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CREDIT AGREEMENT
among
UNIDIGITAL INC.,
Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
Dated as of March 24, 1998
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms.............................................. 1
1.2 Other Definitional Provisions..............................20
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS.....................21
2.1 Term Loan Commitments......................................21
2.2 Term Notes.................................................21
2.3 Procedure for Term Loan Borrowing..........................21
SECTION 3. AMOUNT AND TERMS OF ACQUISITION LOAN COMMITMENTS..............22
3.1 Acquisition Loan Commitments...............................22
3.2 Acquisition Notes..........................................22
3.3 Procedure for Acquisition Loan Borrowing...................22
3.4 Commitment Fee.............................................23
3.5 Termination or Reduction of Acquisition Loan Commitments...23
SECTION 4. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS..............24
4.1 Revolving Credit Commitments...............................24
4.2 Revolving Credit Notes.....................................24
4.3 Procedure for Revolving Credit Borrowing...................25
4.4 Commitment Fee.............................................25
4.5 Termination or Reduction of Revolving Credit
Commitments..............................................26
SECTION 5. LETTERS OF CREDIT.............................................26
5.1 L/C Commitment.............................................26
5.2 Procedure for Issuance of Letters of Credit................27
5.3 Fees, Commissions and Other Charges........................27
5.4 L/C Participations.........................................27
5.5 Reimbursement Obligations of the Borrower..................28
5.6 Obligations Absolute.......................................29
5.7 Letter of Credit Payments..................................29
5.8 Application................................................29
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS........................30
6.1 Interest Rates and Payment Dates...........................30
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6.2 Conversion and Continuation Options........................30
6.3 Maximum Number of Tranches.................................31
6.4 Optional Prepayments.......................................31
6.5 Mandatory Prepayments......................................31
6.6 Computation of Interest and Fees...........................33
6.7 Inability to Determine Interest Rate.......................33
6.8 Pro Rata Treatment and Payments............................33
6.9 Illegality.................................................34
6.10 Requirements of Law.......................................35
6.11 Taxes.....................................................36
6.12 Indemnity.................................................37
6.13 Lending Offices; Change of Lending Office.................38
SECTION 7. REPRESENTATIONS AND WARRANTIES................................38
7.1 Financial Condition........................................38
7.2 No Change..................................................39
7.3 Existence; Compliance with Law.............................39
7.4 Power; Authorization; Enforceable Obligations..............40
7.5 No Legal Bar...............................................40
7.6 No Material Litigation.....................................40
7.7 No Default.................................................40
7.8 Ownership of Property; Liens...............................41
7.9 Intellectual Property......................................41
7.10 No Burdensome Restrictions................................41
7.11 Taxes.....................................................41
7.12 Federal Regulations.......................................41
7.13 ERISA.....................................................43
7.14 Investment Company Act; Other Regulations.................42
7.15 Subsidiaries..............................................42
7.16 Security Documents........................................42
7.17 Accuracy and Completeness of Information..................43
7.18 Labor Relations...........................................43
7.19 Insurance.................................................43
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7.20 Solvency..................................................43
7.21 Purpose of Loans..........................................44
7.22 Environmental Matters.....................................44
7.23 Regulation H..............................................45
7.24 Existing Indebtedness.....................................45
7.25 No Warehouse Inventory....................................45
7.26 Collateral Certificate....................................45
SECTION 8. CONDITIONS PRECEDENT..........................................45
8.1 Conditions to Initial Loans................................45
8.2 Conditions to Acquisition Loans............................50
8.3 Conditions to Each Loan....................................54
SECTION 9. AFFIRMATIVE COVENANTS.........................................55
9.1 Financial Statements.......................................55
9.2 Certificates; Other Information............................56
9.3 Payment of Obligations.....................................57
9.4 Conduct of Business and Maintenance of Existence...........57
9.5 Maintenance of Property; Insurance.........................57
9.6 Inspection of Property; Books and Records; Discussions.....57
9.7 Notices....................................................57
9.8 Environmental Laws.........................................58
9.9 Additional Collateral; Additional Guarantors...............59
9.10 Audit.....................................................59
9.11 Filing of Mortgage........................................59
9.12 Filing of Leasehold Mortgage..............................60
9.13 Execution of Leasehold Mortgages..........................61
SECTION 10. NEGATIVE COVENANTS...........................................61
10.1 Financial Condition Covenants.............................61
10.2 Limitation on Indebtedness................................64
10.3 Limitation on Liens.......................................65
10.4 Limitation on Guarantee Obligations.......................66
10.5 Limitation on Fundamental Changes.........................66
10.6 Limitation on Sale of Assets..............................67
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10.7 Limitation on Leases......................................67
10.8 Limitation on Dividends...................................67
10.9 Limitation on Capital Expenditures........................68
10.10 Limitation on Investments, Loans and Advances............68
10.11 Limitation on Optional Payments and Modifications
of Debt Instruments....................................69
10.12 Limitation on Transactions with Affiliates...............69
10.13 Limitation on Sales and Leasebacks.......................69
10.14 Limitation on Changes in Fiscal Year.....................69
10.15 Limitation on Negative Pledge Clauses....................69
10.16 Limitation on Lines of Business..........................70
10.17 Governing Documents......................................70
10.18 Limitation on Subsidiary Formation.......................70
10.19 Limitation on Securities Issuances.......................70
10.20 Inventory................................................70
SECTION 11. EVENTS OF DEFAULT............................................70
SECTION 12. THE ADMINISTRATIVE AGENT.....................................74
12.1 Appointment...............................................74
12.2 Delegation of Duties......................................74
12.3 Exculpatory Provisions....................................74
12.4 Reliance by Administrative Agent..........................74
12.5 Notice of Default.........................................75
12.6 Non-Reliance on Administrative Agent and Other Lenders....75
12.7 Indemnification...........................................76
12.8 Administrative Agent in Its Individual Capacity...........76
12.9 Successor Administrative Agent............................76
SECTION 13. MISCELLANEOUS................................................77
13.1 Amendments and Waivers....................................77
13.2 Notices...................................................77
13.3 No Waiver; Cumulative Remedies............................78
13.4 Survival of Representations and Warranties................78
13.5 Payment of Expenses and Taxes.............................78
13.6 Successors and Assigns; Participations and Assignments....79
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13.7 Adjustments; Set-off......................................81
13.8 Counterparts..............................................82
13.9 Severability..............................................82
13.10 Integration..............................................82
13.11 GOVERNING LAW............................................82
13.12 Submission To Jurisdiction; Waivers......................82
13.13 Acknowledgments..........................................83
13.14 WAIVERS OF JURY TRIAL....................................83
13.15 Confidentiality..........................................83
SCHEDULES
Schedule I Lenders, Commitments, and Lending Offices
Schedule 1.1. Pro Forma Consolidated EBITDA for the Kwik Acquisition
Schedule 2.1 Scheduled Term Loan Repayments
Schedule 3.2 Scheduled Acquisition Loan Repayments
Schedule 7.2 Dividends and Distributions
Schedule 7.4 Consents, Authorizations, Notices and Filings
Schedule 7.6 Material Litigation
Schedule 7.16 Filing Jurisdictions
Schedule 7.22 Environmental Matters
Schedule 8.1 Mortgaged Properties
Schedule 10.2 Indebtedness
EXHIBITS
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Acquisition Note
Exhibit A-3 Form of Revolving Credit Note
Exhibit B Form of Landlord Agreement
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Exhibit C Form of Pledge Agreement (U.S.)
Exhibit D Form of Pledge Agreement (U.K.)
Exhibit E Form of Security Agreement
Exhibit F Form of Borrowing Notice
Exhibit G Form of Leasehold Mortgage
Exhibit H Form of Mortgage
Exhibit I Form of Subsidiaries Guarantee
Exhibit J Form of Non-Bank Status Certificate
Exhibit K-1 Form of Opinion of Counsel to the Borrower
Exhibit K-2 Form of Opinion of Special Counsel to the Borrower for the
U.K.
Exhibit L Form of Assignment and Acceptance
Exhibit M-1 Form of Secretary's Certificate (Borrower)
Exhibit M-2 Form of Secretary's Certificate (Officer)
Exhibit N Form of Responsible Officer's Certificate
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CREDIT AGREEMENT, dated as of March 24, 1998, among UNIDIGITAL INC., a
Delaware corporation (the "Borrower"), the lenders from time to time parties to
this Agreement (the "Lenders") and CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"),
as administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent").
RECITALS
The Borrower intends to acquire all or substantially all of the assets of,
and assume certain liabilities of, Kwik International Color, Ltd., a New York
corporation ("Kwik"), pursuant to the Kwik Acquisition Agreement (as hereinafter
defined; such acquisition of assets and assumption of liabilities, the "Kwik
Acquisition"). The Borrower further intends to refinance certain existing
indebtedness of the Borrower and its subsidiaries, and to seek additional
financing for its working capital needs and for additional potential
acquisitions. The Borrower has requested (a) that the Lenders make a term loan
to the Borrower, in the principal amount of $25,000,000, the proceeds of which
term loans would be used to finance a portion of the purchase price of the Kwik
Acquisition and fees and expenses incurred in connection therewith, to refinance
existing indebtedness of the Borrower and its subsidiaries and to pay fees and
expenses incurred in connection herewith, (b) that the Lenders make available an
acquisition credit facility in the principal amount of $5,000,000 the proceeds
of which would be used to finance acquisitions (other than the Kwik Acquisition)
and fees and expenses incurred in connection therewith and (c) that the Lenders
make available to the Borrower revolving credit loans and letters of credit in
an aggregate principal and/or face amount at any one time outstanding not to
exceed $10,000,000, the proceeds of which would be used to finance a portion of
the purchase price of the Kwik Acquisition and fees and expenses incurred in
connection therewith, to refinance existing indebtedness of the Borrower and its
subsidiaries, to finance the working capital requirements of the Borrower and
its subsidiaries in the ordinary course of business and to pay fees and expenses
incurred in connection herewith.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acquired Business": with respect to any Permitted Acquisition, the
Person the common stock or other ownership interest which is acquired in
such Permitted Acquisition, or the business unit, division or subdivision
the assets of which are acquired in such Permitted Acquisition, as the case
may be.
"Acquisition Closing Date": in respect of any Acquisition Loan, the
date on which all of the conditions described on Section 8.2 shall have
been satisfied for the Permitted Acquisition to be financed thereby.
"Acquisition Documents": with respect to any Permitted Acquisition,
the stock purchase agreement, asset purchase agreement, agreement and plan
of merger, or similar agreement regarding such Permitted Acquisition, and
all other agreements, instruments and documents delivered in connection
with the consummation thereof (including, without limitation, any equity
financing documents related thereto).
"Acquisition Loan": as defined in Section 3.1.
"Acquisition Loan Commitment": as to any Lender, its obligation to
make Acquisition Loans to the Borrower pursuant to Section 3.1 in the
amount set forth opposite such Lender's name on Schedule I under the
caption "Acquisition Loans" or in an Assignment and Acceptance, as such
amount may be reduced from time to time in accordance with the provisions
of this Agreement.
"Acquisition Loan Commitment Percentage": as to any Lender, the
percentage equal to the quotient of such Lender's Acquisition Loan
Commitment divided by the aggregate Acquisition Loan Commitments.
"Acquisition Loan Commitment Period": the period from and including
the date hereof to but excluding the Acquisition Loan Commitment
Termination Date, or such earlier date as the Acquisition Loan Commitments
terminate as provided herein.
"Acquisition Loan Commitment Termination Date": March 24, 2000.
"Acquisition Note": as defined in Section 3.2.
"Adjusted EBITDA": for any period, the Consolidated EBITDA of the
Borrower for such period plus, for each Permitted Acquisition consummated
(or proposed to be consummated during such period), the Consolidated EBITDA
of the Acquired Business in respect of such Permitted Acquisition for such
period, calculated on a pro forma basis without duplication, as if such
Permitted Acquisition had occurred on the first day of such period (and for
purposes of this definition, "Consolidated EBITDA of the Acquired Business"
shall mean the sum of (i) Consolidated Net Income for such period
(substituting such Acquired Business for the Borrower), (ii) the sum of
provisions for such period for income taxes, interest expense, and
depreciation and amortization expense used in determining such Consolidated
Net Income, (iii) other amounts deducted in such period in respect of
non-cash expenses in accordance with GAAP, (iv) non-capitalized transaction
costs deducted in such period in connection with such Permitted
Acquisition, (v) the amount of any aggregate net loss (or minus the amount
of any gain) during such periods arising from the sale, exchange or other
disposition of capital assets, (vi) non-cash expenses deducted in such
period in connection with any earn-out agreements, stock appreciation
rights, "phantom" stock plans, employment agreements, non-competition
agreements, subscription and stockholders agreements and other incentive
and bonus plans and similar arrangements made in connection with
acquisitions of Persons or businesses by such Acquired Business or the
retention of executives, officers or employees by such Acquired
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Business and (vii) other non-recurring, non-operating expenses as shall
have been approved by the Administrative Agent as exclusions from the
determination of Adjusted EBITDA; provided that Adjusted EBITDA shall in
any event exclude the amount of any non-cash income recognized during any
period for which Consolidated EBITDA is determined; provided further that
for purposes of computing Consolidated EBITDA of the Acquired Business,
there shall be added thereto the amount by which the compensation (whether
in the form of salary, bonus, dividend or other distribution) paid to the
principal owner(s) and/or manager(s) of the Acquired Business prior to such
Permitted Acquisition will be reduced, following such Permitted
Acquisition, as set forth in a certificate of the Borrower reasonably
acceptable to the Administrative Agent; and provided further; in the case
of the period prior to the Closing Date Adjusted EBITDA shall be calculated
by taking into account the amounts and periods set forth on Schedule 1.1.
"Administrative Agent": CIBC, together with its affiliates, as the
arranger of the Commitments and as the administrative agent for the Lenders
under this Agreement and the other Loan Documents.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person (including, with its correlative
meanings, "controlled by" and "under common control with") means the power,
directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Aggregate Outstanding RC Extensions of Credit": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount
of all Revolving Credit Loans made by such Lender then outstanding and (b)
such Lender's Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding.
