay
letter of credit or letter of credit which is not a Trade Letter of
Credit issued by the Bank for the account of the Borrower in accordance
with the terms of Section 2.1(a).
"Standby LOC Committed Amount" means such term as defined in
Section 2.1(a).
"Standby LOC Fee" means such term as defined in Section
3.5(b)(A).
"Standby LOC Obligations" means, at any time, the sum of (i)
the maximum Dollar Amount which is, or at any time thereafter may
become, available to be drawn under Standby Letters of Credit then
outstanding, assuming compliance with all requirements for drawings
referred to in such Standby Letters of Credit plus (ii) the aggregate
Dollar Amount of all drawings under Standby Letters of Credit honored
by the Bank and not theretofore reimbursed.
22
28
"Subordinated Notes" means, collectively, those $100,000,000
aggregate principal amount of 4.75% Convertible Subordinated Notes due
April 1, 2005 issued by the Borrower, as amended and modified.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50% of
the voting interests at any time. Unless otherwise identified,
"Subsidiary" or "Subsidiaries" shall mean Subsidiaries of the Borrower.
"Termination Date" means
(i) as to Revolving Loans and the Revolving
Commitment, April 1, 2001, or if extended with the written
consent of the Bank, such later date as to which the Bank may
agree; and
(ii) as to BA Obligations, LOC Obligations and the
Commitments relating thereto, April 1, 1999, or if extended
with the written consent of the Bank, such later date as to
which the Bank may agree.
"Trade Letter of Credit" means any commercial, trade or
documentary letter of credit issued by the Bank for the account of the
Borrower in accordance with the terms of Section 2.2.
"Trade LOC Obligations" means, at any time, the sum of (i) the
maximum Dollar Amount which is, or ant any time thereafter may become,
available to be drawn under Trade Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Trade Letters of Credit plus (ii) the aggregate Dollar Amount of
all drawings under Trade Letters of Credit honored by the Bank and not
theretofore reimbursed.
"Transfer" means the sale, lease, transfer, conveyance,
abandonment or other disposition, directly or indirectly, in a single
transaction or a series of transactions of all or any part of a
Person's assets.
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary
100% of whose Voting Stock or other equity interests is at the time
owned by such Person directly or indirectly through other Wholly Owned
Subsidiaries.
23
29
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until" each mean
"to but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Bank hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered pursuant
to Section 7.1 hereof (or, prior to the delivery of the first financial
statements pursuant to Section 7.1 hereof, consistent with the annual audited
financial statements referenced in Section 6.1(i)); provided, however, if (a)
the Borrower shall object to determining such compliance on such basis at the
time of delivery of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) the Bank shall so object in
writing within 30 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower to the Bank as to which no such objection
shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Commitment.
During the Commitment Period, subject to the terms and conditions
hereof, the Bank agrees to make revolving loans in Dollars and in Available
Foreign Currencies, and to issue Standby Letters of Credit in Dollars and in
Available Foreign Currencies for the account of, the Borrower; provided that (i)
the aggregate principal Dollar Amount (determined as of the most recent
Determination Date) of Revolving Loans and Standby LOC Obligations shall not
exceed TWENTY MILLION DOLLARS ($20,000,000) (the "Revolving Committed Amount"),
and (ii) the aggregate principal Dollar Amount (determined as of the most recent
Determination Date) of Standby LOC Obligations shall not exceed FIVE MILLION
DOLLARS ($5,000,000) (the "Standby LOC Committed Amount"). Revolving Loans which
are denominated in Dollars may consist of Alternate Base Rate Loans or LIBOR
Rate Loans and Revolving Loans which are denominated in Available Foreign
Currencies shall consist solely of LIBOR Rate Loans, provided that no more than
four (4) separate LIBOR Rate Loans denominated in Available Foreign Currencies
may exist at any time, no more than six (6) LIBOR Rate Loans (including LIBOR
Rate Loans denominated in Available Foreign Currencies) may exist at any time.
Revolving Loans may be repaid and reborrowed in accordance with the provisions
hereof. Standby Letters of Credit issued hereunder (i) shall be of a duration
reasonably acceptable to the
24
30
Bank, but shall not in any event, extend beyond the Termination Date, (ii) may
be issued subject to any additional terms and provision provided in any
application or other document executed in connection therewith, and (iii) may be
issued subject to the Uniform Customs and Practice for Documentary Credits as
published by the International Chamber of Commerce. The obligation of the Bank
to make Extensions of Credit is subject to the condition that the
Representations and Warranties set forth herein are true and correct in all
material respects (except as to items stated as of a particular time).
(b) Notices.
Requests by the Borrower for Extensions of Credit hereunder, and for
extensions or conversions of Loans hereunder, shall be made by written notice
(or telephone notice promptly confirmed in writing) by 12:00 Noon Charlotte,
North Carolina time on (i) the Business Day prior to the requested borrowing,
extension or conversion in the case of Alternate Base Rate Loans, (ii) the third
Business Day prior to the requested borrowing, extension or conversion in the
case of LIBOR Rate Loans and (iii) the third Business Day prior to the requested
date of issuance of a Standby Letter of Credit. Each request shall be in a
minimum principal dollar amount of $1,000,000 (or approximate Dollar Equivalent)
in the case of LIBOR Rate Loans and $100,000 in the case of Alternate Base Rate
Loans and, in each case, integral multiples of $100,000 (or approximate Dollar
Equivalent) in excess thereof, and shall specify the date of the requested
borrowing, extension or conversion, the currency and aggregate amount to be
borrowed, extended or converted and if an extension of conversion, the Loan
which is being extended or converted, and whether the borrowing, extension or
conversion shall consist of LIBOR Rate Loans, Alternate Base Rate Loans or
combination thereof. If the Borrower shall fail to specify (A) the type of Loan
requested for a borrowing, the request shall be deemed a request for a Alternate
Base Rate Loan, (B) the duration of the applicable Interest Period in the case
of LIBOR Rate Loans, the request shall be deemed to be a request for an Interest
Period of one month. Unless extended in accordance with the provisions hereof,
LIBOR Rate Loans shall be converted to Alternate Base Rate Loans at the end of
the applicable Interest Period. A form of Notice of Borrowing is attached as
Schedule 2.1(b).
(c) Interest Rate.
(i) Revolving Loans. Subject to the provisions of Section 3.1,
the Revolving Loans hereunder shall bear interest at a per annum rate
equal to (i) in the case of LIBOR Rate Loans, the LIBOR Rate plus the
Applicable Percentage, and (ii) in the case of Alternate Base Rate
Loans, the Alternate Base Rate plus the Applicable Percentage, payable,
in each case, on each Interest Payment Date.
(ii) Letters of Credit. The unreimbursed portion of any
drawing under at Standby Letter of Credit shall bear interest payable
on demand, at a per annum rate equal to the Alternate Base Rate plus
two percent (2%) from the date of the drawing.
(d) Repayment.
(i) Repayment of Revolving Loans. The Revolving Loans shall be
due and payable on the Termination Date, together with accrued interest
and fees.
25
31
(ii) Reimbursement of Standby Letters of Credit. The Bank will
notify the Borrower of any drawing under a Standby Letter of Credit
issued hereunder and the amount of any such drawing shall be due and
payable in full on the date of such drawing. Unless it shall receive
direction from the Borrower to the contrary, the Bank may, but shall
not be required to, make a Revolving Loan advance to reimburse the
amount an such drawing. The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to
payment the Borrower may claim or have against the Bank, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the
Borrower or any other Credit Party to receive consideration or the
legality, validity, regularity or unenforceability of the Letter of
Credit.
(e) Revolving Note.
The Revolving Loans shall be evidenced by the Revolving Note.
2.2 Trade Letter of Credit Facility.
(a) Issuance. During the Commitment Period, subject to the terms and
conditions hereof and of the LOC Documents, if any, and such other terms and
conditions which the Bank may reasonably require, the Bank shall issue such
Trade Letters of Credit in Dollars and in Available Foreign Currencies as the
Borrower may request for its own account or for the account of another Credit
Party as provided herein, in a form acceptable to the Bank, for the purposes
hereinafter set forth; provided that the aggregate principal Dollar Amount
(determined as of the most recent Determination Date) of Trade LOC Obligations
plus BA Obligations shall not exceed THIRTY MILLION DOLLARS ($30,000,000) at any
time (the "LOC/BA Committed Amount). Trade Letters of Credit issued under this
Section 2.2 shall be trade or commercial letters of credit (as opposed to
standby letters of credit) and shall not have an original expiry date more than
six months from the date of issuance or extension, nor an expiry date, whether
as originally issued or by extension, extending beyond the Termination Date.
Each Trade Letter of Credit shall comply with the related LOC Documents The
issuance date of each Trade Letter of Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a Trade Letter
of Credit shall be submitted by the Borrower to the Bank at least three (3)
Business Days prior to the requested date of issuance (or such shorter period as
may be agreed by the Bank). A form of Notice of Request for Letter of Credit is
attached as Schedule 2.2(b).
(c) Reimbursement. In the event of any drawing under any Trade Letter
of Credit, the Bank will promptly notify the Borrower. The Borrower promises to
reimburse the Bank on the day of drawing under any Trade Letter of Credit
(either with the proceeds of a Revolving Loan obtained hereunder or otherwise)
in same day funds. If the Borrower shall fail to reimburse the Bank as provided
hereinabove, the unreimbursed amount of such drawing shall bear interest at a
per annum rate equal to the Alternate Base Rate plus two percent (2%). The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances
26
32
irrespective of any rights of setoff, counterclaim or defense to payment the
Borrower may claim or have against the Bank, the beneficiary of the Letter of
Credit drawn upon or any other Person, including without limitation any defense
based on any failure of the Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or unenforceability of the
Letter of Credit.
(d) Designation of other Credit Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.2(a) hereof, a Trade Letter of Credit
issued hereunder may contain a statement to the effect that such Letter of
Credit is issued for the account of a Credit Party, provided that
notwithstanding such statement, the Borrower shall be the actual account party
for all purposes of this Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower's reimbursement obligations hereunder
with respect to such Letter of Credit.