"Applicable Lending Office": for each Lender and for each Type of
Loan, the lending office of such Lender designated for such Type of Loan on
Schedule I hereto (or any other lending office from time to time notified
to the Administrative Agent by such Lender ) as the office at which its
Loans of such Type are to be made and maintained.
"Applicable Margin": prior to the date on which financial statements
for the second full fiscal quarter following the Closing Date are required
to be delivered pursuant to Section 9.1(a) or (b), 3.00% with respect to
Eurodollar Loans and 1.75% with respect to Base Rate Loans, and thereafter
with respect to each Type of Loans shall be the margin set forth opposite
the applicable ratio of Consolidated Funded Debt
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to Adjusted EBITDA for the period of four consecutive fiscal quarters most
recently ended, as follows:
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Consolidated
Funded Debt/ Base Rate Eurodollar
Adjusted EBITDA Loans Loans
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Greater than or 1.75% 3.00%
equal to 3.00
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Less than 3.00 1.50% 2.75%
but greater than
or equal to 2.50
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Less than 2.50 1.25% 2.50%
but greater than
or equal to 2.00
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Less than 2.00 1.00% 2.25%
but greater than
or equal to 1.50
-------------------------------------------------
Less than 1.50 0.75% 2.00%
-------------------------------------------------
The Applicable Margin shall be adjusted on and as of the date on which the
consolidated financial statements are delivered pursuant to Section 9.1(a)
or (b) provided, however, that if such financial statements are not
delivered when required pursuant to such Section, then until such financial
statements are so delivered for purposes of calculating the Applicable
Margin the ratio of Consolidated Funded Debt to Adjusted EBITDA shall be
deemed to be greater than 3.00 to 1.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Assignee": as defined in Section 13.6(c).
"Assignment and Acceptance": as defined in Section 13.6(c).
"Available RC Commitment": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Revolving
Credit Commitment at such time over (b) the Aggregate Outstanding RC
Extensions of Credit by such Lender at such time.
"Base Rate": for any day, the rate per annum (rounded upward, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced by CIBC in New York,
New York from time to time as its base rate (the base rate not being
intended to be the lowest rate of interest charged by CIBC in connection
with extensions of credit to debtors).
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"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Borrower": as defined in the heading to this Agreement.
"Borrower Security Documents": the collective reference to the
Mortgage executed and delivered by the Borrower, the Pledge Agreements, and
the Security Agreement.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.3, 3.3 or 4.3 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business": as defined in Section 7.22(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close, and, if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, or a Conversion of or into, or
an Interest Period for, a Eurodollar Loan or a notice by the Borrower with
respect to any such borrowing, payment, prepayment, Conversion or Interest
Period, which is also a day on which dealings in Dollar deposits are
carried out in the London interbank market.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than seven days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Group ("S&P") or P-1 or the equivalent thereof
by Moody's Investors Service, Inc. ("Moody's") and in either case maturing
within six months after the day of acquisition, (e) securities with
maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of
which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's, (f) securities with maturities of six months or
less
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from the date of acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the requirements of clause (b)
of this definition or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
"Closing Date": the date on which the conditions precedent set forth
in Section 8.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property and interests in property of the Loan
Parties, now owned or hereinafter acquired, upon which a Lien is purported
to be created by any Security Document.
"Commitments": the collective reference to the Revolving Credit
Commitments, the Acquisition Loan Commitments and the Term Loan
Commitments.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Current Assets": at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date; provided, however, that such amounts shall not include (a) any
amounts for any Indebtedness owing by an Affiliate of the Borrower, unless
such Indebtedness arose in connection with the sale of goods or other
property in the ordinary course of business and would otherwise constitute
current assets in conformity with GAAP, (b) any shares of stock issued by
an Affiliate of the Borrower, or (c) the cash surrender value of any life
insurance policy.
"Consolidated Current Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be included under current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries as at
such date (excluding the current portion of any Loans).
"Consolidated EBITDA": for any period, the sum, for the Borrower and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), for such period of (a) Consolidated Net Income for
such period, (b) the sum of provisions for such period for income taxes,
interest expense, and depreciation and amortization expense used in
determining such Consolidated Net Income, (c) amounts deducted in such
period in respect of non-cash expenses in accordance with GAAP, (d)
non-capitalized transaction costs deducted in such period in connection
with the Kwik Acquisition and any Permitted Acquisitions and the financings
relating thereto, (e) the amount of any aggregate net loss (or minus the
amount of any gain) during such period arising from the sale, exchange or
other disposition of capital assets,
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(f) non-cash expenses deducted in such period in connection with any
earn-out agreements, stock appreciation rights, "phantom" stock plans,
employment agreements, non-competition agreements, subscription and
stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with acquisitions of Persons or businesses
by the Borrower or its Subsidiaries or the retention of executives,
officers or employees by the Borrower or its Subsidiaries, including (but
without duplication) any Person that has become a Subsidiary during such
specified period, on a pro forma basis as if such acquisition had occurred
on the first day of such period plus other non-recurring, non-operating
expenses as shall have been approved by the Administrative Agent as
exclusions from the determination of Consolidated EBITDA; provided, that
Consolidated EBITDA shall in any event exclude, from and after the Closing
Date, (x) the effect of any write-up of the assets of Kwik or any of its
Subsidiaries or any other assets acquired in any Permitted Acquisitions and
(y) the amount of any non-cash income recognized during any period for
which Consolidated EBITDA is determined.
"Consolidated Fixed Charges": for any period, the sum of (i) the
amounts deducted for the cash portion of Consolidated Interest Expense in
determining Consolidated Net Income for such period, (ii) the amount of
scheduled payments of principal of Indebtedness during such period, (iii)
all amounts of capital expenditures made during such period (other than
capital expenditures in respect of Financing Leases to the extent the same
are included in clauses (i) or (ii) of this definition), and (iv) the
amount of cash income taxes paid during such period.
"Consolidated Funded Debt": as of any date, the sum of all aggregate
indebtedness of the Borrower and its Subsidiaries of the types set forth in
clauses (a), (b), (c), (d), (e) and (g) of Indebtedness, determined on a
consolidated basis in accordance with GAAP, including, in any event, the
Term Loans, the Acquisition Loans, Revolving Credit Loans and any purchase
money Indebtedness.
"Consolidated Indebtedness": at any time, the aggregate Indebtedness
of the Borrower and its consolidated Subsidiaries at such time determined
on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense": for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "interest
expense" or any like caption (including without limitation, imputed
interest included in payments under Financing Leases) on a consolidated
income statement of the Borrower and the Subsidiaries for such period
excluding the amortization of any original issue discount.
"Consolidated Lease Expense": for any period, the aggregate amount of
fixed or contingent rentals payable by the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for such period
with respect to leases of real and personal property.
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"Consolidated Net Income": for any period, the consolidated net income
(or deficit) of the Borrower and the Subsidiaries for such period (taken as
a cumulative whole), determined in accordance with GAAP; provided that
there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or any Subsidiary, (b) the income (or deficit) 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
dividends or similar 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 any Contractual Obligation or Requirement of Law 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, exchange or
other disposition of capital assets (such term to include all fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), (f) any write-up of any
asset, (g) any net gain from the collection of the proceeds of life
insurance policies, (h) any gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of the
Borrower or any Subsidiary, (i) in the case of a successor to the Borrower
by consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets, and (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.
"Continue", "Continuation" and "Continued" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next
Interest Period.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", "Conversion" and "Converted" shall refer to a conversion of
Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into Base Rate
Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Credit Exposure": as to any Lender at any time, the sum of (a) its
Revolving Credit Commitment (or, if the Revolving Credit Commitments shall
have expired or been terminated, the aggregate unpaid principal amount of
its Revolving Credit Loans), (b) the sum (without duplication) of the
aggregate unpaid principal amount of the Acquisition Loans made by such
Lender and its Acquisition Loan Commitment (or, if the Acquisition Loan
Commitments shall have expired or been terminated, the
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aggregate unpaid principal amount of its Acquisition Loans) and (c) the
unpaid principal amount of its Term Loan.
"Credit Exposure Percentage": as to any Lender at any time, the
fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"Default": any of the events specified in Section 11, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Person": any individual resident of the United States or any
other Person organized under the laws of a jurisdiction in the United
States of America, any State thereof or the District of Columbia.
"Domestic Subsidiary": any Subsidiary of the Borrower other than a
Foreign Subsidiary.
"Elements UK": Elements (UK) Limited, a United Kingdom corporation.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
corresponding rate appearing at page 3750 of the Dow Jones Telerate Service
at or about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period,
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or if such rate no longer so appears, the rate per annum at which CIBC is
offered Dollar deposits at or about 10:00 a.m., local time, two Business
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 11;
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Excess Cash Flow": as to the Borrower for any applicable fiscal year:
(a) Consolidated EBITDA for such fiscal year;
plus (b) the decrease (if any) in the amount of the excess of
Consolidated Current Assets (excluding cash and Cash Equivalents) over
Consolidated Current Liabilities at the end of such fiscal year compared to
the amount of the excess of Consolidated Current Assets (excluding cash and
Cash Equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower;
minus (c) the sum of (i) the amount of (A) all regularly scheduled
payments of principal of the Term Loans and Acquisition Loans actually made
during such fiscal year, (B) any voluntary prepayment of principal of the
Term Loans and Acquisition Loans made during such fiscal year, (C) any
permanent reduction in the Revolving Credit Commitments made during such
fiscal year to the extent that, before giving effect to such reduction, the
average outstanding principal balance of the Revolving Credit Loans for the
thirty (30) days prior to such reduction exceeds the aggregate Revolving
Credit Commitments after giving effect to such reduction and (D) any
voluntary prepayment of other permitted Indebtedness to the extent not
subject to reborrowing, made during such fiscal year, (ii) the amount of
all interest payments actually made in cash during such fiscal year by the
Borrower and its consolidated Subsidiaries, (iii) the amount of capital
expenditures (other than capital expenditures in respect of Financing
Leases) actually made during such fiscal year to the extent permitted by
Section 10.9, (iv) cash income taxes paid during such fiscal year and
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(v) the increase (if any) in the amount of the excess of Consolidated
Current Assets (excluding cash and Cash Equivalents) over Consolidated
Current Liabilities at the end of such fiscal year compared to the amount
of the excess of Consolidated Current Assets (excluding cash and Cash
Equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower.
"Existing Creditor": any creditor under an Existing Financing
Document.
"Existing Financing Documents": all credit agreements, indentures,
notes, guarantees and other financing documents, in each case as amended to
the extent permitted hereunder, evidencing or governing the Indebtedness
listed on Schedule 10.2.
"Existing Indebtedness": all Indebtedness of the Borrower, Kwik and
their respective Subsidiaries outstanding immediately prior to the Closing
Date pursuant to the Existing Financing Documents.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Administrative Agent from three federal funds brokers of recognized
standing selected by it.
"Fee Letter": that certain Fee Letter, dated March 5, 1998, between
CIBC and the Borrower, as amended, supplemented or otherwise modified from
time to time.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Subsidiary": any Subsidiary of the Borrower organized under
the laws of a jurisdiction other than the United States of America, any
State thereof or the District of Columbia.
"GAAP": generally accepted accounting principles in the United States
of America.
"Governing Documents": as to any Person, its articles or certificate
of incorporation and by-laws, its partnership agreement, its certificate of
formation and operating agreement, and/or the other organizational or
governing documents of such Person.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have
a correlative meaning. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of letters of credit, acceptances or similar instruments issued or
created for the account of such Person, (e) all liabilities secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, (f) all other
items which, in accordance with GAAP, would be included as liabilities on
the liability side of the balance sheet of such Person as of the date at
which Indebtedness is to be determined and (g) all Guarantee Obligations of
such Person in respect of any of the foregoing.
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"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each March, June, September and December, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar having an Interest Period
longer than three months, (i) each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period, and (ii) the
last day of such Interest Period.
"Interest Period": (a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
Conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of Conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar 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;
(2) any Interest Period in respect of Revolving Credit
Loans, Acquisition Loans or Term Loans, as the case may be, that
would otherwise extend beyond the Revolving Credit Termination
Date or beyond the date final payment is due on the Acquisition
Loans or the Term Loans shall end on the Revolving Credit
Termination Date or such date of final payment, as the case may
be;
(3) any Interest Period pertaining to a Eurodollar 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
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such Interest Period) shall end on the last Business Day of a
calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Intercreditor and Subordination Agreement": the Intercreditor and
Subordination Agreement to be entered into by the Borrower, the
Administrative Agent and Kwik International Color, Ltd., as the same may be
amended, supplemented or otherwise modified from time to time.
"Inventory": as defined in the Uniform Commercial Code in effect in
the State of New York.
"Issuing Lender": CIBC, in its capacity as issuer of any Letter of
Credit.
"Kwik Acquisition": as defined in the recitals hereto.
"Kwik Acquisition Agreement": the Asset Purchase Agreement, dated as
of March 19, 1998, among the Borrower, Unison (NY), Inc., a Delaware
corporation and wholly-owned Subsidiary of the Borrower, Kwik and Richard
J. Sirota, the sole shareholder of Kwik, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Kwik Acquisition Documents": the Kwik Acquisition Agreement and all
other agreements, instruments and documents delivered in connection with
the consummation thereof (including, without limitation, any equity
financing documents related thereto).
"Landlord Agreement": each landlord agreement executed and delivered
by the lessor of premises leased by the Borrower or any other Loan Party,
substantially in the form of Exhibit B or such other form as the
Administrative Agent may approve, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms
hereof.
"L/C Commitment": $1,000,000.
"L/C Fee Payment Date": the last Business Day of each March, June,
September and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn amount of the then outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed.
"L/C Participants": the collective reference to all the Lenders other
than the Issuing Lender.
-14-
"Leasehold Mortgage": each Leasehold Mortgage to be executed and
delivered by any Loan Party, substantially in the form of Exhibit G, as the
same may be amended, supplemented or otherwise modified from time to time.
"Letters of Credit": as defined in Section 5.1(a).
"Leverage Ratio": at any time, the ratio of Consolidated Funded Debt
to Adjusted EBITDA for the immediately preceding period of four consecutive
fiscal quarters; provided that, in calculating the Leverage Ratio for any
period during which a Permitted Acquisition was consummated, Adjusted
EBITDA shall be substituted for Consolidated EBITDA.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing), and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications, the
Subsidiaries Guarantee and the Security Documents.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which
is or becomes a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or
the rights or remedies of the Administrative Agent or the Lenders hereunder
or thereunder.
"Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in excess of $100,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
-15-
"Mortgage": each Mortgage to be executed and delivered by any Loan
Party, substantially in the form of Exhibit H, as the same may be amended,
supplemented or otherwise modified from time to time.
"Mortgages": collectively, the reference to the Mortgages executed by
the Borrower or any Subsidiary and any fee or leasehold mortgage or deed of
trust, in form and substance satisfactory to the Administrative Agent, that
may be required by the Required Lenders in connection with a Permitted
Acquisition.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA with respect to which the Borrower or any
Commonly Controlled Entity is, or ever has been, obligated to contribute.
"Net Proceeds": (i) the aggregate cash consideration received by the
Borrower or a Subsidiary in connection with any transaction referred to in
Section 6.5(b) less (ii) the expenses (including out-of-pocket expenses)
incurred by the Borrower or such Subsidiary in connection with such
transaction (including, in the case of any issuance of debt or equity
securities, underwriters' commissions and fees) and the amount of any
federal and state taxes incurred in connection with such transaction, in
each case as certified by a Responsible Officer to the Administrative Agent
at the time of such transaction.
"Non-Bank Status Certificate": as defined in Section 6.11(b)(i)(B).
"Non-Excluded Taxes": as defined in Section 6.11.
"Notes": the collective reference to the Revolving Credit Notes, the
Acquisition Credit Notes and the Term Notes.
"Obligations": the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Loans, and all
other obligations and liabilities of the Loan Parties to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, or out of or in connection with this Agreement, the Notes, the
Guarantees, the Security Documents and any other Loan Documents and any
other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by a Loan Party
pursuant to the terms of the Loan Documents) or otherwise.
"Participant": as defined in Section 13.6(b).
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"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": an acquisition of (a) 100% of the common
stock or other ownership interests of a Domestic Person or (b) the assets
of a Domestic Person, or of a business unit, division or subdivision of a
Domestic Person, in each case engaged in or relating to a line of business
substantially similar to the line of business engaged in by the Borrower on
the Closing Date; provided that (i) the Ratio for the most recent period of
four consecutive fiscal quarters preceding such Permitted Acquisition
(calculated on a pro-forma basis as if such Permitted Acquisition had been
consummated as of the first day of such four quarter period) of
Consolidated Funded Debt as of the last day of such period to Adjusted
EBITDA for such period is not greater than the required Leverage Ratio less
0.25 set forth in Section 10.1(a) for such period, (ii) no later than five
Business Days prior to the consummation of such acquisition, the
Administrative Agent shall have received a certificate of a Responsible
Officer with detailed calculations establishing to the reasonable
satisfaction of the Administrative Agent that the foregoing requirement has
been satisfied and (iii) each Loan Party shall have granted a security
interest in favor of the Administrative Agent to assets acquired in
accordance with Section 9.9.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreement (U.S.)": the Pledge Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C-1, as the
same may be amended, supplemented or otherwise modified from time to time.
"Pledge Agreement (U.K.)": the Mortgage to be executed and delivered
by the Borrower with respect to the shares of Elements U.K. substantially
in the form of Exhibit D, as the same may be amended, supplemented or
otherwise modified from time to time.
"Pledge Agreements": the collective reference to the Pledge Agreement
(U.S.) and the Pledge Agreement (U.K.).
"Post-Closing Agreement": the Post-Closing Agreement to be executed
and delivered by the Borrower, as the same may be amended, supplemented or
otherwise modified from time to time.
"Properties": as defined in Section 7.22.
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"Refinancing": the refinancing of all of the Existing Indebtedness
(other than Existing Indebtedness listed in Part B of Schedule 10.2) with
the proceeds of the Loans to be made on the Closing Date.
"Register": as defined in Section 13.6(d).
"Regulation G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 5.5(a) for amounts drawn
under a Letter of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 4043.
"Required Lenders": at any time, Lenders the Credit Exposure
Percentage of which aggregate 51% or more.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or Governing Documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": as to any Person, the chief executive officer
and the president of such Person or, with respect to financial matters, the
chief financial officer of such Person. Unless otherwise specified,
"Responsible Officer" refers to a Responsible Officer of the Borrower.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to the Borrower pursuant to
Section 4.1 and/or to issue or participate in Letters of Credit issued on
behalf of the Borrower hereunder in an aggregate principal and/or face
amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule I under the caption "Revolving
Credit Loan" or in an Assignment and Acceptance, as such amount may be
reduced from time to time in accordance with the provisions of this
Agreement. The original aggregate principal amount of the Revolving Credit
Commitment is $10,000,000.
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"Revolving Credit Commitment Percentage": as to any Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"Revolving Credit Commitment Period": the period from and including
the date hereof to but not including the Revolving Credit Termination Date
or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"Revolving Credit Loans": as defined in Section 4.1.
"Revolving Credit Note": as defined in Section 4.2.
"Revolving Credit Termination Date": March 24, 2003.
"Security Agreement": the Security Agreement to be executed and
delivered by the Borrower and each domestic Subsidiary of the Borrower,
substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified from time to time.
"Security Documents": the collective reference to the Leasehold
Mortgages, the Mortgage, the Pledge Agreements, the Security Agreement, and
all other security documents hereafter delivered to the Administrative
Agent granting a Lien on any asset or assets of any Person to secure any of
the Obligations or to secure any guarantee of any such Obligations.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Subsidiaries Guarantee": the Guarantee to be executed and delivered
by each Domestic Subsidiary of the Borrower, substantially in the form of
Exhibit I, as the same may be amended, supplemented or otherwise modified
from time to time.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
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"Subsidiary Guarantor": any Subsidiary party to the Subsidiaries
Guarantee as a guarantor.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, its obligation to make a
Term Loan to the Borrower pursuant to Section 2.1 in the amount set forth
opposite such Lender's name on Schedule I under the caption "Term Loan".
"Term Loan Commitment Percentage": as to any Lender, the percentage
equal to the quotient of such Lender's Term Loan Commitment divided by the
aggregate Term Loan Commitments.
"Term Note": as defined in Section 2.2.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Transferee": as defined in Section 13.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Notes or any certificate or other document made or delivered pursuant
hereto.
(b) As used herein and in any Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Borrower and
its Subsidiaries not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
-20-
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions hereof, each
Lender severally agrees to make a term loan (a "Term Loan") to the Borrower on
the Closing Date in an amount not to exceed the amount of the Term Loan
Commitment of such Lender then in effect; provided, that the Term Loan
Commitments shall terminate at 3:00 p.m., New York City time, on March 31, 1998,
if the Term Loans have not been made prior to that time. The Term Loans may from
time to time be (a) Eurodollar Loans, (b) Base Rate Loans or (c) a combination
thereof, as determined by the Borrower and notified to the Administrative Agent
in accordance with Sections 2.3 and 6.2.
2.2 Term Notes. The Term Loan of each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-1 with
appropriate insertions as to payee, date and principal amount (a "Term Note"),
payable to the order of such Lender and representing the obligation of the
Borrower to pay the amount of the Term Loan made by such Lender. Each Lender is
hereby authorized to record the date, Type and amount of its Term Loan and the
date and amount of each payment or prepayment of principal thereof and each
Conversion of all or a portion thereof to another Type and, and in the case of
Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Term Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided, that the failure of such Lender to make any such recordation
shall not impair or otherwise affect the validity or enforceability of its Term
Note. Each Term Note shall (a) be dated the Closing Date, (b) be stated to
mature in installments in amounts equal to such Lender's Term Loan Commitment
Percentage of the amounts, and payable on the dates, set forth on Schedule 2.2,
and (c) bear interest for the period from the date thereof on the unpaid
principal amount thereof at the applicable interest rates per annum specified in
Section 6.1. Interest on the Term Notes shall be payable on the dates specified
in Section 6.1(d).
2.3 Procedure for Term Loan Borrowing. The Borrower shall give the
Administrative Agent irrevocable written notice substantially in the form of
Exhibit A-4 (which notice must be received by the Administrative Agent prior to
10:00 a.m., New York City time, (a) three Business Days prior to the Closing
Date, if all or any part of the Term Loans are to be initially Eurodollar Loans
or (b) one Business Day prior to the Closing Date, otherwise) requesting that
the Lenders make the Term Loans on the Closing Date and specifying (i) the
Closing Date, (ii) the amount to be borrowed, (iii) whether the Term Loans are
to be initially Eurodollar Loans, Base Rate Loans or a combination thereof, and
(iv) if the Term Loans are to be entirely or partly Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Upon receipt of such notice the
Administrative Agent shall promptly notify each Lender thereof. Not later than
11:00 a.m. on the Closing Date each Lender shall make available to the
Administrative Agent at its office specified in Section 13.2 the amount of such
Lender's pro rata share of such borrowing in immediately available funds. The
Administrative Agent shall on such date credit the account of the Borrower on
the books of such office of the Administrative Agent with the aggregate of
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the amounts made available to the Administrative Agent by the Lenders and in
like funds as received by the Administrative Agent.
SECTION 3. AMOUNT AND TERMS OF ACQUISITION LOAN COMMITMENTS
3.1 Acquisition Loan Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make term loans (each, an "Acquisition
Loan") to the Borrower from time to time during the Acquisition Loan Commitment
Period in an amount not to exceed, together with the aggregate amount of all
other Acquisition Loans theretofore made by such Lender, the amount of the
Acquisition Loan Commitment of such Lender then in effect; provided, that the
Acquisition Loan Commitments shall terminate at 3:00 p.m., New York City time,
on March 31, 1998, if the Term Loans have not been made prior to that time. The
Acquisition Loans may from time to time be (a) Eurodollar Loans, (b) Base Rate
Loans or (c) a combination thereof, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 3.3 and 6.2.
3.2 Acquisition Notes. The Acquisition Loans of each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-2 with appropriate insertions as to payee, date and principal amount
(an "Acquisition Note"), payable to the order of such Lender and representing
the obligation of the Borrower to pay the amount of the Acquisition Loan made by
such Lender. Each Lender is hereby authorized to record the date, Type and
amount of its Acquisition Loan and the date and amount of each payment or
prepayment of principal thereof and each Conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the Interest Period with
respect thereto, on the schedule annexed to and constituting a part of its
Acquisition Note, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded; provided, that the failure of
such Lender to make any such recordation shall not impair or otherwise affect
the validity or enforceability of its Acquisition Note. Each Acquisition Note
shall (a) be dated the Closing Date, (b) be stated to mature in installments in
amounts equal to such Lender's Acquisition Loan Commitment Percentage of the
amounts, and payable on the dates, calculated as set forth on Schedule 3.2, and
(c) bear interest for the period from the date thereof on the unpaid principal
amount thereof at the applicable interest rates per annum specified in Section
6.1. Interest on the Acquisition Notes shall be payable on the dates specified
in Section 6.1(d).
3.3 Procedure for Acquisition Loan Borrowing. The Borrower may borrow under
the Acquisition Loan Commitments during the Acquisition Loan Commitment Period
on any Business Day, provided that the Borrower shall give the Administrative
Agent irrevocable notice substantially in the form of Exhibit A-4 (which notice
must be received by the Administrative Agent prior to 10:00 a.m., New York City
time, in the case of Base Rate Loans and 11:00 a.m., New York City time, in the
case of Eurodollar Loans, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Acquisition Loans are to be
initially Eurodollar Loans or (b) one Business Day prior to the requested
Borrowing Date, otherwise) requesting that the Lenders make such Acquisition
Loans on the proposed
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Acquisition Closing Date and specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) the Permitted Acquisition to be financed with
the proceeds of such Acquisition Loans, (iv) whether the borrowing is to be of
Eurodollar Loans, Base Rate Loans or a combination thereof, and (v) if the
borrowing is to be entirely or partly of Eurodollar Loans, the amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Acquisition Loan Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $500,000 or a whole multiple
of $100,000 in excess thereof (or, if the then remaining unused Acquisition Loan
Commitments are less than $500,000 such lesser amount) and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Lender thereof. Each Lender will make the amount of
its pro rata share of each borrowing of Acquisition Loans available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in Section 13.2 prior to 11:00 a.m., New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
3.4 Commitment Fee. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee for the period from and
including the first day of the Acquisition Loan Commitment Period to but not
including the Acquisition Loan Commitment Termination Date, computed at the rate
of 1/2 of 1% per annum on the average daily amount of the unutilized Acquisition
Loan Commitment of such Lender during the period for which payment is made,
payable quarterly in arrears on the last Business Day of each March, June,
September and December and on the Acquisition Loan Commitment Termination Date
or such earlier date as the Acquisition Loan Commitments shall terminate as
provided herein, commencing on the first of such dates to occur after the date
hereof. The rate per annum at which such commitment fee shall be calculated for
each day during any period of computation shall be equal to (a) 3/8 of 1% per
annum, if the ratio of Consolidated Funded Debt as of the last day in the period
of four consecutive fiscal quarters of the Borrower most recently ended prior to
such day for which financial statements have been delivered pursuant to Section
9.1(a) or (b) to Adjusted EBITDA for such period was less than 2.00 to 1, and
(b) 1/2 of 1% per annum, if otherwise. The rate at which such commitment fee is
calculated shall be adjusted on and as of the date on which the consolidated
financial statements for each period of four consecutive fiscal quarters of the
Borrower and its Subsidiaries are delivered pursuant to Section 9.1(a) or (b),
provided, however, that if such financial statements are not delivered when
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required pursuant to such Section, then until such financial statements are so
delivered for purposes of calculating the rate at which such commitment fee is
calculated the ratio of Consolidated Funded Debt to Adjusted EBITDA for such
period shall be deemed to be greater than 2.00 to 1.
3.5 Termination or Reduction of Acquisition Loan Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
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Administrative Agent, to terminate the Acquisition Loan Commitments or, from
time to time, to reduce the amount of the Acquisition Loan Commitments. Any such
reduction shall be in an amount equal to $1,000,000 or a whole multiple thereof
and shall reduce permanently the Acquisition Loan Commitments then in effect.