(e) Renewal, Extension. The renewal or extension of any Trade Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(f) Uniform Customs and Practices. The Bank may have the Trade Letters
of Credit be subject to The Uniform Customs and Practice for Documentary
Credits, as published as of the date of issue by the International Chamber of
Commerce (the "UCP"), in which case the UCP may be incorporated therein and
deemed in all respects to be a part thereof.
(g) Indemnification; Nature of Bank's Duties.
(i) In addition to its other obligations under this Section
2.2, the Borrower hereby agrees to protect, indemnify, pay and save the
Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Bank may incur or be subject to as
a consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Bank to honor a drawing under a Letter
of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Bank, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of
Credit by the beneficiary thereof. The Bank shall not be responsible:
(A) for the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer
or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D)
for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under a
27
33
Letter of Credit or of the proceeds thereof; and (E) for any
consequences arising from causes beyond the control of the Bank,
including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Bank's rights or
powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Bank, under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in good faith, shall
not put the Bank under any resulting liability to the Borrower or any
other Credit Party. It is the intention of the parties that this Credit
Agreement shall be construed and applied to protect and indemnify the
Bank against any and all risks involved in the issuance of the Letters
of Credit, all of which risks are hereby assumed by the Borrower (on
behalf of itself and each of the other Credit Parties), including,
without limitation, any and all Government Acts. The Bank shall not, in
any way, be liable for any failure by the Bank or anyone else to pay
any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Bank.
(iv) Nothing in this subsection (g) is intended to limit the
reimbursement obligations of the Borrower contained herein. The
obligations of the Borrower under this subsection (g) shall survive the
termination of this Credit Agreement. No act or omissions of any
current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Bank to enforce any right, power or
benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrower shall have no obligation to indemnify the
Bank in respect of any liability incurred by the Bank (A) arising out
of the gross negligence or willful misconduct of the Bank, as
determined by a court of competent jurisdiction, or (B) caused by the
Bank's failure to pay under any Letter of Credit after presentation to
it of a request strictly complying with the terms and conditions of
such Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law, regulation,
court order or decree.
(h) Conflict with LOC Documents. In the event of any conflict between
this Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.
2.3 Bankers' Acceptances.
(a) Bankers' Acceptance Commitment. During the Commitment Period,
subject to the terms and conditions hereof and of the BA Documents, if any,
executed in connection with the creation of each Bankers' Acceptance and such
other terms and conditions which the Bank may reasonably require, the Bank shall
create and discount such Bankers' Acceptances in Dollars as the Borrower may
request from time to time as provided herein, in a form acceptable to the Bank;
provided that the sum of LOC Obligations plus the BA Obligations shall not at
any time exceed the LOC/BA Committed Amount, and provided further that the
Borrower shall not be entitled to request any Bankers' Acceptance which, if
created, would result in more than ten (10) separate Bankers' Acceptances being
outstanding hereunder at any time. The maturity of any Bankers'
28
34
Acceptances shall be the date 30, 60 or 90 days after the creation thereof, as
the Borrower may elect; provided that, no such maturity shall extend beyond the
date falling five (5) days before the Termination Date. Each Bankers' Acceptance
shall comply with the related BA Documents and shall be executed on behalf of
the Borrower and presented to the Bank pursuant to such procedures as are
provided for in such BA Documents or otherwise provided or required by the Bank.
The face amount of any Bankers' Acceptance shall be in a minimum amount of
$100,000 and integral multiples of $100,000 in excess thereof. The creation and
maturity date of each Bankers' Acceptance shall be a Business Day.
Notwithstanding the foregoing, the Bank shall not be obligated to create or
discount any Bankers' Acceptance (i) that is not an Eligible Bankers'
Acceptance, or (ii) if creation thereof would cause the BA Agent to exceed the
maximum amount of outstanding bankers' acceptances permitted by applicable law.
(b) Notice and Requests. Any request for the creation and discount of a
Bankers' Acceptance shall be submitted to the Bank by 9:30 A.M. (Charlotte,
North Carolina time) on the requested date of creation and discount by
completion of a Bankers' Acceptance Request in form acceptable to the Bank (a
"BA Request") and shall be accompanied by such documents as are specified
therein and in the related BA Documents.
(c) Discount of Bankers' Acceptances. Upon the creation by the Bank of
a Bankers' Acceptance, the Bank shall discount such Committed Bankers'
Acceptance by deducting from the face amount thereof a discount equal to the sum
of BA Discount Reference Rate plus the Applicable Percentage (the "Applicable BA
Discount Rate") applied against the face amount of the Bankers' Acceptance for
the term thereof, and the Bank shall make the net amount available in
immediately available funds to the Borrower. The Bank may retain or rediscount,
at its election, any Bankers' Acceptance and the amount received by the Bank
upon payment thereof at maturity or upon rediscounting shall be solely for the
account of the Bank.
(d) Reimbursement. The Bank shall give prompt notice to the Borrower in
each case of its honor of a mature Bankers' Acceptance. The Borrower shall
thereupon reimburse the Bank on the same day on which the Bank honors a matured
Bankers' Acceptance for the full amount of the related BA Reimbursement
Obligation in Dollars and in immediately available funds. If the Borrower shall
fail to reimburse the Bank as provided hereinabove, the related BA Reimbursement
Obligation shall bear interest at a per annum rate equal to the Alternate Base
Rate plus two percent (2%). The Borrower's reimbursement obligations hereunder
shall be absolute and unconditional under all circumstances irrespective of any
rights of set-off, counterclaim or defense to payment the Borrower may claim or
have against the Bank or any other Person.
(e) Eligibility Requirement. The Borrower agrees that, in the event
that any Bankers' Acceptance created (or to be created) shall not be an Eligible
Bankers' Acceptance, the Borrower shall, upon demand by the Bank, pay to the
Bank additional amounts sufficient to compensate the Bank for any increased
costs resulting therefrom (including without limitation costs resulting from any
reserve requirement, premium liability to the Federal Deposit Insurance
Corporation, or a higher discount rate). A detailed statement as to the amount
of such increased costs, prepared in good faith and submitted by the Bank to the
Borrower, shall be conclusive and binding for all purposes, absent manifest
error in computation.
29
35
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by law, interest on
the Loans and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate 2% greater
than the rate which would otherwise be applicable (or if no rate is applicable,
whether in respect of interest, fees or other amounts, then 2% greater than the
Alternate Base Rate).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have
the option, on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another interest
rate type; provided, however, that (i) except as provided in Section 3.8, LIBOR
Rate Loans may be converted into Alternate Base Rate Loans only on the last day
of the Interest Period applicable thereto, (ii) LIBOR Rate Loans may be
extended, and Alternate Base Rate Loans may be converted into LIBOR Rate Loans,
only if no Default or Event of Default is in existence on the date of extension
or conversion, (iii) Loans extended as, or converted into, LIBOR Rate Loans
shall be subject to the terms of the definition of "Interest Period" set forth
in Section 1.1 and shall be in such minimum amounts as provided in Section
2.1(b), and (iv) any request for extension or conversion of a LIBOR Rate Loan
which shall fail to specify an Interest Period shall be deemed to be a request
for an Interest Period of one month. Each such extension or conversion shall be
effected by the Borrower by giving a Notice of Extension/Conversion (or
telephone notice promptly confirmed in writing) to the Bank prior to 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a LIBOR Rate Loan into a Alternate Base Rate Loan, and on the
third Business Day prior to, in the case of the extension of a LIBOR Rate Loan
as, or conversion of a Alternate Base Rate Loan into, a LIBOR Rate Loan, the
date of the proposed extension or conversion, specifying the date of the
proposed extension or conversion, the Loans to be so extended or converted, the
types of Loans into which such Loans are to be converted and, if appropriate,
the applicable Interest Periods with respect thereto. Each request for extension
or conversion shall be irrevocable and shall constitute a representation and
warranty by the Borrower of the matters specified in subsections (a) through (d)
of Section 5.2. In the event the Borrower fails to request extension or
conversion of any LIBOR Rate Loan in accordance with this Section, or any such
conversion or extension is not permitted or required by this Section, then (i)
in the case of LIBOR Rate Loans denominated in Dollars, such LIBOR Rate Loan
shall be continued as a LIBOR Rate Loan denominated in Dollars at the end of the
Interest Period applicable thereto for an Interest Period of one month, and (ii)
in the case of LIBOR Rate Loans in an Available Foreign Currency, such LIBOR
Rate Loan shall be automatically continued as a LIBOR Rate Loan in the same
Available Foreign Currency for an Interest Period of one month. The Bank shall
give the Bank notice as promptly as practicable of any such proposed extension
or conversion affecting any Loan.
30
36
3.3 Prepayments.
(a) Voluntary Prepayments. Revolving Loans may be repaid in
whole or in part without premium or penalty; provided that (i) LIBOR Rate Loans
may be prepaid only upon three (3) Business Days' prior written notice to the
Bank and must be accompanied by payment of any amounts owing under Section 3.11,
and (ii) partial prepayments shall be minimum principal amounts of $1,000,000
(or approximate Dollar Equivalents), in the case of LIBOR Rate Loans, and
$100,000, in the case of Alternate Base Rate Loans, and in integral multiples of
$100,000 (or approximate Dollar Equivalents) in excess thereof.
(b) Mandatory Prepayments. If at any time, (A) the aggregate
principal Dollar Amount (determined as of the most recent Determination Date) of
Revolving Loans and Standby LOC Obligations shall exceed the Revolving Committed
Amount, (B) the aggregate principal Dollar Amount (determined as of the most
recent Determination Date) of Standby LOC Obligations shall exceed the Standby
LOC Committed Amount or (C) the aggregate principal Dollar Amount (determined as
of the most recent Determination Date) of Trade LOC Obligations plus BA
Obligations shall exceed the LOC/BA Committed Amount, the Borrower shall
immediately make payment on the Revolving Loans and/or to a cash collateral
account in respect of the LOC Obligations and/or BA Obligations, in an amount
sufficient to eliminate the deficiency.