SECTION 4. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
4.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("Revolving
Credit Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Credit Commitment Percentage of the
outstanding L/C Obligations, does not exceed the amount of such Lender's
Revolving Credit Commitment then in effect; provided, that the Revolving Credit
Commitments shall terminate at 3:00 p.m., New York City time, on March 31, 1998,
if the Term Loans have not been made prior to that time. During the Revolving
Credit Commitment Period the Borrower may use the Revolving Credit Commitments
by borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
4.3 and 6.2, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
4.2 Revolving Credit Notes. The Revolving Credit Loans made by each Lender
shall be evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit A-3 with appropriate insertions as to payee, date and principal
amount (a "Revolving Credit Note"), payable to the order of such Lender and
evidencing the obligation of the Borrower to pay a principal amount equal to the
lesser of (a) the amount of the Revolving Credit Commitment of such Lender and
(b) the aggregate unpaid principal amount of all Revolving Credit Loans made by
such Lender. Each Lender is hereby authorized to record the date, Type and
amount of each Revolving Credit Loan made or Converted by such Lender, the date
and amount of each payment or prepayment of principal thereof, and, in the case
of Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Revolving Credit Termination Date
and (z) bear interest on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided in
Section 6.1. Interest on each Revolving Credit Note shall be payable on the
dates specified in Section 6.1(d).
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4.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Revolving Credit Commitments during the Revolving Credit Commitment Period
on any Business Day in an aggregate principal amount not exceeding the aggregate
Available RC Commitments then in effect, provided that the Borrower shall give
the Administrative Agent irrevocable written notice, substantially in the form
of Exhibit A-4 (which notice must be received by the Administrative Agent prior
to 10:00 a.m., New York City time in the case of Base Loan Rates and 11:00 a.m.,
New York City time, in the case of Eurodollar Loans), (a) three Business Days
prior to the requested Borrowing Date, as to any part of the requested Revolving
Credit Loans that are to be initially Eurodollar Loans or (b) one Business Day
prior to the requested Borrowing Date, otherwise) specifying (i) the amount to
be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if
the borrowing is to be entirely or partly of Eurodollar Loans, the amounts of
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $500,000 or a whole multiple
thereof (or, if the then Available RC Commitments are less than $500,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $1,000,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Lender thereof.
Each Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the Borrower at the
office of the Administrative Agent specified in Section 13.2 prior to 11:00
a.m., New York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent.
4.4 Commitment Fee. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee for the period from and
including the first day of the Revolving Credit Commitment Period to the
Revolving Credit Termination Date, computed at the rate per annum calculated as
provided in the next succeeding sentence on the average daily amount of the
Available RC Commitment of such Lender during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the Revolving Credit Termination Date or such
earlier date as the Revolving Credit Commitments shall terminate as provided
herein, commencing on the first of such dates to occur after the date hereof.
The rate per annum at which such commitment fee shall be calculated for each day
during any period of computation shall be equal to (a) 3/8 of 1% per annum, if
the ratio of Consolidated Funded Debt as of the last day in the period of four
consecutive fiscal quarters of the Borrower most recently ended prior to such
day for which financial statements have been delivered pursuant to Section
9.1(a) or (b) to Adjusted EBITDA for such period was less than 2.00 to 1, and
(b) 1/2 of 1% per annum, if otherwise. The rate at which such commitment fee is
calculated shall be adjusted on and as of the date on which the consolidated
financial statements for each period of four consecutive fiscal quarters of the
Borrower and its Subsidiaries are delivered pursuant to Section 9.1(a) or (b),
provided, however, that if such financial statements are not delivered when
required
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pursuant to such Section, then until such financial statements are so delivered
for purposes of calculating the rate at which such commitment fee is calculated
the ratio of Consolidated Funded Debt to Adjusted EBITDA for such period shall
be deemed to be greater than 2.00 to 1.
4.5 Termination or Reduction of Revolving Credit Commitments. The Borrower
shall have the right, upon not less than five Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Credit Loans made on the
effective date thereof, the Aggregate Outstanding RC Extensions of Credit would
exceed the Revolving Credit Commitments then in effect. Any such reduction shall
be in an amount equal to $1,000,000 or a whole multiple thereof and shall reduce
permanently the Revolving Credit Commitments then in effect.
SECTION 5. LETTERS OF CREDIT
5.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 5.4(a), agrees to issue letters of credit ("Letters of Credit") for the
account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (1) the L/C
Obligations would exceed the L/C Commitment or (2) the aggregate Available RC
Commitments would be less than zero.
(b) Each Letter of Credit shall:
(1) be denominated in Dollars and shall be a standby letter of credit
issued to support obligations of the Borrower and/or the Subsidiaries,
contingent or otherwise, in respect of insurance obligations, to workman's
compensation board or similar Governmental Authority for workman's
compensation liabilities of the Borrower and/or the Subsidiaries, and for
such other purposes as may be approved by the Issuing Lender and the
Administrative Agent (such consent not to be unreasonably withheld), and
(2) expire no later than the earlier of (i) the Revolving Credit
Termination Date and (ii) 364 days from the date of issuance (subject to
renewal).
(c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
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5.2 Procedure for Issuance of Letters of Credit. The Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may request. Upon receipt of any Application, the Issuing Lender will process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.
5.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from the date of such payment to the date upon
which the next such payment is due hereunder at a rate equal to the sum of the
Applicable Margin for Eurodollar Loans then in effect and 0.25% per annum,
calculated on the basis of the actual days elapsed over a 360 day year, of the
aggregate amount available to be drawn under such Letter of Credit on the date
on which such fee is calculated. One-quarter of one percent (.25%) of such fee
shall be payable to the Issuing Lender, and the remainder of such fee shall be
payable to the L/C Participants and the Issuing Lender to be shared ratably
among them in accordance with their respective Revolving Credit Commitment
Percentages. Such commissions shall be payable in arrears on each L/C Fee
Payment Date to occur after the issuance of each Letter of Credit and shall be
nonrefundable.
(b) In addition to the foregoing fees and commissions, the Borrower shall
pay or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
5.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk, an undivided interest equal to such L/C Participant's
Revolving Credit Commitment Percentage in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with
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the Issuing Lender that, if a draft is paid under any Letter of Credit for which
the Issuing Lender is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing
Lender upon demand at the Issuing Lender's address for notices specified herein
an amount equal to such L/C Participant's Revolving Credit Commitment Percentage
of the amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the Issuing
Lender pursuant to Section 5.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Lender under any Letter of Credit is paid to the
Issuing Lender within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand an amount equal
to the product of (1) such amount, times (2) the daily average Federal funds
rate, as quoted by the Issuing Lender, during the period from and including the
date such payment is required to the date on which such payment is immediately
available to the Issuing Lender, times (3) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to Section 5.4(a) is not in fact made available to the Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans hereunder. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with Section 5.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
5.5 Reimbursement Obligations of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender or, if later, on each date on which such
draft is paid by the Issuing Lender for the amount of (1) such draft so paid and
(2) any taxes and any reasonable fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment at its address
for notices specified herein in lawful money of the United States of America and
in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this Section from the date such amounts become payable
(whether at stated
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maturity, by acceleration or otherwise) until payment in full at the rate which
would be payable on any outstanding Base Rate Loans which were then overdue.
(c) Each drawing under any Letter of Credit shall constitute a request by
the Borrower to the Administrative Agent for a borrowing pursuant to Section 4.3
of Base Rate Loans in the amount of such drawing. The Borrowing Date with
respect to such borrowing shall be the date of such drawing.
5.6 Obligations Absolute. (a) The Borrower's obligations under this Section
5 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of a
Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 5.5(a) shall not be affected by, among other things,
(1) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (2) any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (3) any claims whatsoever of the Borrower against any beneficiary
of such Letter of Credit or any such transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.
5.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
5.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 5, the provisions of this Section 5 shall apply.
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SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS
6.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any interest
payable thereon, (iii) any commitment fee or (iv) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
or (y) in the case of any such overdue interest, commitment fee or other amount,
the rate described in paragraph (b) of this Section plus 2%, in each case from
the date of such non-payment until such overdue principal, interest, commitment
fee or other amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
6.2 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to Convert Eurodollar Loans to Base Rate Loans, by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such Conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to Convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election. Any such notice of Conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Loans and Base
Rate Loans may be Converted as provided herein, provided that (i) no Loan may be
Converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a Conversion is not appropriate, (ii) any such Conversion
may only be made if, after giving effect thereto, Section 6.3 shall not have
been contravened, and (iii) no Loan may be Converted into a Eurodollar Loan
after the date that is one month prior to the Revolving Credit Termination Date
(in the case of Conversions of Revolving Credit Loans) or the date of the final
installment of principal (in the case of Conversions of Term Loans and
Acquisition Loans).
(b) Any Eurodollar Loan may be Continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Administrative Agent, in accordance with the applicable provisions of the
term "Interest
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Period" set forth in Section 1.1, of the length of the next Interest Period to
be applicable to such Loans, provided that no Eurodollar Loan may be Continued
as such (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that such a
Continuation is not appropriate, (ii) if, after giving effect thereto, Section
6.3 would be contravened or (iii) after the date that is one month prior to the
Revolving Credit Termination Date (in the case of Continuations of Revolving
Credit Loans) or the date of the final installment of principal (in the case of
Continuations of Term Loans and Acquisition Loans) and provided, further, that
if the Borrower shall fail to give such notice or if such Continuation is not
permitted pursuant to this Section 6.2, such Loans shall be automatically
converted to Base Rate Loans on the last day of such then expiring Interest
Period.
6.3 Maximum Number of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, in no event shall there be more than eight
Tranches outstanding at any time.
6.4 Optional Prepayments. The Borrower may on the last day of any Interest
Period with respect thereto, in the case of Eurodollar Loans or at any time and
from time to time, in the case of Base Rate Loans, prepay the Loans, in whole or
in part, without premium or penalty, upon at least three Business Days'
irrevocable written notice to the Administrative Agent, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans, Base
Rate Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to Section 6.12
and, in the case of prepayments of the Term Loans and Acquisition Loans only,
accrued interest to such date on the amount prepaid. Partial prepayments of the
Term Loans and Acquisition Loans pursuant to this Section shall be applied to
the installments of principal thereof in the inverse order of their scheduled
maturities. Amounts prepaid on account of the Term Loans and Acquisition Loans
may not be reborrowed. Partial prepayments pursuant to this Section shall be in
an aggregate principal amount of $1,000,000 or a whole multiple thereof.
6.5 Mandatory Prepayments. (a) Subject to Section 6.12, if on any date the
Aggregate Outstanding RC Extensions of Credit exceeds the Revolving Credit
Commitments, the Borrower shall immediately prepay the Revolving Credit Loans
and cash collateralize or replace Letters of Credit in an amount equal to the
amount of such excess.
(b) Unless the Required Lenders otherwise agree, the Borrower shall prepay
the Loans and reduce the Commitments in an amount equal to (i) 100% of the Net
Proceeds of any sale or issuance of debt securities, and 75% of the Net Proceeds
of any sale or issuance of any equity securities, in either case by the Borrower
or any Subsidiary, whether in a public offering, a private placement or
otherwise and (ii) 100% of the Net Proceeds of any sale, lease, assignment,
exchange or other disposition for cash of any asset or group of assets not
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made in the ordinary course of business (including, without limitation, but
subject to clause (d) of this Section 6.5, insurance proceeds paid as a result
of any destruction, casualty or taking of any property of the Borrower or any
Subsidiary and the proceeds of key person life insurance required by the terms
hereof), by the Borrower or any Subsidiary of the Borrower, in any such case no
later than three Business Days following receipt by the Borrower or such
Subsidiary of such proceeds, together with accrued interest to such date on the
amount prepaid; provided that no such prepayment shall be required pursuant to
subclause (ii) of this Section 6.5(b) unless the aggregate amount of such Net
Proceeds received by the Borrower and its Subsidiaries and not previously
applied to prepayment of the Loans and the reduction of the Commitments pursuant
to Section 6.5(b)(ii) is at least $100,000 for any single disposition or
$500,000 in the aggregate for all dispositions in any year. Amounts prepaid
pursuant to this Section 6.5(b) shall be applied first to the Term Loans and the
Acquisition Loans (or, if no Acquisition Loans are then outstanding, to the
reduction of the Acquisition Credit Commitments), pro rata, until paid in full,
and second to the reduction of the Revolving Credit Commitments and the
prepayment of the Revolving Credit Loans and/or cash collateralization of the
Letters of Credit. Prepayments of installments of Term Loans and Acquisition
Loans shall be applied in the inverse order of maturity and such amounts so
prepaid may not be reborrowed. Nothing in this Section 6.5(b) shall be construed
to derogate any restriction or limitation contained in any Loan Document imposed
on any transaction of the types described in this Section 6.5(b), including
without limitation the restrictions set forth in Sections 10.2, 10.5 and 10.6
hereof.
(c) On or before the earlier of the date on which the financial statements
referred to in Section 9.1(a) are required to be delivered in respect of a
fiscal year of the Borrower, beginning with the fiscal year ending August 31,
2000, and the date on which such financial statements are actually delivered,
the Borrower shall prepay the Term Loans and Acquisition Loans and permanently
reduce the Commitments in the amount of 50% of Excess Cash Flow for the fiscal
year covered by such financial statements, together with accrued interest to
such date on the amount prepaid. Amounts prepaid pursuant to this Section 6.5(c)
shall be applied first to the Term Loans and the Acquisition Loans (or, if no
Acquisition Loans are then outstanding, to the reduction of the Acquisition
Credit Commitments), pro rata, until paid in full, and second to the reduction
of the Revolving Credit Commitments and the prepayment of the Revolving Credit
Loans and/or cash collateralization of the Letters of Credit. Prepayments of
installments of Term Loans and Acquisition Loans shall be applied in the inverse
order of maturity and such amounts so prepaid may not be reborrowed.
(d) Net Proceeds received by the Borrower or any Subsidiary as proceeds of
insurance upon any destruction, casualty or taking with respect to any property
of the Borrower or any Subsidiary need not be applied as set forth in Section
6.5(b) to the extent that such Net Proceeds are applied to the repair,
rebuilding or replacement of the property which was the subject of such
destruction, casualty or taking within 60 days after the receipt of such Net
Proceeds. If required by the Administrative Agent, such Net Proceeds shall be
held in a special collateral account, subject to the sole dominion and control
of the Administrative Agent and in a manner reasonably satisfactory to the
Administrative Agent, as additional Collateral for the Obligations and the
Subsidiaries Guarantee, until such time as it is to be applied to such repair,
rebuilding or replacement.
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6.6 Computation of Interest and Fees. (a) Commitment fees and, whenever it
is calculated on the basis of the Prime Rate, interest shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 6.1(a) or (c).
6.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the 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, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans Loan requested to be made on the first day of
such Interest Period shall be made as Base Rate Loans, (y) any Loans that were
to have been Converted on the first day of such Interest Period to Eurodollar
Loans shall be Converted to or Continued as Base Rate Loans and (z) any
outstanding Eurodollar Loans shall be Converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or Continued as
such, nor shall the Borrower have the right to Convert Loans to Eurodollar
Loans.
6.8 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower
from the Lenders hereunder, each payment by the Borrower on account of any
commitment fee hereunder and any reduction of the Term Loan Commitments, the
Acquisition Loan Commitments or the Revolving Credit Commitments of the Lenders
shall be made pro rata according to the respective Term Loan Commitment
Percentages, Acquisition Loan
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Commitment Percentages or Revolving Credit Commitment Percentages, as
applicable, of the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Term Loans, Acquisition
Loans or the Revolving Credit Loans shall be made pro rata according to the
respective outstanding principal amounts of the Term Loans, Acquisition Loans or
the Revolving Credit Loans, as applicable, then held by the Lenders. All
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without
set-off or counterclaim and shall be made prior to 12:00 noon, New York City
time, on the due date thereof to the Administrative Agent, for the account of
the Lenders, at the Administrative Agent's office specified in Section 13.2, in
Dollars and in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its Term Loan Commitment Percentage, Acquisition Loan
Commitment Percentage or Revolving Credit Commitment Percentage, as applicable,
of such borrowing available to the Administrative Agent, the Administrative
Agent may assume that such Lender is making such amount available to the
Administrative Agent, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section shall be conclusive in the absence of manifest error. If such
Lender's Term Loan Commitment Percentage, Acquisition Loan Commitment Percentage
or Revolving Credit Commitment Percentage, as applicable, of such borrowing is
not made available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Administrative Agent shall also be
entitled to recover such amount with interest thereon at the rate per annum
applicable to Base Rate Loans hereunder, on demand, from the Borrower.
6.9 Illegality. Notwithstanding any other provision herein, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, Continue Eurodollar Loans as such and
Convert Base Rate Loans to Eurodollar Loans shall forthwith be
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canceled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be Converted automatically to Base Rate Loans on the respective last
days of the then current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such Conversion of a Eurodollar
Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, the Borrower shall pay to such Lender such amounts,
if any, as may be required pursuant to Section 6.12.
6.10 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 6.11 and changes in the
rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, Converting into,
Continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, the
Borrower shall promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
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(c) If any Lender becomes entitled to claim any additional amounts pursuant
to this Section, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The agreements in
this Section shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
6.11 Taxes. (a) All payments made by the Borrower under this Agreement and
any Notes shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any 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 Administrative Agent or any Lender hereunder or under any Note, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the 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 Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) (A) if such Lender is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, deliver to the Borrower and the Administrative
Agent (x) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor
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applicable form, as the case may be, and (y) an Internal Revenue Service
Form W-8 or W-9, or successor applicable form, as the case may be, or (B)
if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code and cannot deliver either Internal Revenue Service Form 1001 or
4224, deliver (x) a certificate substantially in the form of Exhibit J (a
"Non-Bank Status Certificate") and (y) two completed and signed copies of
Internal Revenue Service Form W-8 or successor applicable form;
(ii) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, (ii) in the
case of a Non-Bank Status Certificate, that it is not a "bank" as such term is
defined in Section 881(c)(3)(A) of the Code, and (iii) in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to Section 13.6 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms and statements required pursuant to this
Section, provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.
6.12 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
Conversion into or Continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, Converted or Continued, for the period from the date of such
prepayment or of such failure to borrow, Convert or Continue to the last day of
such Interest Period (or, in the case of a failure to borrow, Convert or
Continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable
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rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Bank on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
6.13 Lending Offices; Change of Lending Office. (a) Loans of each Type made
by any Lender shall be made and maintained at such Lender's Applicable Lending
Office for Loans of such Type.
(b) Each Lender agrees that if it makes any demand for payment under
Section 6.10 or 6.11(a), or if any adoption or change of the type described in
Section 6.9 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under Section 6.10 or 6.11(a), or would eliminate or reduce the effect of any
adoption or change described in Section 6.9.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
7.1 Financial Condition. (a) The consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at November 30, 1997 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by Ernst and Young, LLP, copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at February 28, 1998 and the related unaudited consolidated statements of income
and of cash flows for the three-month period ended on such date, certified by a
Responsible Officer, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent
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liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other financial derivative,
which is not reflected in the foregoing statements or in the notes thereto.
During the period from August 31, 1997 to and including the date hereof there
has been no sale, transfer or other disposition by the Borrower or any of its
consolidated Subsidiaries of any material part of its business or property and
no purchase or other acquisition of any business or property (including any
Capital Stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its consolidated Subsidiaries at August
31, 1997.
(b) The pro forma consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at November 30, 1997, certified by a Responsible
Officer of the Borrower (the "Pro Forma Balance Sheet"), a copy of which has
been provided to the Administrative Agent and each Lender, is the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries
adjusted to give effect (as if such events had occurred on such date) to (i) the
Kwik Acquisition, (ii) the Refinancing, (iii) the making of the Term Loans, (iv)
the making of the Revolving Credit Loans to be made on the Closing Date, (v) the
application of the proceeds of the foregoing in accordance with the terms of the
Loan Documents and (vi) the payment of all fees and expenses related to the
foregoing transactions, as estimated in good faith as of the date of the Pro
Forma Balance Sheet. The Pro Forma Balance Sheet, together with the notes
thereto, presents fairly, on a pro forma basis, the consolidated financial
position of the Borrower and its Subsidiaries as at November 30, 1997, assuming
that the events specified in the preceding sentence had actually occurred on
such date.
(c) The operating forecast and cash flow projections of the Borrower and
its consolidated Subsidiaries, copies of which have heretofore been furnished to
the Lenders, have been prepared in good faith under the direction of a
Responsible Officer of the Borrower, and in accordance with GAAP. The Borrower
has no reason to believe that as of the date of delivery thereof such operating
forecast and cash flow projections are materially incorrect or misleading in any
material respect, or omit to state any material fact which would render them
misleading in any material respect.
7.2 No Change. (a) Since August 31, 1997 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect, and (b) except as set forth on Schedule 7.2, during the period from
August 31, 1997 to and including the date hereof no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries.
7.3 Existence; Compliance with Law. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate 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
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business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
7.4 Power; Authorization; Enforceable Obligations. The Borrower has the
corporate power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and to borrow hereunder and has taken
all necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and any Notes and to authorize the execution,
delivery and performance of the Loan 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,
performance, validity or enforceability of the Loan Documents to which the
Borrower is a party other than those consents, authorizations, notices and
filings which have been obtained, are in full force and effect and are set forth
on Schedule 7.4. This Agreement has been, and each other Loan Document to which
it is a party will be, duly executed and delivered on behalf of the Borrower.
This Agreement constitutes, and each other Loan Document to which it is a party
when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
7.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than Liens created by the Security Documents in
favor of the Administrative Agent).
7.6 No Material Litigation. Except as set forth on Schedule 7.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
7.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
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7.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to any
Lien except as permitted by Section 10.3.
7.9 Intellectual Property. The Borrower and each of its Subsidiaries owns,
or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not have a
Material Adverse Effect (the "Intellectual Property"). 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 the Borrower know of any valid basis for any
such claim. The use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, do not have a Material Adverse
Effect.
7.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries has a Material Adverse
Effect.
7.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
7.12 Federal Regulations. No part of the proceeds of any Loans will be used
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation G or Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect, or for any purpose which violates, or which would be inconsistent
with, the provisions of the regulations of such Board of Governors. If requested
by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
7.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-
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year period. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
7.14 Investment Company Act; Other Regulations. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
7.15 Subsidiaries. Schedule 7.15 sets forth the name of each direct or
indirect Subsidiary of the Borrower, its form of organization, its jurisdiction
of organization, the total number of issued and outstanding shares or other
interests of Capital Stock thereof, the classes and number of issued and
outstanding shares or other interests of Capital Stock of each such class, the
name of each holder of Capital Stock thereof and the number of shares or other
interests of such Capital Stock held by each such holder and the percentage of
all outstanding shares or other interests of such class of Capital Stock held by
such holders.
7.16 Security Documents. (a) The provisions of each Security Document are
effective to create in favor of the Administrative Agent for the ratable benefit
of the Lenders a legal, valid and enforceable security interest in all right,
title and interest of the Loan Party thereto in the "Collateral" described
therein.
(b) (i) When financing statements have been filed in the offices in the
jurisdictions listed in Schedule 7.16, the Security Agreements shall each
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of each of the Borrower and its Subsidiaries in the
"Collateral" described therein, which can be perfected by such filing.
(ii) When certificates representing the Pledged Stock (as defined in the
Pledge Agreements) are delivered to the Administrative Agent, together with
stock powers endorsed in blank by a duly authorized officer of the pledgors
thereof, the Pledge Agreements shall constitute a fully perfected first Lien on,
and security interest in, all right, title and interest of the pledgors parties
thereto in the "Collateral" described therein.
(c) Neither the Borrower nor any Subsidiary owns any property, or has any
interest in any property, that is not subject to a fully perfected first
priority Lien on, or security interest in, such property in favor of the
Administrative Agent, other than any such property having an aggregate fair
market value at any one time not exceeding $250,000.
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7.17 Accuracy and Completeness of Information. (a) All factual information,
reports and other papers and data with respect to the Loan Parties (other than
projections) furnished, and all factual statements and representations made, to
the Administrative Agent or the Lenders by a Loan Party, or on behalf of a Loan
Party, were, at the time the same were so furnished or made, when taken together
with all such other factual information, reports and other papers and data
previously so furnished and all such other factual statements and
representations previously so made, complete and correct in all material
respects, to the extent necessary to give the Administrative Agent and the
Lenders true and accurate knowledge of the subject matter thereof in all
material respects, and did not, as of the date so furnished or made, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein not misleading in light of the
circumstances in which the same were made.
(b) All projections with respect to the Loan Parties furnished by or on
behalf of a Loan Party to the Administrative Agent or the Lenders were prepared
and presented in good faith by or on behalf of such Loan Party. No fact is known
to a Loan Party which materially and adversely affects or in the future is
reasonably likely (so far as such Loan Party can reasonably foresee) to have a
Material Adverse Effect which has not been set forth in the financial statements
referred to in Section 7.1 or in such information, reports, papers and data or
otherwise disclosed in writing to the Administrative Agent or the Lenders prior
to the Closing Date.
7.18 Labor Relations. No Loan Party is engaged in any unfair labor practice
which could reasonably be expected to have a Material Adverse Effect. There is
(a) no unfair labor practice compliant pending or, to the best knowledge of each
Loan Party and each of the Subsidiaries, threatened against a Loan Party before
the National Labor Relations Board which could reasonably be expected to have a
Material Adverse Effect and no grievance or arbitration proceeding arising out
of or under a collective bargaining agreement is so pending or threatened; (b)
no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge
of each Loan Party, threatened against a Loan Party; and (c) no union
representation question existing with respect to the employees of a Loan Party
and no union organizing activities are taking place with respect to any thereof.
7.19 Insurance. Each Loan Party has, with respect to its properties and
business, insurance covering the risks, in the amounts, with the deductible or
other retention amounts, and with the carriers, listed on Schedule 7.19, which
insurance meets the requirements of Section 9.5 hereof and Section 5(m) of the
Security Agreements and Section 5 of the Mortgages as of the date hereof and the
Closing Date.
7.20 Solvency. On the Closing Date, after giving effect to the consummation
of the Kwik Acquisition and the Refinancing and to the incurrence of all
indebtedness and obligations being incurred on or prior to such date in
connection herewith and therewith, (i) the amount of the "present fair saleable
value" of the assets of the Borrower and of the Borrower and its Subsidiaries,
taken as a whole, will, as of such date, exceed the amount of all "liabilities
of the Borrower and of the Borrower and its Subsidiaries, taken as a whole,
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contingent or otherwise", as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (ii) the present fair saleable value of the assets of
the Borrower and of the Borrower and its Subsidiaries, taken as a whole, will,
as of such date, be greater than the amount that will be required to pay the
liabilities of the Borrower and of the Borrower and its Subsidiaries, taken as a
whole, on their respective debts as such debts become absolute and matured,
(iii) neither the Borrower nor the Borrower and its Subsidiaries, taken as a
whole, will have, as of such date, an unreasonably small amount of capital with
which to conduct their respective businesses, and (iv) each of the Borrower and
the Borrower and its Subsidiaries, taken as a whole, will be able to pay their
respective debts as they mature. For purposes of this Section 7.20, "debt" means
"liability on a claim", "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
7.21 Purpose of Loans. The proceeds of the Term Loans shall be used by the
Borrower to finance in part the Kwik Acquisition and the Refinancing, and to pay
fees and expenses incurred in connection therewith. The proceeds of the
Revolving Credit Loans shall be used to finance in part the Refinancing, for the
working capital requirements of the Borrower in the ordinary course of business
and to pay fees and expenses incurred in connection herewith. The proceeds of
the Acquisition Loans shall be used to finance in part the purchase price of
Permitted Acquisitions, and to pay fees and expenses incurred in connection
therewith.
7.22 Environmental Matters. Except as set forth on Schedule 7.22:
(a) The facilities and properties owned, leased or operated by the Borrower
or any of its Subsidiaries (the "Properties") do not contain, and have not
previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in compliance,
and have in the last five years been in compliance, in all material respects
with all applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business") which could interfere with the continued operation
of the Properties or impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the
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Properties or the Business, nor does the Borrower 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 in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could [reasonably] give rise to liability under
Environmental Laws.