(c) Application. Unless otherwise specified by the Borrower,
prepayments made hereunder shall be applied first to Alternate Base Rate Loans,
then to LIBOR Rate Loans in direct order of Interest Period maturities and then
to a cash collateral account to secure LOC Obligations and BA Obligations.
Amounts prepaid hereunder may be reborrowed in accordance with the provisions
hereof.
3.4 Termination and Reduction of Commitments
(a) Voluntary Reductions. The Commitments hereunder may be
terminated or permanently reduced in whole or in part upon three (3) Business
Days' prior written notice to the Bank, provided that (i) after giving effect to
any such voluntary reduction the aggregate amount of Revolving Loans shall not
exceed the Revolving Committed Amount and the sum of LOC Obligations plus BA
Obligations shall not exceed the LOC Committed Amount, and (ii) partial
reductions shall be minimum principal amount of $1,000,000 (or approximate
Dollar Equivalents), and in integral multiples of $100,000 (or approximate
Dollar Equivalents) in excess thereof.
(b) Mandatory Reduction. The Commitments hereunder shall
terminate on the Termination Date.
3.5 Fees.
(a) Commitment Fee. In consideration of the Revolving
Commitments hereunder, the Borrower agrees to pay to the Bank a commitment fee
(the "Commitment Fee") at a per annum rate equal to the Applicable Percentage in
effect at the time on the average daily Unused Amount of the Revolving Committed
Amount for the applicable period. The
31
37
Commitment Fee shall be payable quarterly in arrears on the 5th day following
the last day of each calendar quarter for the immediately preceding quarter (or
portion thereof) beginning with the first such date to occur after the Closing
Date. As used herein, the "Unused Amount" of the Revolving Committed Amount
shall be, on any day, the Revolving Committed Amount minus the aggregate Dollar
Amount (determined as of the most recent Determination Date) of Revolving Loans
and Standby LOC Obligations then outstanding.
(b) Letter of Credit Fees. The Borrower agrees to pay to the
Bank (collectively, the "Letter of Credit Fees"):
(A) with regard to Standby Letters of Credit (the
"Standby LOC Fee"), a per annum fee equal to the Applicable
Percentage on the average daily maximum amount available to be
drawn under Standby Letters of Credit from the date of
issuance to the date of expiration, payable quarterly in
arrears at the end of each calendar quarter thereafter;
(B) with regard to trade or commercial Letters of
Credit, such fronting and negotiation fees as may be mutually
agreed upon by the Bank and the Borrower from time to time;
and
(C) customary charges of the Bank with respect to the
issuance, amendment, transfer, administration, cancellation
and conversion of, and drawings under, such Letters of Credit
as may be mutually agreed upon by the Bank and the Borrowers
from time to time.
(c) Upfront Fee. The Borrower agrees to pay to the Bank on or
before the Closing Date an upfront fee of $50,000.
3.6 Capital Adequacy.
If the Bank has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by the Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which the Bank could have achieved
but for such adoption, effectiveness, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy), then, upon
notice from the Bank to the Borrower, the Borrower shall be obligated to pay to
the Bank such additional amount or amounts as the Bank determines in good faith
will compensate the Bank for such reduction. Each determination by the Bank of
amounts owing under this Section shall, absent manifest error, be conclusive and
binding on the parties hereto.
32
38
3.7 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Bank shall have
determined (which determination shall be conclusive and binding upon the
Borrower) 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, the Bank shall give telecopy or telephonic notice
thereof to the Borrower as soon as practicable thereafter. If such notice is
given, in the case of Loans denominated in Dollars, any request for LIBOR Rate
Loans shall be made as Alternate Base Rate Loans instead, and, in the case of
Loans denominated in Foreign Currencies, any request for LIBOR Rate Loans shall
be made as Dollar denominated Alternated Base Rate Loans instead (unless the
Borrower shall otherwise request another currency or rate option available
hereunder). Until such notice has been withdrawn by the Bank, no further LIBOR
Rate Loans shall be made or continued in the affected currency.
3.8 Illegality.
Notwithstanding any other provision herein, if (i) the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for the Bank to make or
maintain LIBOR Rate Loans as contemplated by this Credit Agreement, or (ii)
there shall have occurred any change in national or international financial,
political or economic conditions (including the imposition of or any change in
exchange controls) or currency exchange rates which would make it unlawful or
impossible for any Lender to make Loans denominated in any Available Foreign
Currency as contemplated by this Agreement, then until notice that the
conditions giving rise thereto have abated or otherwise been resolved,
(a) with respect to the affected currencies, the commitment of the
Bank hereunder to make LIBOR Rate Loans, continue Loans as LIBOR Rate
Loans or convert Loans into LIBOR Rate Loans, shall forthwith be
suspended; and
(b) with respect to the affected currencies, the Bank may require
outstanding LIBOR Rate Loans to be paid or converted into Alternate Base
Rate Loans in the case of Loans denominated in Dollars, or, in the case
other currencies, paid or converted into Loans in other Available
Currencies which are not affected hereunder.
If any such conversion or payment is made on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower will pay to
the Bank such amounts, if any, as may be required pursuant to Section 3.11.
3.9 Requirements of Law.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
the Bank, or compliance by the Bank with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date:
33
39
(a) shall subject the Bank to any tax of any kind whatsoever
with respect to any Letter of Credit, any LIBOR Rate Loans made by it or
its obligation to make LIBOR Rate Loans, or change the basis of taxation
of payments to the Bank in respect thereof (except for (i) Non-Excluded
Taxes covered by Section 3.10 (including Non-Excluded Taxes imposed solely
by reason of any failure of the Bank to comply with its obligations under
Section 3.10) and (ii) changes in taxes measured by or imposed upon the
overall net income of the Bank or its applicable lending office, or any
branch or affiliate thereof, and all franchise taxes, branch taxes, taxes
on doing business or taxes on the overall capital or net worth of the Bank
or its applicable lending office, or any branch or affiliate thereof, in
each case imposed in lieu of net income taxes);
(b) 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 the Bank which is not otherwise included in the
determination of the Eurodollar Rate hereunder; or
(c) shall impose on the Bank any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to the Bank, by
an amount which the Bank deems to be material, of making, converting into,
continuing or maintaining LIBOR Rate Loans or issuing or participating in
Letters of Credit or creating and discounting Bankers' Acceptances or to reduce
any amount receivable hereunder in respect thereof, then, in any such case, upon
notice to the Borrower from the Bank in accordance herewith, the Borrower shall
be obligated to promptly pay the Bank, upon its demand, any additional amounts
necessary to compensate the Bank for such increased cost or reduced amount
receivable, provided that, in any such case, the Borrower may elect to convert
the LIBOR Rate Loans made by the Bank hereunder to Alternate Base Rate Loans by
giving the Bank at least one Business Day's notice of such election, in which
case the Borrower shall promptly pay to the Bank, upon demand, without
duplication, such amounts, if any, as may be required pursuant to Section 3.11.
If the Bank becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Borrower certifying
(x) that one of the events described in this Section has occurred and describing
in reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by the Bank and a reasonably detailed explanation of the calculation
thereof. Such a certificate as to any additional amounts payable pursuant to
this Section submitted by the Bank to the Borrower shall be conclusive and
binding on the parties hereto in the absence of manifest error. This covenant
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.10 Taxes.
Except as provided below in this Section, all payments made by the
Borrower under this Credit Agreement and the Revolving Note 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,
34
40
collected, withheld or assessed by any court, or governmental body, agency or
other official, excluding taxes measured by or imposed upon the overall net
income of the Bank or its applicable lending office, or any branch or Affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing business or taxes
on the overall capital or net worth of the Bank or its applicable lending
office, or any branch or Affiliate thereof, in each case imposed in lieu of net
income taxes, imposed: (i) by the jurisdiction under the laws of which the Bank,
applicable lending office, branch or Affiliate is organized or is located, or in
which its principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between the jurisdiction imposing such tax and the Bank,
applicable lending office, branch or Affiliate other than a connection arising
solely from the Bank having executed, delivered or performed its obligations, or
received payment under or enforced, this Credit Agreement or the Revolving Note.
If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
from any amounts payable to the Bank hereunder or under the Revolving Note, (A)
the amounts so payable to the Bank shall be increased to the extent necessary to
yield to the Bank (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
Credit Agreement and the Revolving Note, and (B) as promptly as possible
thereafter the Borrower shall send to the Bank for its own account, a certified
copy of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Bank the required receipts
or other required documentary evidence, the Borrower shall indemnify the Bank
for any incremental taxes, interest or penalties that may become payable by the
Bank as a result of any such failure. The agreements in this Section shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.11 Indemnity.
The Borrower promises to indemnify the Bank and to hold the Bank harmless
from any loss or expense which the Bank may sustain or incur (other than through
the Bank's gross negligence or willful misconduct) as a consequence of (a)
default by the Borrower in making a borrowing of, conversion into or
continuation of LIBOR Rate Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a LIBOR Rate Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement or (c) the making of a prepayment of LIBOR Rate Loans on a
day which is not the last day of an Interest Period with respect thereto. With
respect to LIBOR Rate Loans, 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 the applicable 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 LIBOR Rate Loans provided for herein over (ii) the amount of
interest (as reasonably determined by the Bank) which would have accrued to the
Bank on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank Eurodollar market. The covenants of the
Borrower set forth in this Section 3.11 shall survive the
35
41
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.12 Payments, Computations, Etc.