7.23 Regulation H. No Mortgage or Leasehold Mortgage encumbers improved
real property which is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.
7.24 Existing Indebtedness. Schedule 10.2 is a true and complete list of
all Indebtedness of the Borrower and its Subsidiaries as of the date hereof.
Immediately after giving effect to the Refinancing, the only Indebtedness of the
Borrower and its Subsidiaries will be that listed under Part B of Schedule 10.2,
"Indebtedness to Remain Outstanding".
7.25 No Warehouse Inventory. No Inventory of any Loan Party is held in a
warehouse operated by any Person.
7.26 Collateral Certificate. As of the Closing Date, the information in the
Collateral Certificate provided by or on behalf of the Loan Parties is true and
correct in all material respects.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Initial Loans. The agreement of each Lender to make the
initial Loan requested to be made by it is subject to the satisfaction,
immediately prior to or
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concurrently with the making of such Loan on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received:
(i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender having a Term Loan
Commitment, a Term Note of the Borrower conforming to the requirements
hereof and executed by a duly authorized officer of the Borrower,
(iii) for the account of each Lender having an Acquisition
Loan Commitment, an Acquisition Note of the Borrower conforming to
the requirements hereof and executed by a duly authorized officer of
the Borrower,
(iv) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(v) each of the Pledge Agreements, each executed and delivered by
a duly authorized officer of the party thereto, with a counterpart or
a conformed copy for each Lender,
(vi) the Subsidiaries Guarantee, executed and delivered by a duly
authorized officer of the parties thereto, with a counterpart or a
conformed copy for each Lender,
(vii) the Security Agreement, executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender,
(viii) the Mortgage, with respect to the property listed on
Schedule 8.1, executed and delivered by a duly authorized officer of
the party thereto, with a counterpart or a conformed copy for each
Lender,
(ix) a Blocked Account Agreement (as defined in the Security
Agreement), executed and delivered by a duly authorized officer of the
parties thereto, with respect to each Bank Account (as defined in the
Security Agreement) of each Loan Party,
(x) a certificate of insurance naming the Administrative Agent
additional insured and loss payee with respect to the key person life
insurance policy for William E. Dye and with respect to each other
policy of insurance maintained by the Loan Parties,
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(xi) the Intercreditor and Subordination Agreement executed and
delivered by a duly authorized officer of each party thereto, with a
counterpart or a conformed copy for each Lender, and
(xii) the Post-Closing Agreement, executed and delivered by a
duly authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender.
(b) Related Agreements. The Administrative Agent shall have received,
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the Kwik Acquisition Documents and such
other documents or instruments as may be reasonably requested by the
Administrative Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which the
Borrower or its Subsidiaries may be a party.
(c) Concurrent Transactions. (i) The Kwik Acquisition shall have been,
or shall be concurrently with the making of the initial Loans, consummated
for a total consideration, including fees and expenses thereof, not to
exceed $27,000,000 pursuant to satisfactory documentation, without any
amendment, modification or waiver thereof except with the consent of the
Required Lenders, and the Administrative Agent shall have received evidence
satisfactory to it to that effect.
(ii) All amounts owing to the Existing Creditors under the Existing
Financing Documents listed on Part A of Schedule 10.2, "Indebtedness to be
Repaid" shall have been, or shall be concurrently with the making of the
initial Loans, repaid in full, and any Liens created pursuant to such
Existing Financing Documents shall have been or shall be, concurrently with
the making of the initial Loans, released, and such Existing Financing
Documents shall terminate and be of no further force and effect upon such
repayment; in each case pursuant to such payout letters, Lien releases,
termination statements, mortgage satisfactions and other documents as the
Administrative Agent may require, each of which shall be in form and
substance satisfactory to the Administrative Agent.
(d) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant to the
Borrower Security Documents, certified by the Secretary or an Assistant
Secretary of the Borrower as of the Closing Date, which certificate shall
be in substantially in the form of Exhibit M-1 and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(e) Borrower Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of the
Borrower, dated the
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Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document, which certificate shall be
substantially in the form of Exhibit M-1, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(f) Corporate Proceedings of Subsidiaries. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Subsidiary of the Borrower which
is a party to a Loan Document authorizing (i) the execution, delivery and
performance of the Loan Documents to which it is a party and (ii) the
granting by it of the Liens created pursuant to the Security Documents to
which it is a party, certified by the Secretary or an Assistant Secretary
of each such Subsidiary as of the Closing Date, which certificate shall be
substantially in the form of Exhibit M-2 and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(g) Subsidiary Incumbency Certificates. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing Date,
as to the incumbency and signature of the officers of such Subsidiaries
executing any Loan Document, satisfactory, which certificate shall be
substantially in the form of Exhibit M-2, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of each such
Subsidiary.
(h) Corporate Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party, certified as
of the Closing Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of such Loan Party.
(i) Good Standing Certificates. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent
date from the Secretary of State or other appropriate authority, evidencing
the good standing of each Loan Party (i) in the jurisdiction of its
organization and (ii) in each other jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires it to
qualify as a foreign Person except, as to this subclause (ii), where the
failure to so qualify could not have a Material Adverse Effect.
(j) Consents, Licenses and Approvals. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of a
Responsible Officer of the Borrower, substantially in the form of Exhibit
O, (i) attaching copies of all consents, authorizations and filings
referred to in Section 7.4, and (ii) stating that such consents, licenses
and filings are in full force and effect, and each such consent,
authorization and filing shall be in form and substance satisfactory to the
Administrative Agent.
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(k) Fees. The Administrative Agent shall have received the fees and
other compensation, and reimbursement of expenses, to be received on the
Closing Date referred to in the Fee Letter.
(l) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Buchanan Ingersoll, special
counsel to the Borrower and the other Loan Parties, substantially in
the form of Exhibit K - 1;
(ii) the executed legal opinion of Wilde Sapte, special United
Kingdom counsel to Elements UK, substantially in the form of Exhibit
K-2; and
(iii) the executed legal opinion of Kantor, Davidoff, Wolfe,
Mandelker & Kass, P.C., counsel to Kwik and its Subsidiaries in
connection with the Kwik Acquisition, in form and substance
satisfactory to the Administrative Agent, accompanied by a letter from
such counsel authorizing the Lenders and the Administrative Agent to
rely on such opinion as if it were addressed to the Lenders and the
Administrative Agent as of the Closing Date.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(m) Pledged Stock; Stock Powers. The Administrative Agent shall have
received the certificates representing the shares pledged pursuant to each
of the Pledge Agreements (limited to 2/3 of the shares of Elements UK),
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof. Each Issuer
referred to in each Pledge Agreement shall have delivered an acknowledgment
of and consent to such Pledge Agreement, executed by a duly authorized
officer of such Issuer, in substantially the form appended to such Pledge
Agreement. All necessary action shall have been taken under English law to
provide the Administrative Agent with a fixed charge over the shares of
Elements UK to be pledged to the Administrative Agent.
(n) Actions to Perfect Liens. The Administrative Agent shall have
received evidence in form and substance satisfactory to it that all
filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form UCC-1,
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Liens created by the Security Documents shall have been
completed or will be completed promptly following the making of the initial
Loans hereunder.
(o) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgment and tax lien filings which
may have been filed with
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respect to personal property of the Borrower, and the results of such
search shall be satisfactory to the Administrative Agent.
(p) Insurance. The Administrative Agent shall have received evidence
in form and substance satisfactory to it that all of the requirements of
Section 9.5 hereof and Section 5(m) of the Security Agreements and Section
5 of the Mortgages shall have been satisfied; provided, however, that such
evidence regarding the life insurance policy of William E. Dye shall be
delivered pursuant to the terms set forth in the Post-Closing Agreement.
(q) Historical Financial Information. The Lenders shall have received
copies of the audited annual financial statements and quarterly financial
statements for the Borrower and its Subsidiaries for (i) the fiscal years
ended August 31, 1996 and 1997, and (ii) each fiscal quarter ended
subsequent to August 31, 1997 for which financial statements are available
and for Kwik and its Subsidiaries for (i) the fiscal year ended December
31, 1996 and 1997, and (ii) each fiscal quarter subsequent to December 31,
1997 for which financial statements are available.
(r) Pro Forma Financial Information. The Lenders shall have received
the Pro Forma Balance Sheet referenced in Section 7.1(b) above.
(s) Maximum Expenses. The Administrative Agent shall have received
evidence reasonably satisfactory to it that the aggregate fees and expenses
incurred by the Borrower in connection with the Kwik Acquisition, the
Refinancing and the financing thereof shall not exceed $2,000,000.
(t) Landlord Agreements. The Administrative Agent shall have received
a Landlord Agreement with respect to each of the Properties leased by any
Loan Party as of the date set forth on the Post-Closing Agreement, duly
executed and delivered on behalf of the lessor of such real property.
(u) Senior Managers. The Lenders shall be satisfied that senior
managers acceptable to them shall be available to manage the Borrower and
its Subsidiaries and that all management incentive plans relating to the
Borrower and its Subsidiaries are satisfactory to the Lenders.
8.2 Conditions to Acquisition Loans. The agreement of each Lender having an
Acquisition Loan Commitment to make any Acquisition Loan requested to be made by
it is subject to the satisfaction, immediately prior to or concurrently with the
making of such Acquisition Loan, of the following conditions precedent:
(a) Acquisition Documents. (i) The Administrative Agent shall have
received, not later than five (5) Business Days prior to the proposed
Borrowing Date for such Permitted Acquisition, drafts of each of the
Acquisition Documents substantially in the form as will be executed at the
closing of the Permitted Acquisition to be financed with such requested
Acquisition Loans (and thereafter copies of
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subsequent drafts marked to show changes) and on the Borrowing Date the
Administrative Agent shall have received copies of the executed material
Acquisition Documents certified as to authenticity by the Borrower on the
date of borrowing, and such other documents or instruments as may be
reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other
material contract to which the Borrower or any Subsidiary of the Borrower
may be a party, and if requested by the Administrative Agent, Borrower
shall use its best efforts to obtain reliance letters from counsel
rendering opinions pursuant to such Acquisition Documents.
(ii) The Administrative Agent shall have received a certificate from a
duly authorized officer of each of the Loan Parties party to such
Acquisition Documents and each of the Persons which are sellers in such
Permitted Acquisition, addressed to the Administrative Agent and the
Lenders, to the effect that none of the Acquisition Documents as delivered
to the Administrative Agent has been amended, supplemented or otherwise
modified except as approved by the Administrative Agent, that each of the
representations and warranties set forth in such Acquisition Documents
continue to be true, complete and correct in all material respects as of
the Acquisition Closing Date as if made on and as of the Acquisition
Closing Date, that the Administrative Agent and the Lenders may rely on
such representations and warranties as if such representations and
warranties were made to the Administrative Agent and Lenders directly, and
that no default, breach or violation of any of the Acquisition Documents
has occurred and is continuing.
(b) Pro Forma Financial Condition. The Administrative Agent shall have
received, with a copy for each Lender, not later than five Business Days
prior to the proposed Borrowing Date of such Acquisition Loan, the
certificate of a Responsible Officer of the Borrower, in form and substance
satisfactory to the Lenders, referenced in clause (ii) of the proviso to
the definition of "Permitted Acquisition".
(c) Supplements to Loan Documents; Additional Loan Documents. The
Administrative Agent shall have received:
(i) if there shall be any new Subsidiary acquired or formed in
connection with the proposed Permitted Acquisition to be financed with such
Acquisition Loans, Supplements to the Borrower Pledge Agreement and/or
Subsidiaries Pledge Agreement, substantially in the form of Exhibit A
thereto, executed and delivered by a duly authorized officer of the party
thereto, with a counterpart or a conformed copy for each Lender,
(ii) if there shall be any new Subsidiary acquired or formed in
connection with the proposed Permitted Acquisition to be financed with such
Acquisition Loans, Supplements to the Subsidiaries Guarantee, substantially
in the form of Exhibit A thereto, executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a conformed
copy for each Lender,
-51-
(iii) if there shall be any new Subsidiary acquired or formed in
connection with the proposed Permitted Acquisition to be financed with such
Acquisition Loans, Supplements to the Security Agreement, substantially in
the form of Annex A thereto, executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender,
(iv) if the proposed Permitted Acquisition included the acquisition of
any leasehold, fee, or other interests in real property and if requested by
the Required Lenders, one or more Mortgages or Leasehold Mortgages on such
real property, together with such title insurance, surveys, flood
insurance, and legal opinions as the Required Lenders may request, and
(d) Consummation of Acquisition. The Permitted Acquisition shall have
been, or shall be concurrently with the making of such Acquisition Loans,
consummated in accordance with the terms of the Acquisition Documents
therefor, without any material amendment thereto or modification or waiver
thereof, except with the consent of the Required Lenders and with notice of
all amendments thereto and modifications and waivers thereof, and the
Administrative Agent shall have received evidence satisfactory to it to
that effect.
(e) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of the Borrower authorizing
(i) the execution, delivery and performance of the Acquisition Documents
and the Loan Documents and supplements thereto to which it is a party being
executed and delivered in connection with the Acquisition Loans requested
in connection with such Permitted Acquisition and (ii) the granting by it
of the Liens created pursuant to the Security Documents and supplements
thereto being executed and delivered in connection with the Acquisition
Loans requested in connection with such Permitted Acquisition, certified by
the Secretary or an Assistant Secretary of the Borrower as of the
Acquisition Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(f) Borrower Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of the
Borrower, dated such Acquisition Closing Date, as to the incumbency and
signature of the officers of the Borrower executing any Loan Document being
executed and delivered in connection with the Acquisition Loans requested
in connection with such Permitted Acquisition, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
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(g) Corporate Proceedings of Subsidiaries. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of each Subsidiary of the
Borrower which is a party to an Acquisition Document authorizing (i) the
execution, delivery and performance of the Acquisition Documents and the
Loan Documents and supplements thereto to which it is a party being
executed and delivered in connection with the Acquisition Loans requested
in connection with such Permitted Acquisition and (ii) the granting by it
of the Liens created pursuant to the Security Documents and supplements
thereto being executed and delivered in connection with the Acquisition
Loans requested in connection with such Permitted Acquisition, certified by
the Secretary or an Assistant Secretary of such Subsidiary as of the
Acquisition Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(h) Subsidiary Incumbency Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower, dated such Acquisition Closing Date, as to the
incumbency and signature of the officers of such Subsidiary executing any
Loan Document being executed and delivered in connection with the
Acquisition Loans requested in connection with such Permitted Acquisition,
satisfactory in form and substance to the Administrative Agent, executed by
the President or any Vice President and the Secretary or any Assistant
Secretary of such Subsidiary.