(a) Each payment on account of an amount due from the Borrower shall be
made in the currency in which such amount is denominated and in such funds as
are customary at the place and time of payment for the settlement of
international payments in such currency. Without limiting the terms of the
preceding sentence, accrued interest on any Loans denominated in a Foreign
Currency shall be payable in the same Foreign Currency as such Loan. Upon
request, the Bank will provide a statement to the Borrower showing the
computation used in calculating amounts denominated in foreign currencies
hereunder, which statement shall be assumed correct and conclusive absent
manifest error. The obligation of the Borrower to make each payment on account
of such amount in the currency in which such amount is denominated shall not be
discharged or satisfied by any tender, or any recovery pursuant to any judgment,
which is expressed in or converted into any other currency, except to the extent
such tender or recovery shall result in the actual receipt by the Bank of the
full amount in the appropriate currency payable hereunder. The Borrower agrees
that its obligation to make each payment on account of such amount in the
currency in which such amount is denominated shall be enforceable as an
additional or alternative claim for recovery in such currency of the amount (if
any) by which such actual receipt shall fall short of the full amount of such
currency payable hereunder, and shall not be affected by judgment being obtained
for such amount.
(b) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Bank in immediately available funds, without
offset, deduction, counterclaim or withholding of any kind, at the Bank's office
specified in Section 10.1 not later than 2:00 P.M. (Charlotte, North Carolina
time) on the date when due. Payments received after such time shall be deemed to
have been received on the next succeeding Business Day. The Bank may (but shall
not be obligated to) debit the amount of any such payment which is not made by
such time to any ordinary deposit account of the Borrower maintained with the
Bank (with notice to the Borrower). The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Bank the Loans, LOC
Obligations, BA Obligations, Fees, interest or other amounts payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
it fails so to specify, or if such application would be inconsistent with the
terms hereof, the Bank shall apply such payment in such manner as the Bank may
determine to be appropriate in respect of obligations owing by the Borrower
hereunder). Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of LIBOR Rate Loans, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. Except as expressly provided otherwise herein, all computations of interest
and Fees shall be made on the basis of actual number of days elapsed over a year
of 360 days, except with respect to computation of interest on Alternate Base
Rate Loans which (unless the Alternate Base Rate is determined by reference to
the Federal Funds Rate) shall be calculated based on a year of 365 or 366 days,
as appropriate. Interest shall accrue from and include the date of borrowing,
but exclude the date of payment.
36
42
SECTION 4
GUARANTY
4.1 The Guarantee.
Each of the Guarantors hereby jointly and severally guarantees to the
Bank, to each Affiliate of the Bank that enters into a Hedging Agreement and to
the Bank as hereinafter provided the prompt payment of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, as a mandatory prepayment, by acceleration or otherwise)
in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 hereof are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Guaranteed Obligations for amounts paid under this
Guaranty until such time as the Bank (and any Affiliates of the Bank entering
into Hedging Agreements) has been paid in full, all Commitments under the Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Bank in
connection with monies received under the Credit Documents or Hedging
Agreements. Without limiting the generality of the foregoing, it is agreed that,
to the fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor hereunder
which shall remain absolute and unconditional as described above:
37
43
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of
the Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be waived or any other guarantee of any of the Guaranteed Obligations or
any security therefor shall be released or exchanged in whole or in part
or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Bank as security for
any of the Guaranteed Obligations shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Bank exhaust any right, power or remedy
or proceed against any Person under any of the Credit Documents, any Hedging
Agreement or any other agreement or instrument referred to in the Credit
Documents or Hedging Agreements, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Bank on demand for all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel) incurred by the Bank in connection
with such rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under the Bankruptcy Code,
insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. Sections
26-7 through 26-9, inclusive. Each
38
44
Guarantor further agrees that such Guarantor shall have no right of recourse to
security for the Guaranteed Obligations, except through the exercise of the
rights of subrogation pursuant to Section 4.2.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Bank, on the other hand, the
Guaranteed Obligations may be declared to be forthwith due and payable as
provided in Section 9.2 hereof (and shall be deemed to have become automatically
due and payable in the circumstances provided in said Section 9.2) for purposes
of Section 4.1 hereof notwithstanding any stay, injunction or other prohibition
preventing such declaration (or preventing the Guaranteed Obligations from
becoming automatically due and payable) as against any other Person and that, in
the event of such declaration (or the Guaranteed Obligations being deemed to
have become automatically due and payable), the Guaranteed Obligations (whether
or not due and payable by any other Person) shall forthwith become due and
payable by the Guarantors for purposes of said Section 4.1.
4.6 Rights of Contribution.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
of this Section 4.6, (i) "Excess Funding Guarantor" shall mean, in respect of
any obligations arising under the other provisions of this Section 4 (hereafter,
the "Excess Funding Guarantied Obligations"), a Guarantor that has paid an
amount in excess of its Pro Rata Share of the Excess Funding Guarantied
Obligations; (ii) "Excess Payment" shall mean, in respect of any Excess Funding
Guarantied Obligations, the amount paid by an Excess Funding Guarantor in excess
of its Pro Rata Share of such Excess Funding Guarantied Obligations; and (iii)
"Pro Rata Share", for the purposes of this Section 4.6, shall mean, for any
Guarantor, the ratio (expressed as a percentage) of (a) the amount by which the
aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date
(if any Guarantor becomes a party hereto subsequent to the Closing Date, then
for the purposes of this Section 4.6 such subsequent Guarantor shall be deemed
to have been a Guarantor as of the Closing Date and the information pertaining
to, and only pertaining to, such
39
45
Guarantor as of the date such Guarantor became a Guarantor shall be deemed true
as of the Closing Date).
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee, and shall apply
to all Guaranteed Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Conditions to Closing.
This Credit Agreement shall become effective, and the initial Extensions
of Credit may be made, upon the satisfaction of the following conditions
precedent:
(a) Execution of Credit Agreement and Credit Documents. Receipt of
fully executed copies of this Credit Agreement and the Revolving Note.
(b) Financial Information. Receipt of financial information
regarding the Borrower and its Subsidiaries, as may be requested by, and in each
case in form and substance satisfactory to the Bank.
(c) Absence of Legal Proceedings. Except as disclosed in Schedule
6.6, the absence of any action, suit, investigation or proceeding pending in any
court or before any arbitrator or governmental instrumentality which if
adversely determined could reasonably be expected to have a Material Adverse
Effect on the Consolidated Group taken as a whole.
(d) Legal Opinions. Receipt of an opinion of counsel for the Credit
Parties relating to the Credit Documents and the transactions contemplated
herein, in form and substance satisfactory to the Bank.
(e) Corporate Documents. Receipt of the following (or their
equivalent) for each of the Credit Parties:
(i) Articles of Incorporation. Copies of the articles of
incorporation or charter documents certified to be true and complete as of
a recent date by the appropriate governmental authority of the state of
its incorporation.
(ii) Resolutions. Copies of resolutions of the Board of
Directors approving and adopting the respective Credit Documents, the
transactions contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary as of the Closing
Date to be true and correct and in force and effect as of such date.
40
46
(iii) Bylaws. Copies of the bylaws certified by a secretary or
assistant secretary as of the Closing Date to be true and correct and in
force and effect as of such date.
(iv) Good Standing. Copies, where applicable, of certificates
of good standing, existence or its equivalent certified as of a recent
date by the appropriate governmental authorities of the state of
incorporation and each other state in which the failure to so qualify and
be in good standing would have a Material Adverse Effect on the business
or operations in such state.
(v) Officer's Certificate. An officer's certificate for each
of the Credit Parties dated as of the Closing Date substantially in the
form of Schedule 5.1(f) with appropriate insertions and attachments.
(f) Fees. Receipt of all Fees, if any, owing to the Bank.
(g) Section 5.2 Conditions. The conditions specified in Section 5.2
shall be satisfied.
(h) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Credit Agreement shall be
reasonably satisfactory in form and substance to the Bank.
5.2 Conditions to All Extensions of Credit.
The obligation of the Bank to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein or in any other Credit Documents or
which are contained in any certificate furnished at any time under or in
connection herewith shall be true and correct in all material respects on and as
of the date of such Extension of Credit as if made on and as of such date
(except for those which expressly relate to an earlier date).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect to the
Extension of Credit to be made on such date unless such Default or Event of
Default shall have been waived in accordance with this Credit Agreement.
(c) No Material Adverse Effect. No circumstances, events or
conditions shall have occurred since the date of the audited financial
statements referenced in Section 6.1 which would have a Material Adverse Effect.
(d) Additional Conditions to Revolving Loans. If a Revolving Loan is
made pursuant to Section 2.1, all conditions set forth therein shall have been
satisfied.
41
47
(e) Additional Conditions to Letters of Credit. If such Extension of
Credit is made pursuant to Section 2.2, all conditions set forth therein shall
have been satisfied.
(f) Additional Conditions to Bankers' Acceptances. If such Extension
of Credit is made pursuant to Section 2.3, all conditions set forth therein
shall have been satisfied.
Each request for Extension of Credit (including extensions and
conversions) and each acceptance by the Borrower of an Extension of Credit
(including extensions and conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in subsections (a), (b) and (c), and in
(d), (e) or (f) of this Section have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each of the members of the
Consolidated Group parties hereto hereby represents and warrants to the Bank
that:
6.1 Financial Condition.
Each of the financial statements described below (copies of which have
heretofore been provided to the Bank), have been prepared in accordance with
GAAP consistently applied throughout the periods covered thereby, are complete
and correct in all material respects and present fairly the financial condition
and results from operations of the entities and for the periods specified,
subject in the case of interim Borrower-prepared statements to normal year-end
adjustments:
(i) an audited consolidated balance sheet of the Borrower and its
consolidated subsidiaries dated as of September 30, 1997, together with
related statements income and cash flows certified by Arthur Andersen LLP,
certified public accountants; and
(ii) a Borrower-prepared consolidated balance sheet of the Borrower
and its consolidated subsidiaries dated as of March 31, 1998, together
with related consolidated statements of income and cash flows.
6.2 No Changes or Restricted Payments.
Since the date of the audited financial statements referenced in Section
6.1(i), (a) there has been no circumstance, development or event relating to or
affecting the members of the Consolidated Group which has had or would be
reasonably expected to have a Material Adverse Effect, and (b) except as
permitted herein, no Restricted Payments have been made by any members of the
Consolidated Group, other than those permitted hereunder.
42
48
6.3 Organization; Existence; Compliance with Law.
Each of the members of the Consolidated Group (a) is a corporation duly
organized, validly existing in good standing under the laws of the jurisdiction
of its organization, (b) has the corporate or other necessary 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 as a foreign entity 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, other than in such jurisdictions where the failure to be so
qualified and in good standing would not, in the aggregate, have a Material
Adverse Effect, and (d) is in compliance with all Organizational Documents and
Requirements of Law, except to the extent that the failure to comply therewith
would not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is a party. No 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 borrowings hereunder or with the execution,
delivery or performance of any Credit Documents by the Credit Parties (other
than those which have been obtained, such filings as are required by the
Securities and Exchange Commission and to fulfill other reporting requirements
with Governmental Authorities) or with the validity or enforceability of any
Credit Document against the Credit parties. Each Credit Document to which it is
a party constitutes a legal, valid and binding obligation of such Credit Parties
enforceable against such Credit Parties in accordance with their respective
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).
6.5 No Legal Bar.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any member of the
Consolidated Group (except those as to which waivers or consents have been
obtained, 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
Requirement of Law or Contractual Obligation other than the Liens arising under
or contemplated in connection with the Credit Documents. No member of the
Consolidated Group is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a Material
Adverse Effect.
43
49
6.6 No Material Litigation.
Except as disclosed on Schedule 6.6 (as updated from time to time with the
consent of the Bank), no claim, litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the best
knowledge of the Credit Parties, threatened by or against, any members of the
Consolidated Group or against any of their respective properties or revenues
which (a) relate to the Credit Documents or any of the transactions contemplated
hereby or thereby, (b) if adversely determined, would reasonably be expected to
have a Material Adverse Effect. Set forth on Schedule 6.6 (as updated from time
to time with the consent of the Bank) is a summary of all material claims,
litigation, investigations and proceedings pending or, to the best knowledge of
the Credit Parties, threatened by or against the members of the Consolidated
Group or against any of their respective properties or revenues, and none of
such actions, individually or in the aggregate, if adversely determined is
reasonably expected to have a Material Adverse Effect, except as disclosed on
Schedule 6.6 (as updated from time to time with the consent of the Bank).
6.7 No Default.
No Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens.
Each of members of the Consolidated Group has good record and marketable
title in fee simple to, or a valid leasehold interest in, all its material real
property, and good title to, or a valid leasehold interest in, all its other
material property, and none of such property is subject to any Lien, except for
Permitted Liens.
6.9 Intellectual Property.
Each of the members of the Consolidated Group owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Credit Party know of any such claim, and the use of such
Intellectual Property by the members of the Consolidated Group does not infringe
on the rights of any Person, except for such claims and infringements that in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
6.10 No Burdensome Restrictions.
No Requirement of Law, Organizational Document or Contractual Obligation
of the members of the Consolidated Group would be reasonably expected to have a
Material Adverse Effect.
44
50
6.11 Taxes.
Each of the members of the Consolidated Group has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and has paid (a) all taxes shown to be due and payable on said returns or
(b) all taxes shown to be due and payable on any assessments of which it has
received notice 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 (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person), and no tax Lien has been
filed, and, to the best knowledge of the Credit Parties, no claim is being
asserted, with respect to any such tax, fee or other charge.
6.12 ERISA
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as defined
in Section 4001(a)(16) of ERISA), whether or not vested, under each Single
Employer Plan, as of the last annual valuation date prior to the date on which
this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
(c) No member of the Consolidated Group nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. No member of the Consolidated Group nor any
ERISA Affiliate would become subject to any withdrawal liability under ERISA if
any member of the Consolidated Group or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No member of the Consolidated Group nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the
45
51
meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in reorganization,
insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan which has subjected or may subject any member of the
Consolidated Group or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(e) No member of the Consolidated Group nor any ERISA Affiliates has any
material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply
has been administered in compliance in all material respects of such sections.
6.13 Governmental Regulations, Etc.
(a) No part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If requested by the
Bank, the Borrower will furnish to the Bank a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 referred to in
said Regulation U. No indebtedness being reduced or retired out of the
proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U
or any "margin security" within the meaning of Regulation T. "Margin
stock" within the meanings of Regulation U does not constitute more than
25% of the value of the consolidated assets of the Borrower and its
Subsidiaries. None of the transactions contemplated by this Credit
Agreement (including, without limitation, the direct or indirect use of
the proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or regulations issued pursuant thereto, or Regulation G,
T, U or X.
(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Borrower Act of 1940, each as amended.
In addition, none of the members of the Consolidated Group is (i) an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such
a company, or (ii) a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder of any
member of the Consolidated Group is a director, executive officer or
principal shareholder of the Bank. For the purposes hereof the terms
"director", "executive officer" and "principal
46
52
shareholder" (when used with reference to the Bank) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors
of the Federal Reserve System.
(d) Each of the members of the Consolidated Group has obtained all
material licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective Property and
to the conduct of its business.
(e) None of the members of the Consolidated Group is in violation of
any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or any other
jurisdiction, or of any agency thereof (including without limitation,
environmental laws and regulations), which violation could reasonably be
expected to have a Material Adverse Effect.
(f) Each of the members of the Consolidated Group is current with
all material reports and documents, if any, required to be filed with any
state or federal securities commission or similar agency and is in full
compliance in all material respects with all applicable rules and
regulations of such commissions.
6.14 Subsidiaries.
Set forth on Schedule 6.14 are all the Subsidiaries of the Borrower at the
Closing Date, the jurisdiction of their incorporation and the direct or indirect
ownership interest of the Borrower therein.
6.15 Purpose of Extensions of Credit.
The Extensions of Credit will be used to finance permitted acquisitions
and to finance working capital and other corporate purposes. The Letters of
Credit shall be used only for or in connection with appeal bonds, reimbursement
obligations arising in connection with surety and reclamation bonds,
reinsurance, domestic or international trade transactions and obligations not
otherwise aforementioned relating to transactions entered into by the applicable
account party in the ordinary course of business.
6.16 Environmental Matters.
Except as disclosed on Schedule 6.6 and as would not reasonably be
expected to have a Material Adverse Effect:
(a) Each of the facilities and properties owned, leased or operated by the
members of the Consolidated Group (the "Properties") and all operations at the
Properties are in compliance with all applicable Environmental Laws, and there
is no violation of any Environmental Law with respect to the Properties or the
businesses operated by the members of the Consolidated Group (the "Businesses"),
and there are no conditions relating to the Businesses or Properties that could
give rise to liability under any applicable Environmental Laws.
47
53
(b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts or
concentrations that constitute or constituted a violation of, or could give rise
to liability under, Environmental Laws.
(c) None of the members of the Consolidated Group has received any written
or verbal notice of, or inquiry from any Governmental Authority regarding, any
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 Businesses, nor does any member of the
Consolidated Group have knowledge or reason to believe that any such notice will
be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf any members of the Consolidated Group in violation of, or in a manner
that would be reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any member of the Consolidated Group is or will be
named as a party, 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
any member of the Consolidated Group, the Properties or the Businesses.
(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 (including, without limitation, disposal) of any member of the
Consolidated Group in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties covenants and agrees that on the Closing Date,
and so long as this Credit Agreement is in effect and until the Commitments have
been terminated, no Obligations remain outstanding and all amounts owing
hereunder or in connection herewith have been paid in full, each of the members
of the Consolidated Group party hereto shall:
7.1 Financial Statements.
Furnish, or cause to be furnished, to the Bank:
(a) Audited Financial Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year, an audited
consolidated balance sheet of the Borrower and its subsidiaries as of the
end of the fiscal year and the related consolidated statements of income,
retained earnings, shareholders' equity and cash flows for the
48
54
year, audited by Arthur Andersen LLP, or other firm of independent
certified public accountants of nationally recognized standing reasonably
acceptable to the Bank, setting forth in each case in comparative form the
figures for the previous year, reported without a "going concern" or like
qualification or exception, or qualification indicating that the scope of
the audit was inadequate to permit such independent certified public
accountants to certify such financial statements without such
qualification.
(b) Borrower-Prepared Financial Statements. As soon as available,
but in any event
(i) within 45 days after the end of each of the first three
fiscal quarters, a Borrower-prepared consolidated balance sheet of
the Borrower and its subsidiaries as of the end of the quarter and
related Borrower-prepared consolidated statements of income and cash
flows for such quarterly period and for the fiscal year to date;
(ii) within 30 days prior to the end of each fiscal year, an
annual business plan and budget for the members of the Consolidated
Group, containing, among other things, pro forma financial
statements for the next fiscal year,
in each case setting forth in comparative form the consolidated figures
for the corresponding period or periods of the preceding fiscal year or
the portion of the fiscal year ending with such period, as applicable, in
each case subject to normal recurring year-end audit adjustments.
All such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and ,in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein) and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change in the application of accounting principles as provided in
Section 1.3.
7.2 Certificates; Other Information.
Furnish, or cause to be furnished, to the Bank:
(a) Accountant's Certificate and Reports. Concurrently with the
delivery of the financial statements referred to in subsection 7.1(a)
above, 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.
(b) Officer's Certificate. Concurrently with the delivery of the
financial statements referred to in Sections 7.1(a) and 7.1(b) above, a
certificate of a Responsible Officer in such capacity and not individually
stating that, to the best of such Responsible Officer's knowledge and
belief, (i) the financial statements fairly present in all material
49
55
respects the financial condition of the parties covered by such financial
statements, (ii) during such period the members of the Consolidated Group
have observed or performed in all material respects the covenants and
other agreements hereunder and under the other Credit Documents relating
to them, and satisfied in all material respects the conditions, contained
in this Credit Agreement to be observed, performed or satisfied by them,
(iii) such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (iv) such
certificate shall include the calculations required to indicate compliance
with Section 7.9. A form of Officer's Certificate is attached as Schedule
7.2(b).
(c) Public Information. Within thirty days after the same are sent,
copies of all reports (other than those otherwise provided pursuant to
subsection 7.1) and other financial information which any member of the
Consolidated Group sends to its public stockholders, and within thirty
days after the same are filed, copies of all financial statements and
non-confidential reports which any member of the Consolidated Group may
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority.