(i) Corporate Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party as to which
such corporate documents were not theretofore delivered, certified as of
the Acquisition Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of such Loan Party.
(j) Good Standing Certificates. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent
date from the Secretary of State or other appropriate authority, evidencing
the good standing of each Person becoming a Loan Party as of such
Acquisition Closing Date (i) in the jurisdiction of its organization and
(ii) in each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (ii), where the failure to so qualify
could not have a Material Adverse Effect.
(k) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, copies of such executed legal opinions with
respect to, and to the extent delivered in connection with, such Permitted
Acquisition, and the Borrower shall use its best efforts to obtain letters
from counsel delivering such opinions permitting the Administrative Agent
and the Lenders to rely thereon.
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(l) Pledged Stock; Stock Powers; Pledged Interests. The Administrative
Agent shall have received the certificates representing the shares or other
equity interests of each Subsidiary formed or acquired in connection with
such Permitted Acquisition or which otherwise shall not theretofore have
been delivered to the Administrative Agent, which are to be pledged
pursuant to the Pledge Agreements, together with an undated stock or
transfer power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof. Each such Subsidiary shall have
delivered an acknowledgment of and consent to such respective Pledge
Agreement, executed by a duly authorized officer of such Subsidiary, in
substantially the form appended to such Pledge Agreement.
(n) Actions to Perfect Liens. The Administrative Agent shall have
received all financing statements on form UCC-1, and all other actions
shall have been taken, in each case which are necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Liens created by the
Security Documents as supplemented in connection with such Acquisition
Loans shall have been completed or will be completed promptly following the
making of the initial Loans hereunder.
(o) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgment and tax lien filings which
may have been filed with respect to personal property of each Subsidiary
formed or acquired in connection with such Permitted Acquisition, the
Borrower, to the extent that such Permitted Acquisition results in the
Borrower owning property or conducting operations in new jurisdictions, and
if requested by the Administrative Agent the seller of the property to be
acquired in such Permitted Acquisition, and the results of such search
shall be satisfactory to the Administrative Agent.
(p) Chief Financial Officer. The Borrower shall have retained a Chief
Financial Officer reasonably acceptable to the Administrative Agent.
8.3 Conditions to Each Loan. The agreement of each Lender to make any Loan
requested to be made by it on any date (including, without limitation, its
initial Loan) is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loans requested to
be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions
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contemplated by this Agreement, the other Loan Documents, the Kwik
Acquisition Documents and any other Acquisition Documents shall be
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
paragraphs (a) and (b) of this Section 8.3 have been satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall and (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Subsidiaries to:
9.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Ernst & Young, LLP or other
independent certified public accountants of nationally recognized standing;
and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(c) within 20 days after the end of each calendar month, (i) an
accounts receivable aging schedule for the Borrower and its Subsidiaries on
a consolidated basis and (ii) a schedule of each Domestic Subsidiary's
billings for the immediately preceding calendar month (without giving
effect to any intercompany adjustments);
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all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
9.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 9.1(a), 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) concurrently with the delivery of the financial statements
referred to in Sections 9.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, the
Borrower during such period has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or
satisfied by it, and that such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(ii) showing in detail the calculations supporting such Officer's
certification of the Borrower's compliance with the requirements of Section
10.1(a) through 10.1(c);
(c) not later than thirty days prior to the end of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for the
succeeding fiscal year, such projections to be accompanied by a certificate
of a Responsible Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice and that such
Officer has no reason to believe they are incorrect or misleading in any
material respect;
(d) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(e) during the month of March in each calendar year, a report of a
reputable insurance broker with respect to the insurance maintained by the
Borrower and its Subsidiaries in accordance with Section 9.5 of this
Agreement and Section 5(m) of the Security Agreement and Section 5 of each
Mortgage, and such supplemental reports with respect to insurance
maintained by the Borrower and its Subsidiaries as the Administrative Agent
may from time to time reasonably request; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
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9.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
9.4 Conduct of Business and Maintenance of Existence. Continue to engage in
business of the same general type as now conducted by it and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business except as otherwise permitted pursuant to
Section 10.5; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
9.5 Maintenance of Property; Insurance. (a) Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business, and maintain key person life insurance for William
E. Dye at not less than level of coverage maintained on the Closing Date, which
insurance shall name the Administrative Agent as lender loss payee, in the case
of property or casualty insurance, and as an additional insured, in the case of
liability insurance; and furnish to each Lender, upon written request, full
information as to the insurance carried.
(b) on or before April 24, 1998, the Administrative Agent shall have
received evidence of being named as loss payee on the life insurance policy of
William E. Dye.
9.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
9.7 Notices. Promptly give notice to the Administrative Agent and each
-------
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any
-57-
Governmental Authority, which in either case, if not cured or if adversely
determined, as the case may be, would have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $500,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the acquisition by any Loan Party of any property or interest in
property (including, without limitation, real property), that is not
subject to a perfected Lien in favor of the Administrative Agent pursuant
to the Security Documents;
(e) the occurrence of any transaction or occurrence referred to in
Section 6.5(b), and the receipt of any Net Proceeds or any insurance
proceeds as a result thereof (whether or not such Net Proceeds or proceeds
are then required to be applied to the repayment of Loans and reduction of
Revolving Credit Commitments as specified in Section 6.5(b));
(f) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(g) any material adverse change in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
9.8 Environmental Laws. (a) Comply with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under Environmental Laws
and promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
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9.9 Additional Collateral; Additional Guarantors. (a) In the event that the
Borrower or any Subsidiary acquires any property or interest in property
(including, without limitation, real property) other than property made subject
to a Lien permitted under Section 10.3(g), that is not subject to a perfected
Lien in favor of the Administrative Agent pursuant to the Security Documents,
the Borrower shall, and shall cause any such Subsidiary to, take such action
(including, without limitation, the preparation and filing of mortgages or deeds
of trust in form and substance satisfactory to the Administrative Agent) as the
Administrative Agent shall request in order to create and/or perfect a Lien in
favor of the Administrative Agent on such property.
(b) In the event that the Borrower is permitted to acquire or form any
additional Subsidiary in accordance with the terms of this Agreement and the
other Loan Documents, such Subsidiary shall execute a guarantee and a security
agreement, or supplements to the Subsidiaries Guarantee and the Subsidiaries
Security Agreement, and the Borrower and/or any Subsidiary which is a holder of
any Capital Stock of such Subsidiary shall execute such pledge agreements or
supplements to the Pledge Agreements, each in form and substance satisfactory to
the Administrative Agent, and shall take such other action as shall be necessary
or advisable (including, without limitation, the execution of financing
statements on form UCC-1) in order to perfect the Liens granted by such
Subsidiary in favor of the Administrative Agent for the benefit of the Lenders
and to effect and perfect the pledge of all of the Capital Stock of such
Subsidiary in favor of the Administrative Agent for the benefit of the Lenders.
Such Subsidiary shall thereupon become a Guarantor for all purposes under the
Loan Documents, including, without limitation, Section 9.9(a) of this Agreement.
The Administrative Agent shall be entitled to receive legal opinions of one or
more counsel to the Borrower and such Subsidiary addressing such matters as the
Administrative Agent or its counsel may reasonably request, including, without
limitation, the enforceability of the guaranty and the security agreement to
which such Subsidiary becomes a party and the pledge of the Capital Stock of
such Subsidiary, and the creation, validity and perfection of the Liens so
granted by such Subsidiary and the Borrower and/or other Subsidiaries to the
Administrative Agent for the benefit of the Lenders.
9.10 Audit. Upon the request of the Administrative Agent, a field audit
shall be conducted by CIBC or a Person satisfactory to the Administrative Agent,
of the accounts receivable, inventory of the Borrower, Kwik and their respective
Subsidiaries, which audit shall be in form and substance satisfactory to the
Administrative Agent, and the results of such audit shall be delivered to the
Administrative Agent; provided, that unless an Event of Default has occurred,
the Administrative Agent may request no more than one such audit each calendar
year.
9.11 Filing of Mortgage. In the event that the Borrower or any of its
Subsidiaries is the beneficial owner of the real property located at 545 West
45th Street, New York, New York as of the date which is six months after the
Closing Date, the Mortgage which has been executed and delivered to the
Administrative Agent pursuant to Section 8.1(a)(viii) of this Credit Agreement
shall be filed in the appropriate recording office, the Borrower shall cause to
be provided title insurance of the type called for by Section 9.12
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hereof and a legal opinion with respect to the Mortgage acceptable to the
Administrative Agent, and the Borrower shall pay all applicable recording taxes
and other fees and expenses in connection therewith.
9.12 Filing of Leasehold Mortgage. In the event that the Borrower or any of
its Subsidiaries enters into a lease of real property with a term greater than
or equal to five years, the Borrower shall:
(a) cause a Leasehold Mortgage, satisfactory to the Administrative Agent,
to be executed by the parties to such lease for the benefit of the
Administrative Agent and filed in the appropriate recording office;
(b) provide to the Administrative Agent and the title insurance company
issuing the policies referred to in 9.12(c) (the "Title Insurance Company") maps
or plats of an as-built survey of the sites of the property covered by such
Leasehold Mortgage certified to the Administrative Agent and the Title Insurance
Company in a manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1962, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map;
(c) provide to the Administrative Agent in respect of each parcel covered
by each Leasehold Mortgage a mortgagee's title policy (or policies) or marked up
unconditional binder for such insurance dated the Closing Date. Each such policy
shall (i) be in an amount satisfactory to the Administrative Agent; (ii) be
issued at ordinary rates; (iii) insure that the Leasehold Mortgages insured
thereby creates a valid first Lien on such parcel (or such leasehold interest)
free and clear of all defects and encumbrances, except such as may be approved
by the Administrative Agent; (iv) name the Administrative Agent for the benefit
of the Lenders as the insured thereunder; (v) be in the form of ALTA Loan Policy
- - 1970 (Amended 10/17/70); (vi) contain such endorsements and affirmative
coverage as the Administrative Agent may request and (vii) be issued by title
companies satisfactory to the Administrative Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have received
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evidence satisfactory to it that all premiums in respect of each such policy,
and all charges for mortgage recording tax, if any, have been paid;
(d) if requested by the Administrative Agent, provide (i) a policy of flood
insurance which (A) covers any parcel of improved real property which is
encumbered by any Leasehold Mortgage, (B) is written in an amount not less than
the outstanding principal amount of the indebtedness secured by such Leasehold
Mortgage which is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of property
under the Act, whichever is less, and (C) has a term ending not later than the
maturity of the indebtedness secured by such Leasehold Mortgage and (ii)
confirmation that the Company has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board of Governors of the Federal
Reserve System;
(e) provide a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in Section
9.12(c) and a copy, certified by such parties as the Administrative Agent may
deem appropriate, of all other documents affecting the property covered by each
Leasehold Mortgage;
(f) pay all applicable recording taxes and other fees and expenses in
connection therewith; and
(g) deliver to the Administrative Agent a Landlord Agreement with respect
to the real property encumbered by any such Leasehold Mortgage.
9.13 Execution of Leasehold Mortgages. On or before April 30, 1998 and in
accordance with Section 9.12, the Borrower shall cause Leasehold Mortgages,
substantially in the form of Exhibit G to be executed for each of the four
leases of real property at 28th Street, New York, New York, as more fully
described on Schedule 9.13.
SECTION 10. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall not, and (except
with respect to Section 10.1) shall not permit any of its Subsidiaries to,
directly or indirectly:
10.1 Financial Condition Covenants.
(a) Maximum Leverage Ratio. Permit the ratio of Consolidated Funded Debt of
the Borrower and its Subsidiaries as of the last day of any fiscal quarter of
the Borrower ending during any test period set forth on the table below, to
Adjusted EBITDA for the period of four consecutive fiscal quarters ending on the
same day, to be greater than the ratio set forth opposite such test period
below:
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Four Fiscal Quarters Ending Ratio
------------------------------------ -----------------
5/31/98 3.45
8/31/98 3.35
11/30/98 3.25
2/28/99 3.25
5/31/99 3.25
8/31/99 3.25
11/30/99 2.75
2/28/00 2.75
5/31/00 2.75
8/31/00 2.75
11/30/00 2.25
2/28/01 2.25
5/31/01 2.25
8/31/01 2.25
11/30/01 and thereafter 2.00
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(b) Minimum EBITDA. Permit the amount of Consolidated EBITDA for any period
of four consecutive fiscal quarters of the Borrower ending during any test
period set forth on the table below to be less than the amount set forth
opposite such test period below:
Four Fiscal Quarters Ending Amount
---------------------------------- ---------------
5/31/98 $11,000,000
8/31/98 11,000,000
11/30/98 11,500,000
2/28/99 11,500,000
5/31/99 11,500,000
8/31/99 11,500,000
11/30/99 12,500,000
2/28/00 12,500,000
5/31/00 12,500,000
8/31/00 12,500,000
11/30/00 14,000,000
2/28/01 14,000,000
5/31/01 14,000,000
8/31/01 14,000,000
11/30/01 15,000,000
2/28/02 15,000,000
5/31/02 15,000,000
8/31/02 15,000,000
11/30/02 16,500,000
2/28/03 16,500,000
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(c) Minimum Fixed Charge Coverage. Permit the ratio of Consolidated EBITDA
of the Borrower and its Subsidiaries to Consolidated Fixed Charges for any test
period of the Borrower set forth on the table below to be less than the ratio
set forth opposite such test period below:
Test Period Ratio
---------------------------- --------------
3/1/98 - 5/31/98 1.50
3/1/98 - 8/31/98 1.30
3/1/98 - 11/30/98 1.20
3/1/98 - 2/28/99 1.20
(and for each period of
four quarters thereafter)
10.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary Guarantor and of
any Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor;
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in an aggregate principal amount
not exceeding as to the Borrower and its Subsidiaries $7,500,000 at any
time outstanding;
(d) long-term Indebtedness for borrowed money of any Foreign
Subsidiary, together with similar such Indebtedness listed on Schedule
10.2, not to exceed $3,000,000 at any one time outstanding;
(e) short-term Indebtedness of Foreign Subsidiaries incurred for
working capital purposes, together with similar such Indebtedness listed on
Schedule 10.2, not to exceed $5,000,000 at any one time outstanding;
(f) Indebtedness outstanding on the date hereof and listed on Part B
of Schedule 10.2, and prior to the Closing Date only, Indebtedness
outstanding on the date hereof and listed on Part A of Schedule 10.2;
(g) Indebtedness of a corporation which becomes a Subsidiary after the
date hereof, provided that (i) such Indebtedness existed at the time such
corporation became a Subsidiary and was not created in anticipation thereof
and (ii) immediately after giving effect to the acquisition of such
corporation by the Borrower no Default or Event of Default shall have
occurred and be continuing;
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(h) additional Indebtedness not exceeding $500,000 in aggregate
principal amount at any one time outstanding;
(i) Indebtedness in an amount and having terms approved by the
Required Lenders which is subordinated on terms approved by the Required
Lenders in each case in their sole discretion; and
(j) all Guarantee Obligations permitted under Section 10.4.