(d) Other Information. Promptly, such additional financial and other
information as the Bank may from time to time reasonably request.
7.3 Notices.
Give notice to the Bank of:
(a) Defaults. Immediately (and in any event within two (2) Business
Days) after a Responsible Officer of a Credit Party knows or has reason to
know thereof, the occurrence of any Default or Event of Default.
(b) Contractual Obligations. Promptly, the initiation of any default
or event of default under any Contractual Obligation of any member of the
Consolidated Group which would reasonably be expected to have a Material
Adverse Effect.
(c) Legal Proceedings. Promptly, any litigation, or any
investigation or proceeding (including without limitation, any
environmental proceeding) known to any member of the Consolidated Group
(other than those disclosed in Schedule 6.6), or any material development
in respect thereof (including those matters disclosed on Schedule 6.6),
affecting any member of the Consolidated Group which, if adversely
determined, would reasonably be expected to have a Material Adverse
Effect.
(d) ERISA. Promptly, after any Responsible Officer of the Borrower
knows or has reason to know of (i) any event or condition, including, but
not limited to, any Reportable Event, that constitutes, or might
reasonably lead to, an ERISA Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against any of their ERISA Affiliates, or of
a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or
50
56
before the due date (including extensions) thereof of all amounts which
the members of the Consolidated Group or any ERISA Affiliate are required
to contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with respect;
or (iv) any change in the funding status of any Plan that reasonably could
be expected to have a Material Adverse Effect; together with a description
of any such event or condition or a copy of any such notice and a
statement by the chief financial officer of the Borrower briefly setting
forth the details regarding such event, condition, or notice, and the
action, if any, which has been or is being taken or is proposed to be
taken by the Credit Parties with respect thereto. Promptly upon request,
the members of the Consolidated Group shall furnish the Bank with such
additional information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return (Form
5500 series), as well as all schedules and attachments thereto required to
be filed with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year" (within
the meaning of Section 3(39) of ERISA).
(e) Other. Promptly, any other development or event which a
Responsible Officer determines could reasonably be expected to have a
Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the relevant Credit Parties propose to take with respect
thereto.
7.4 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, in accordance with prudent business
practice (subject, where applicable, to specified grace periods) all material
obligations of each member of the Consolidated Group of whatever nature and any
additional costs that are imposed as a result of any failure to so pay,
discharge or otherwise satisfy such obligations, except (i) when the amount or
validity of such obligations and costs is currently being contested in good
faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Consolidated
Group, as the case may be, and (ii) to the extent that the failure to so pay,
discharge or otherwise satisfy such obligations would not have a Material
Adverse Effect.
7.5 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted
by it on the date hereof and similar or related businesses with respect to
motorsports products except to the extent that failure to comply therewith would
not, in the aggregate, have a Material Adverse Effect; preserve, renew and keep
in full force and effect its corporate existence and take all reasonable action
to maintain all rights, privileges, licenses and franchises necessary or
desirable in the normal conduct of its business; and comply with all Contractual
Obligations and Requirements of Law applicable to it except to the extent that
failure to comply with such Contractual Obligations and Requirements of Law
would not, in the aggregate, have a Material Adverse Effect.
51
57
7.6 Maintenance of Property; Insurance.
Keep all material Property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted);
maintain with financially sound and reputable insurance companies casualty,
liability and such other insurance (which may include plans of self-insurance)
with such coverage and deductibles, and in such amounts as may be consistent
with prudent business practice and in any event consistent with normal industry
practice (except to any greater extent as may be required by the terms of any of
the other Credit Documents); and furnish to the Bank, upon written request, full
information as to the insurance carried.
7.7 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 businesses and activities; and
permit, during regular business hours and upon reasonable notice, the Bank to
visit and inspect any of its properties and examine and make abstracts
(including photocopies) from any of its books and records (other than materials
protected by the attorney-client privilege and materials which the Credit
Parties may not disclose without violation of a confidentiality obligation
binding upon them) at any reasonable time, and to discuss the business,
operations, properties and financial and other condition of the members of the
Consolidated Group with officers and employees of the members of the
Consolidated Group and with their independent certified public accountants. The
cost of the inspection referred to in the preceding sentence shall be for the
account of the Bank unless an Event of Default has occurred and is continuing,
in which case the cost of such inspection shall be for the account of the Credit
Parties.
7.8 Environmental Laws.
(a) Comply in all material respects with, and take reasonable actions to
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 take reasonable actions to
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 except to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Effect;
(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 except to the extent that the same are being contested
in good faith by appropriate proceedings and the failure to do or the
pendency of such proceedings would not reasonably be expected to have a
Material Adverse Effect; and
52
58
(c) Defend, indemnify and hold harmless the Bank, and its employees,
agents, officers and directors, from and against any and all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to
the operations of the members of the Consolidated Group or the Properties,
or any orders, requirements or demands of Governmental Authorities related
thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs,
court costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the
party seeking indemnification therefor. The agreements in this paragraph
shall survive repayment of the Loans and all other amounts payable
hereunder, and termination of the Commitments.
7.9 Financial Covenants.
(a) Consolidated Senior Leverage Ratio. The Borrower will not permit, at
any time, the Consolidated Senior Leverage Ratio to be greater than 2.0 to 1.0.
(b) Fixed Charges Coverage Ratio. The Borrower will not permit, at any
time, the Fixed Charges Coverage Ratio to be less than 5.0 to 1.0.
(c) Consolidated Net Worth. The Borrower will not permit, at any time
Consolidated Net Worth to be less than the sum of (i) $95 million plus (ii) as
of the end of each fiscal quarter to occur after September 30, 1997, an amount
equal to fifty percent (50%) of Consolidated Net Income (but not less than zero)
for the fiscal quarter then ended, such increases to be cumulative plus (iii) an
amount equal to one hundred percent (100%) of the net proceeds from Equity
Transactions occurring after September 30, 1997.
7.10 Additional Guaranties.
(a) Domestic Subsidiaries. At any time any Person becomes a Domestic
Subsidiary, the Borrower will promptly notify the Bank thereof and cause
such Domestic Subsidiary to become a Guarantor hereunder by (i) execution
of a Joinder Agreement, and (ii) delivery of supporting resolutions,
incumbency certificates, corporation formation and organizational
documentation and opinions of counsel as the Bank may reasonably request.
(b) Foreign Subsidiaries. At any time any Person becomes a Foreign
Subsidiary, the Borrower will promptly notify the Bank thereof and cause
delivery of supporting resolutions, incumbency certificates, corporation
formation and organizational documentation and opinions of counsel as the
Bank may reasonably request.
7.11 Use of Proceeds.
Extensions of Credit will be used solely for the purposes provided in
Section 6.15.
53
59
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties covenants and agrees that on the Closing Date,
and so long as this Credit Agreement is in effect and until the Commitments have
been terminated, no Obligations remain outstanding and all amounts owing
hereunder or in connection herewith, have been paid in full, no member of the
Consolidated Group shall:
8.1 Indebtedness.
Contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising or existing under this Credit Agreement and
the other Credit Documents;
(b) Indebtedness evidenced by the Senior Notes in an aggregate
principal amount not to exceed $20,000,000;
(c) Indebtedness set forth in Schedule 8.1, and renewals,
refinancings and extensions thereof on terms and conditions no less
favorable than for such existing Indebtedness;
(d) Capital Lease Obligations and Indebtedness incurred, in each
case, to provide all or a portion of the purchase price or costs of
construction of an asset or, in the case of a sale/leaseback transaction
as described in Section 8.11, to finance the value of such asset owned by
a member of the Consolidated Group, provided that (i) such Indebtedness
when incurred shall not exceed the purchase price or cost of construction
of such asset or, in the case of a sale/leaseback transaction, the fair
market value of such asset, (ii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing, and (iii) the total amount of all
such Indebtedness shall not exceed an amount equal to fifteen percent
(15%) of Consolidated Net Worth as of the end of the most recent fiscal
quarter;
(e) Indebtedness and obligations owing under interest rate
protection agreements relating to the Obligations hereunder and under
interest rate, commodities and foreign currency exchange protection
agreements entered into in the ordinary course of business to manage
existing or anticipated risks and not for speculative purposes;
(f) unsecured intercompany Indebtedness owing by a member of the
Consolidated Group to another member of the Consolidated Group (subject,
however, to the limitations of Section 8.5 in the case of the member of
the Consolidated Group extending the intercompany loan, advance or
credit);
(g) other unsecured Funded Debt of the Borrower in the aggregate at
any time outstanding of up to an amount equal to an amount equal to
fifteen percent (15%) of Consolidated Net Worth as of the end of the most
recent fiscal quarter;
54
60
(h) Guaranty Obligations of Indebtedness permitted under this
Section 8.1;
(i) the Subordinated Notes; and
(j) other subordinated debt issued on terms and conditions
reasonably acceptable to the Bank in an amount equal to fifteen percent
(15%) of Consolidated Net Worth as of the end of the most recent fiscal
quarter.
8.2 Liens.
Contract, create, incur, assume or permit to exist any Lien with respect
to any of their respective property or assets of any kind (whether real or
personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.
8.3 Nature of Business.
Alter the character of their business in any material respect from that
conducted as of the Closing Date and similar or related businesses with respect
thereto.
8.4 Consolidation, Merger, Sale or Purchase of Assets, Capital
Expenditures, etc.
(a) Dissolve, liquidate or wind up their affairs, except (i) in connection
with a disposition of assets permitted by the terms of subsection (c) hereof and
(ii) for the dissolution and liquidation of a wholly-owned Subsidiary of a
Credit Party where the parent Credit Party receives the assets of such
Subsidiary;
(b) Enter into any transaction of merger or consolidation; provided,
however, that, so long as no Default or Event of Default would be directly or
indirectly caused as a result thereof,
(i) a member of the Consolidated Group (other than the Borrower) may
merge or consolidate with another member of the Consolidated Group,
provided that (A) if the Borrower is a party thereto, it shall be the
surviving corporation, (B) if a Credit Party shall be a party thereto, it
shall be the surviving corporation, and (C) the surviving corporation
shall be a Domestic Credit Party or shall become a Domestic Credit Party
pursuant to the terms of Section 7.10 concurrently with consummation of
the merger or consolidation;
(ii) a member of the Consolidated Group (other than the Borrower)
may merge or consolidate with any Person that is not a Subsidiary,
provided that the applicable conditions set forth in the foregoing
subsection (i) of this Section 8.4(b), in Section 7.10 regarding joinder
of certain Subsidiaries as Credit Parties, and in Section 8.4(d) regarding
acquisitions, are complied with in connection with any such acquisition by
merger.
(c) Sell, lease, transfer or otherwise dispose of any Property (including
without limitation pursuant to any sale/leaseback transaction) other than (i)
the sale of inventory in the ordinary course of business for fair consideration,
(ii) the sale or disposition of machinery and
55
61
equipment no longer used or useful in the conduct of such Person's business, and
(iii) other sales of assets, provided that (A) after giving effect to such sale
or other disposition, the aggregate book value of assets sold or otherwise
disposed of pursuant to this clause (iii), or the revenues therefrom, in any
given fiscal year does not exceed an amount equal to the lesser of 15% of
Consolidated Net Worth as of the end of the immediately preceding fiscal quarter
or 15% of Consolidated Revenues for the immediately preceding four Fiscal
Quarters, and (B) after giving effect to such sale or other disposition, no
Default or Event of Default would exist hereunder.
(d) Except
(i) as otherwise permitted by Section 8.4(b)(i), and
(ii) for Investments in entities in which less than 50% is (or, as a
result of the transaction, will be) owned by a Credit Party where such
Investments are permitted by subclause (xiii) of the definition of
"Permitted Investments",
purchase, lease or otherwise acquire (in a single transaction or a series of
related transactions) all or any substantial part of the Property of any other
Person without the prior written consent of the Bank, unless the Borrower shall
certify that no Default or Event of Default shall then exist and demonstrate
that no Default or Event of Default shall exist after giving effect thereto on a
pro forma basis by giving effect to the transaction as if it had occurred as of
the first day of the four fiscal quarter period ending as of the most recent
fiscal quarter preceding the date of such transaction.
(e) Take or permit any action, or fail to take any action, the effect of
which would be to cause a Domestic Credit Party to lose its status as such,
other than as expressly permitted in this Section.
8.5 Advances, Investments and Loans.
Lend money or extend credit or make advances to any Person, or purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, or otherwise make an Investment in, any Person
except for Permitted Investments.
8.6 Transactions with Affiliates.
Enter into or permit to exist any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder or Affiliate other than (i) transactions permitted by Section 8.1,
Section 8.4(b), Section 8.5 or Section 8.10, (ii) customary fees and expenses
paid to directors and (iii) where such transactions are on terms and conditions
substantially as favorable as would be obtainable in a comparable arm's-length
transaction with a Person other than an officer, director, shareholder or
Affiliate.
8.7 Ownership of Equity Interests.
56
62
Issue, sell, transfer, pledge or otherwise dispose of any partnership
interests, shares of capital stock or other equity or ownership interests
("Equity Interests") in any member of the Consolidated Group other than the
Borrower, except (i) issuance, sale or transfer of Equity Interests to a Credit
Party by a Subsidiary of such Credit Party, (ii) in connection with a
transaction permitted by Section 8.4, and (iii) as needed to qualify directors
under applicable law.
8.8 Fiscal Year.
Change its Fiscal Year.
8.9 Prepayments of Indebtedness, etc.
(a) After the issuance thereof, amend or modify (or permit the amendment
or modification of), the terms of any other Funded Debt in a manner adverse to
the interests of the Bank (including specifically shortening any maturity or
average life to maturity or requiring any payment sooner than previously
scheduled or increasing the interest rate or fees applicable thereto);
(b) Make any prepayment, redemption, defeasance or acquisition for value
of (including without limitation, by way of depositing money or securities with
the trustee with respect thereto before due for the purpose of paying when due),
or refund, refinance or exchange of any Funded Debt (other than intercompany
Indebtedness permitted hereunder) other than regularly scheduled payments of
principal and interest on such Funded Debt, except to the extent permitted by
Section 8.10.
8.10 Restricted Payments.
Make or permit Restricted Payments in the aggregate for any Fiscal Year in
excess of an amount equal to 35% of Consolidated Net Income (if positive) for
the immediately preceding Fiscal Year, without the prior written consent of the
Bank.
8.11 Sale Leasebacks.
Except as permitted pursuant to Section 8.1(c) and (d) hereof, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property (whether real or personal or mixed), whether now owned or hereafter
acquired, (i) which such Person has sold or transferred or is to sell or
transfer to any other Person other than a Credit Party or (ii) which such Person
intends to use for substantially the same purpose as any other Property which
has been sold or is to be sold or transferred by such Person to any other Person
in connection with such lease.
8.12 No Further Negative Pledges.
Except with respect to the Senior Note Agreement relating to (i) the
Senior Notes, (ii) Indebtedness incurred pursuant to Section 8.1(g), and (iii)
prohibitions against other encumbrances on specific Property encumbered to
secure payment of particular Indebtedness
57
63
(which Indebtedness relates solely to such specific Property, and improvements
and accretions thereto, and is otherwise permitted hereby), no member of the
Consolidated Group will enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of the
Loans or of any reimbursement obligations relating to Letters of Credit or
Bankers' Acceptances, or
(ii) default, and such defaults shall continue for five (5) or more
Business Days, in the payment when due of any interest on the Loans or on
any reimbursement obligations, or of any Fees or other amounts owing
hereunder, under any of the other Credit Documents or in connection
herewith or therewith; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove untrue in any material respect on the date as of which it
was deemed to have been made; or
(c) Covenants.
(i) Default in the due performance or observance of any term,
covenant or agreement contained in Section 7.3(a), 7.9, 7.10 or 8.1
through 8.12 (except in the case of negative covenants contained in
Sections 8.1 through 8.12, those Defaults which may occur or arise other
than on account of or by affirmative or intentional act of the Borrower or
event or condition which the Borrower shall with knowledge permit to
exist, all of which shall be subject to the provisions of clause (ii)
hereof), inclusive, or
(ii) Default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in subsections (a),
(b) or (c)(i) of this Section 9.1) contained in this Credit Agreement and
such default shall continue unremedied for a period of at least 30 days
after the earlier of a responsible officer of a Credit Party becoming
aware of such default or notice thereof by the Bank or, if such
58
64
default cannot reasonably be remedied within such 30 day period, an
additional period not to exceed 30 days, provided that remedy is commenced
within the original 30 day period and is diligently and continuously
pursued; or
(d) Other Credit Documents. (i) Any Credit Party shall default in the due
performance or observance of any material term, covenant or agreement in any of
the other Credit Documents (subject to applicable grace or cure periods, if
any), or (ii) except as to the Credit Party which is dissolved, released or
merged or consolidated out of existence as the result of or in connection with a
dissolution, merger or disposition permitted by Section 8.4(a), Section 8.4(b)
or Section 8.4(c), any Credit Document shall fail to be in full force and effect
or to give the Bank any material part of the Liens, rights, powers and
privileges purported to be created thereby; or
(e) Guaranties. Except as to the Credit Party which is dissolved, released
or merged or consolidated out of existence as the result of or in connection
with a dissolution, merger or disposition permitted by Section 8.4(a), Section
8.4(b) or Section 8.4(c), the guaranty given by any Guarantor hereunder or any
material provision thereof shall cease to be in full force and effect, or any
Guarantor hereunder or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in payment under such guaranty; or
(f) Bankruptcy, etc. A Bankruptcy Event shall occur with respect to any
member of the Consolidated Group; or
(g) Defaults under Other Agreements. With respect to any Indebtedness
(other than Indebtedness outstanding under this Credit Agreement) in excess of
$1,000,000 in the aggregate for the Consolidated Group taken as a whole, without
duplication, (A) (1) any member of the Consolidated Group shall default in any
payment (beyond the applicable grace period with respect thereto, if any) with
respect to any such Indebtedness, or (2) the occurrence and continuance of a
default in the observance or performance relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or permit, the
holder or holders of such Indebtedness (or trustee or agent on behalf of such
holders) to cause any such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be declared due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or
(h) Judgments. Any member of the Consolidated Group shall fail within 30
days of the date due and payable to pay, bond or otherwise discharge any
judgment, settlement or order for the payment of money which judgment,
settlement or order, when aggregated with all other such judgments, settlements
or orders due and unpaid at such time, exceeds $2,000,000, and which is not
stayed on appeal (or for which no motion for stay is pending) or is not
otherwise being executed; or
(i) ERISA. Any of the following events or conditions, if such event or
condition could reasonably be expected to have a Material Adverse Effect: (1)
any "accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code,
59
65
whether or not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of a member of the Consolidated Group or any ERISA Affiliate
in favor of the PBGC or a Plan; (2) an ERISA Event shall occur with respect to a
Single Employer Plan, which is, in the reasonable opinion of the Bank, likely to
result in the termination of such Plan for purposes of Title IV of ERISA; (3) an
ERISA Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the reasonable opinion of the Bank, likely to result
in (i) the termination of such Plan for purposes of Title IV of ERISA, or (ii) a
member of the Consolidated Group or any ERISA Affiliate incurring any liability
in connection with a withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency of (within the meaning of Section 4245 of
ERISA) such Plan; or (4) any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject a member of the Consolidated Group
or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which a member of the Consolidated Group or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability; or
(j) Ownership. There shall occur a Change of Control; or
(k) Senior Notes. The occurrence of an Event of Default under the Senior
Notes.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter,
the Bank may, by written notice to the Borrower and the other Credit Parties
take any of the following actions:
(i) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans, any reimbursement obligations relating
to Letters of Credit and Bankers' Acceptances and any and all other
indebtedness or obligations of any and every kind owing by the Credit
Parties to the Bank hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each of the Credit
Parties.