10.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP (or, in the case
of Foreign Subsidiaries, generally accepted accounting principles in effect
from time to time in their respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 10.3,
securing Indebtedness permitted by Section 10.2(f), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by Section 10.2(c) incurred to finance the acquisition of fixed
or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with
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the acquisition of such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any such
Lien shall at no time exceed 90% of the original purchase price of such
property of such property at the time it was acquired;
(h) Liens on assets of any Foreign Subsidiary securing Indebtedness of
such Foreign Subsidiary permitted by Sections 10.2(d) and (e);
(i) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by Section
10.2(g), provided that (i) such Liens existed at the time such corporation
became a Subsidiary and were not created in anticipation thereof, (ii) any
such Lien is not spread to cover any property or assets of such corporation
after the time such corporation becomes a Subsidiary, and (iii) the amount
of Indebtedness secured thereby is not increased;
(j) Liens (not otherwise permitted hereunder) which secure obligations
not exceeding (as to the Borrower and all Subsidiaries) $100,000 in
aggregate amount at any time outstanding; and
(k) Liens created pursuant to the Security Documents.
10.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer
to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 10.4;
(b) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed (i) $100,000 at any one time outstanding for
the Borrower and its Domestic Subsidiaries and (ii) $100,000 at any one
time outstanding for the Borrower's Foreign Subsidiaries; and
(c) the Guarantees.
10.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Domestic Subsidiaries of the Borrower (provided that the wholly owned
Domestic Subsidiary or Domestic Subsidiaries shall be the continuing or
surviving corporation); and
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(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Domestic Subsidiary of
the Borrower.
10.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), except as set forth on
Schedule 10.6, whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Borrower or any wholly owned Subsidiary except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business; provided that the Net Proceeds of each
such transaction are applied to the prepayment of the Loans as provided in
Section 6.5(b);
(b) the sale or other disposition of any property in the ordinary
course of business, provided that (other than inventory) the aggregate book
value of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed 2 1/2% of consolidated total assets of
the Borrower and its Subsidiaries as at the beginning of such twelve-month
period;
(c) the sale of inventory in the ordinary course of business;
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(e) as permitted by Section 10.5(b); and
(f) the sale or disposition of any other property (not including
Accounts) not in the ordinary course of business provided that all such
sales shall not exceed, in the aggregate $100,000 and that the proceeds of
such sales shall be subject to the mandatory prepayment requirements of
Section 6.5 of this Agreement.
10.7 Limitation on Leases. Permit Consolidated Lease Expense (other than
Capital Leases) for any fiscal year of the Borrower to exceed $1,500,000.
10.8 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary
[(such declarations, payments, setting apart, purchases, redemptions,
defeasances, retirements, acquisitions and distributions being herein called
"Restricted Payments"), except that: any
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wholly-owned Subsidiary may declare and pay dividends to the Borrower or, in the
case of any Subsidiary that is wholly-owned by any other Subsidiary, to such
Subsidiary.
10.9 Limitation on Capital Expenditures. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any expenditure in
respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries during any of the fiscal years of the
Borrower set forth below, the amount set forth opposite such fiscal year below:
Fiscal Year Amount/Category of Expenditures Total Amount
- ------------------ ------------------------------------- ------------------
1998 Financing Leases - $2,250,000 $3,000,000
Other - 750,000
1999 Financing Leases - $2,250,000 $3,000,000
Other - 750,000
2000 Financing Leases - $2,625,000 $3,500,000
Other - 875,000
2001 Financing Leases - $3,000,000 $4,000,000
Other $1,000,000
2002 Financing Leases - $3,000,000 $4,000,000
Other - $1,000,000
provided, that up to 50% of any such amount if not so expended in the fiscal
year for which it is permitted above, may be carried over for expenditure in the
next following fiscal year (but not subsequent years).
10.10 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except :
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Permitted Acquisitions;
(d) Capital Stock of any Subsidiary;
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(e) loans and advances by the Borrower to its wholly-owned
Subsidiaries and by such Subsidiaries to the Borrower not to exceed
$200,000 in the aggregate at any one time outstanding;
(f) investments by the Borrower in Subsidiary Guarantors and
investments by such Subsidiary Guarantors in the Borrower and in other
Subsidiary Guarantors;
(g) loans and advances to employees of the Borrower or its
Subsidiaries in the ordinary course of business, in an aggregate amount not
to exceed $250,000 in the aggregate at any one time outstanding; and
(h) intercompany loans listed on Schedule 10.2 Part B hereto.
10.11 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on or redemption or
purchase of any Indebtedness (other than the Loans), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to any of
the terms of any such Indebtedness or any Acquisition Documents (other than any
such amendment, modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon), or (c) amend, modify or change
the terms of, consent or otherwise agree to any amendment, modification or
change to the terms of, or waive or otherwise relinquish any rights or causes of
action under or arising out of, any Kwik Acquisition Document, or any Landlord
Agreement.
10.12 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
10.13 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
10.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Borrower to end on a day other than August 31.
10.15 Limitation on Negative Pledge Clauses. Enter into with any Person any
agreement, other than (a) this Agreement and (b) any industrial revenue bonds,
purchase money mortgages or Financing Leases permitted by this Agreement (in
which cases, any prohibition or limitation shall only be effective against the
assets financed thereby), which
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prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
10.16 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or which
are directly related thereto.
10.17 Governing Documents. Amend its certificate of incorporation (except
to increase the number of authorized shares of common stock), partnership
agreement or other Governing Documents, without the prior written consent of the
Required Lenders, which shall not be unreasonably withheld or delayed.
10.18 Limitation on Subsidiary Formation. Form any Subsidiaries unless,
immediately upon the formation of such Subsidiary, all requirements of Section
9.9 shall have been satisfied.
10.19 Limitation on Securities Issuances. (A) Permit any Subsidiary to
issue any shares of Capital Stock that are not "certificated securities" (as
defined in ss. 8-102 of the Uniform Commercial Code as in effect in the State of
New York on the date hereof) and are not pledged to the Administrative Agent
pursuant to a Pledge Agreement or (B) issue, or permit any Subsidiary to issue,
any shares of preferred stock.
10.20 Inventory. No inventory of any Loan Party shall be held in a
warehouse unless a warehouse bailment agreement form satisfactory to the
Administrative Agent has been entered into by the Loan Party intending to place
such inventory in a warehouse, the Person operating such warehouse and the
Administrative Agent.
SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder or
under the other Loan Documents or the Fee Letter, within five days after
any such interest or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
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(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 10, Section
5 of the Pledge Agreement (U.S.), or Sections 5(h), 5(i), 5(j), 5(k), 5(p),
5(s) or 5(t) of the Security Agreement]; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created, if the aggregate amount of the Indebtedness and/or Guarantee
Obligations in respect of which such default or defaults shall have
occurred is at least $500,000; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in
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furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
involve an aggregate amount in excess of $100,000; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $100,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or the Borrower or any other Loan Party which
is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or
(j) Any Guarantee shall cease, for any reason, to be in full force and
effect or any Guarantor shall so assert; or
(k) William E. Dye shall cease to maintain beneficial ownership of 10%
or more of the outstanding class of Capital Stock having ordinary voting
power in the election of directors of the Borrower, unless such cessation
is the result of a testamentary disposition upon his death; or
(l) (i) Any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) other than
William E. Dye or Richard J. Sirota (A) shall have acquired beneficial
ownership of 20% or more of any
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outstanding class of Capital Stock having ordinary voting power in the
election of directors of the Borrower or (B) shall obtain the power
(whether or not exercised) to elect a majority of the Borrower's directors
or (ii) the Board of Directors of the Borrower shall not consist of a
majority of Continuing Directors; "Continuing Directors" shall mean the
directors of the Borrower on the Closing Date and each other director, if
such other director's nomination for election to the Board of Directors of
the Borrower is recommended by a majority of the then Continuing Directors,
provided that notwithstanding anything in this Section 11 to the contrary,
the transfer of Capital Stock owned by either William E. Dye or Richard J.
Sirota upon their death shall not be deemed an Event of Default hereunder;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit have presented the documents required thereunder)
to be due and payable forthwith, whereupon the same shall immediately become due
and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower. The Borrower shall execute and deliver to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
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Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 12. THE ADMINISTRATIVE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
12.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
12.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon
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advice and statements of legal counsel (including, without limitation, counsel
to the Borrower or any other Loan Party), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
12.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
12.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Borrower or
any other Loan Party, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties and
made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished
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to the Lenders by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower or any other Loan Party which may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Credit Exposure Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
12.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower and the other Loan Parties as
though the Administrative Agent were not the Administrative Agent hereunder and
under the other Loan Documents. With respect to the Loans made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall
include the Administrative Agent in its individual capacity.
12.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Borrower, whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions
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of this Section 12 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 13.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) reduce the amount or extend the scheduled date of
maturity of any Loan or of any installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the aggregate amount or extend the expiration date
of any Lender's Commitments, in each case without the consent of each Lender
affected thereby, or (ii) amend, modify or waive any provision of this Section
13.1 or reduce the percentage specified in the definition of Required Lenders,
or consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents or release all
or substantially all of the Collateral or release all or substantially all of
the Guarantors from their obligations under the Guarantees, in each case without
the written consent of each of the Lenders, or (iii) amend, modify or waive any
provision of Section 12 without the written consent of the then Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders and the Administrative Agent shall
be restored to their former positions and rights hereunder and under the other
Loan Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three days after being deposited
in the mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been electronically confirmed, addressed
as follows in the case of the Borrower and the Administrative Agent, and as set
forth in Schedule I in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
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The Borrower: Unidigital Inc.
545 West 45th Street
New York, New York 10036
Attention: William Dye
Fax: (212) 262-1830
The Administrative Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: William Koslo
Fax: 212/856-3991
Telephone: 212/856-3545
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.3, 3.3, 3.5, 4.3, 4.5, 6.2, 6.4 or 6.8(b)
shall not be effective until received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
13.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
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payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Administrative Agent harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents, the
Kwik Acquisition Documents, the Kwik Acquisition, any Acquisition Documents, any
Permitted Acquisition, or the use of the proceeds of the Loans in connection
with the Kwik Acquisition or any Permitted Acquisition and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower any of its Subsidiaries or any of
the Properties (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided, that the Borrower shall have no obligation
hereunder to the Administrative Agent or any Lender with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Lender or (ii) legal proceedings commenced
against the Administrative Agent or any such Lender by any security holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor solely in its capacity as such. The agreements in this
Section shall survive repayment of the Loans and all other amounts payable
hereunder.
13.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest,
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such Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 13.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 6.10, 6.11, and 6.12 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 6.11, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Administrative Agent and the Issuing Lender (which in each case shall not be
unreasonably withheld), to an additional bank or financial institution ("an
Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit L, with appropriate completions (an
"Assignment and Acceptance"), executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an affiliate
thereof, by the Administrative Agent and the Issuing Lender) and delivered to
the Administrative Agent for its acceptance and recording in the Register,
provided that, in the case of any such assignment to an additional bank or
financial institution, the sum of the aggregate principal amount of the Loans,
the aggregate amount of the L/C Obligations and the aggregate amount of the
unused Revolving Credit Commitment being assigned are not less than $5,000,000
(or such lesser amount as may be agreed to by the Borrower and the
Administrative Agent). Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with Commitments as set forth therein, and (y)
the assigning Lender thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this Section, the consent
of the Borrower shall not be required, and, unless requested by the Assignee
and/or the assigning Lender, new Notes shall not be required to be executed and
delivered by the Borrower, for any assignment which occurs at any time when any
of the events described in Section 11(f) shall have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall maintain at
the address of the Administrative Agent referred to in Section 13.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Lenders
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may (and, in the case of any Loan or other obligation hereunder not evidenced by
a Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents. Any assignment of any
Loan or other obligation hereunder not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register.
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Administrative Agent and the
Issuing Lender) together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, subject to the
provisions of Section 13.15, any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
13.7 Adjustments; Set-off. (a) If any Lender (a "benefited Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 11(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loan may exercise all rights of payment
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(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
13.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission of signature pages hereto), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.
13.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13.10 Integration. This Agreement and the other Loan Documents represent
the agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents.
13.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the
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United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 13.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
13.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Borrower and the other Loan Parties, on one hand,
and Administrative Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
13.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
13.15 Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this Agreement
that is designated by the
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Borrower in writing as confidential; provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Administrative Agent
or any other Lender, (ii) to any Transferee which receives such information
having been made aware of the confidential nature thereof, (iii) to its
employees, directors, agents, attorneys, accountants and other professional
advisors, (iv) upon the request or demand of any examiner or other Governmental
Authority having jurisdiction over such Lender, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (vi) which has been publicly disclosed other
than in breach of this Agreement, or (vii) in connection with the exercise of
any remedy hereunder.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
UNIDIGITAL INC.
By:/s/ William E. Dye
-------------------------------------
Title: Chief Executive Officer
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent and as a Lender
By:/s/ William Koslo
-------------------------------------
Title: Executive Director
Credit Agreement: Signature Page