(iii) Cash Collateral. Direct the Borrower to pay (and the Borrower agrees
that upon receipt of such notice, or upon the occurrence of an Event of
Default under Section 9.1(f), it will immediately pay) to the Bank
additional cash, to be held by the Bank in a cash collateral account as
additional security for the LOC Obligations and BA Obligations in an
amount equal to the maximum aggregate amount which may be drawn under all
Letters of Credits and Bankers' Acceptances then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents and all rights of set-off.
60
66
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations relating to Letters of Credit and Bankers'
Acceptances, all accrued interest in respect thereof, all accrued and unpaid
Fees and other indebtedness or obligations owing to the Bank hereunder
automatically shall immediately become due and payable without presentment,
demand, protest or the giving of any notice or other action by the Bank, all of
which are hereby waived by the Credit Parties.
SECTION 10
MISCELLANEOUS
10.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, Guarantors and
the Bank, set forth below or at such other address as such party may specify by
written notice to the other parties hereto:
if to the Borrower or the Guarantors:
ACTION PERFORMANCE COMPANIES, INC.
4707 East Baseline Road
Phoenix, Arizona 85040
Attn: David Husband
Telephone: (602) 337-3636
Telecopy: (602) 337-3780
with a copy to:
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012-1656
Attn: Robert S. Kant
Telephone: (602) 263-2606
Telecopy: (602) 263-2900
if to the Bank:
First Union National Bank
201 South College Street, Suite 1300
61
67
Charlotte, North Carolina 28288-0656
Attn: Portfolio Management
Telephone: (704) 383-4369
Telecopy: (704) 374-4820
with a copy to:
First Union National Bank
301 S. Tryon Street, N.C. Corporate Banking
Charlotte, North Carolina 28288-0145
Attn: Tracey Gillespie
Vice President
Telephone: (704) 383-7645
Telecopy: (704) 374-4000
10.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default, the Bank is authorized at any time and from time to
time, without presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by the Bank (including, without limitation branches,
agencies or Affiliates of the Bank wherever located) to or for the credit or the
account of any Credit Party against obligations and liabilities of such Person
to the Bank hereunder, under the Revolving Note, the other Credit Documents or
otherwise, irrespective of whether the Bank shall have made any demand hereunder
and although such obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such charge
is made or entered on the books of the Bank subsequent thereto.
10.3 Benefit of Agreement.
This Credit Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided that none of the Credit Parties may assign or transfer any of
its interests without prior written consent of the Bank.
10.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Bank in exercising any right, power
or privilege hereunder or under any other Credit Document and no course of
dealing between the Bank and any of the Credit Parties shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies provided herein are cumulative
and not exclusive of any rights or remedies which the Bank would otherwise have.
No notice to or demand on any Credit Party in any case shall entitle the
Borrower or any other Credit Party to any other or further notice
62
68
or demand in similar or other circumstances or constitute a waiver of the rights
of the Bank to any other or further action in any circumstances without notice
or demand, except as expressly provided otherwise herein or in other Credit
Documents.
10.5 Payment of Expenses, etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Bank in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, PLLC, special counsel to the Bank) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (B) of the Bank in connection with enforcement of the Credit
Documents and the documents and instruments referred to therein (including,
without limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Bank); (ii) pay and hold the Bank harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to the Bank) to pay such taxes;
and (iii) indemnify the Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of (A)
any investigation, litigation or other proceeding (whether or not the Bank is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Loans (including other extensions of
credit) hereunder or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding or (B) the presence or Release of any Materials
of Environmental Concern at, under or from any Property owned, operated or
leased by the Borrower or any of its Subsidiaries, or the failure by the
Borrower or any of its Subsidiaries to comply with any Environmental Law (but
excluding, in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
10.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Bank and the Credit
Parties directly affected thereby.
10.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the
63
69
same instrument. It shall not be necessary in making proof of this Credit
Agreement to produce or account for more than one such counterpart.
10.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
10.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 3.11 or 10.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
delivery of the Revolving Note and the making of the Loans hereunder.
10.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA. Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document may be brought in the courts of the State of North
Carolina in Mecklenburg County, or of the United States for the Western District
of North Carolina, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Nothing herein shall affect the right of the Bank to commence legal
proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE BANK, THE BORROWER AND THE
CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT
AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.11 Severability.
64
70
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
10.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
10.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on or after
the Closing Date when it shall have been executed by the Borrower, the
Guarantors and the Bank, and thereafter this Credit Agreement shall be binding
upon and inure to the benefit of the Borrower, the Guarantors and the Bank and
their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans or other
Obligations or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding and until all of the Commitments
hereunder shall have expired or been terminated.
10.14 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
65
71
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: ACTION PERFORMANCE COMPANIES, INC.,
an Arizona corporation
By:_____________________________________
Name:
Title:
GUARANTORS: SPORTS IMAGE, INC.,
an Arizona corporation
By:_____________________________________
Name:
Title:
MTL ACQUISITION, INC.,
an Arizona corporation
By:_____________________________________
Name:
Title:
CREATIVE MARKETING & PROMOTIONS, INC.,
a North Carolina corporation
By:_____________________________________
Name:
Title:
RYP, INC.,
a North Carolina corporation
By:_____________________________________
Name:
Title:
ACTION PERFORMANCE COMPANIES, INC.
CREDIT AGREEMENT
72
IW ACQUISITION CORP.,
an Arizona corporation
By:_____________________________________
Name:
Title:
AW ACQUISITION CORP.,
an Arizona corporation
By:_____________________________________
Name:
Title:
BANK: FIRST UNION NATIONAL BANK
By:_____________________________________
Name:
Title:
ACTION PERFORMANCE COMPANIES, INC.
CREDIT AGREEMENT
73
Schedule 2.1(e)
FORM OF REVOLVING NOTE
$20,000,000 August 5, 1998
FOR VALUE RECEIVED, the undersigned Borrower, hereby promises to pay to
the order of FIRST UNION NATIONAL BANK, and its successors and assigns, on or
before the Termination Date to the office of the Bank in immediately available
funds as provided in the Credit Agreement, the principal amount of the Bank's
Revolving Committed Amount or, if less, the aggregate unpaid principal amount of
all Revolving Loans made by the Bank to the undersigned Borrower, together with
interest thereon at the rates and as provided in the Credit Agreement.
This Note is the Revolving Note referred to in the Amended and Restated
Credit Agreement dated as of August 5, 1998 (as amended and modified, the
"Credit Agreement") among Action Performance Companies, Inc., an Arizona
corporation, the Guarantors identified therein and First Union National Bank.
Terms used but not otherwise defined herein shall have the meanings provided in
the Credit Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
undersigned Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by this
Note may, or shall, become immediately due and payable as provided in the Credit
Agreement without presentment, demand, protest or notice of any kind, all of
which are waived by the undersigned Borrower. In the event payment of amounts
evidenced by this Note is not made at any stated or accelerated maturity, the
undersigned Borrower agrees to pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of North Carolina.
IN WITNESS WHEREOF, the undersigned Borrower has caused this Note to be
duly executed as of the date first above written.
ACTION PERFORMANCE COMPANIES, INC.,
an Arizona corporation
By_________________________________
Name:
Title:
74
Schedule 7.11-1
Form of Joinder Agreement
THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________, 19__,
is by and between the parties identified on the signature page as Applicant
Guarantors, a ___________________ (the "Applicant Guarantor"), and FIRST UNION
NATIONAL BANK, under that certain Amended and Restated Credit Agreement dated as
of August 5, 1998 (as amended and modified, the "Credit Agreement") by and among
ACTION PERFORMANCE COMPANIES, INC., an Arizona corporation, the Guarantors
identified therein and First Union National Bank of North Carolina, as Bank. All
of the defined terms in the Credit Agreement are incorporated herein by
reference.
The Applicant Guarantors have indicated their desire to become a Guarantor
or is required by the terms of Section 7.10 of the Credit Agreement to become, a
Guarantor under the Credit Agreement.
Accordingly, each of the Applicant Guarantors hereby agrees as follows
with the Bank:
1. Each of the Applicant Guarantors hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Guarantor will
be deemed to be a party to the Credit Agreement and a "Guarantor" for all
purposes of the Credit Agreement and the other Credit Documents, and shall have
all of the obligations of a Guarantor thereunder as if it had executed the
Credit Agreement and the other Credit Documents. Each of the Applicant
Guarantors agrees to be bound by, all of the terms, provisions and conditions
contained in the Credit Documents, including without limitation (i) all of the
affirmative and negative covenants set forth in Sections 7 and 8 of the Credit
Agreement and (ii) all of the undertakings and waivers set forth in Section 4 of
the Credit Agreement. Without limiting the generality of the foregoing terms of
this paragraph 1, each of the Applicant Guarantors hereby (A) jointly and
severally together with the other Guarantors, guarantees to the Bank as provided
in Section 4 of the Credit Agreement, the prompt payment and performance of the
Guaranteed Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. and (B) agrees that if
any of the Guaranteed Obligations are not paid or performed in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise), the Applicant Guarantor will,
jointly and severally together with the other Guarantors, promptly pay and
perform the same, without any demand or notice whatsoever, and that in the case
of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
2. Each of the Applicant Guarantors acknowledges and confirms that it has
received a copy of the Credit Agreement and the Schedules and Exhibits thereto.
The information on the Schedules to the Credit Agreement are amended to provide
the information, if any, shown on the attached Schedule A.
75
3. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
4. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Applicant Guarantors have caused this Joinder
Agreement to be duly executed by its authorized officers, and the Bank has
caused the same to be accepted by its authorized officer, as of the day and year
first above written.
APPLICANT GUARANTORS
By:__________________________________
Name:
Title:
Address for Notices:
Attn: _______________________
Telephone:
Telecopy:
Acknowledged and accepted:
FIRST UNION NATIONAL BANK
By:______________________________________
Name:
Title: