EXHIBIT 4.21
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CREDIT AGREEMENT
DATED AS OF DECEMBER 16, 1997
AMONG
▇▇▇▇▇ II, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
BT COMMERCIAL CORPORATION,
as Agent
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▇▇▇▇▇ II, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
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Section 1. DEFINITIONS................................................. 2
1.1 Certain Defined Terms....................................... 2
1.2 Accounting Terms: Utilization of GAAP for Purposes of
Calculations Under Agreement................................ 42
1.3 Other Definitional Provisions............................... 42
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.................. 42
2.1 Commitments; Making of Loans; the Register; Notes........... 43
2.2 Interest on the Loans....................................... 52
2.3 Fees........................................................ 57
2.4 Repayments, Prepayments and Reductions in Commitments;
General Provisions Regarding Payments....................... 61
2.5 Use of Proceeds............................................. 68
2.6 Special Provisions Governing Eurodollar Rate Loans and
Canadian Eurodollar Rate Loans.............................. 68
2.7 Increased Costs; Taxes; Capital Adequacy.................... 71
2.8 Obligation of Lenders and Issuing Lenders to Mitigate....... 76
2.9 Collection, Deposit and Transfer of Payments in
Respect of Accounts......................................... 77
Section 3. LETTERS OF CREDIT........................................... 79
3.1 Issuance of Letters of Credit and Domestic Lenders'
Purchase of Participations Therein.......................... 79
3.2 Letter of Credit Fees....................................... 82
3.3 Drawings and Reimbursement of Amounts Drawn Under
Letters of Credit........................................... 82
3.4 Obligations Absolute........................................ 85
3.5 Indemnification; Nature of Issuing Lenders' Duties.......... 87
3.6 Increased Costs and Taxes Relating to Letters of Credit..... 88
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT................... 89
4.1 Conditions to Term Loans and Initial Revolving Loans........ 89
4.2 Conditions to All Loans..................................... 96
4.3 Conditions to Letters of Credit............................. 97
4.4 Conditions to Canadian Loans................................ 97
Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES................... 103
(i)
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5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries....................................103
5.2 Authorization of Borrowing, etc..............................104
5.3 Financial Condition..........................................105
5.4 No Material Adverse Change; No Restricted Junior Payments....106
5.5 Title to Properties; Liens...................................106
5.6 Litigation; Adverse Facts....................................106
5.7 Payment of Taxes.............................................107
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts...........................................107
5.9 Governmental Regulation......................................107
5.10 Securities Activities........................................108
5.11 Employee Benefit Plans.......................................108
5.12 Certain Fees.................................................108
5.13 Environmental Protection.....................................109
5.14 Employee Matters.............................................110
5.15 Solvency.....................................................110
5.16 Disclosure...................................................111
5.17 Related Agreements...........................................111
Section 6. BORROWER'S AFFIRMATIVE COVENANTS.............................111
6.1 Financial Statements and Other Reports.......................112
6.2 Corporate Existence, etc.....................................118
6.3 Deposit of Excess Cash; BTCC Account.........................118
6.4 Payment of Taxes and Claims; Tax Consolidation...............118
6.5 Maintenance of Properties; Insurance.........................119
6.6 Inspection; Lender Meeting...................................120
6.7 Compliance with Laws, etc....................................121
6.8 Environmental Disclosure and Inspection......................121
6.9 Company's Remedial Action Regarding Hazardous Materials......122
6.10 Supplemental Actions Relating to Creation and Perfection of
Liens and Security Interests in Real, Personal and Mixed
Property Collateral and Related Matters......................123
6.11 Execution of Guaranties and Collateral Documents by Future
Subsidiaries.................................................126
6.12 Additional Mortgages.........................................127
6.13 Assignability and Recording of Lease Agreements..............128
Section 7. BORROWER'S NEGATIVE COVENANTS................................129
7.1 Indebtedness.................................................129
7.2 Liens and Related Matters....................................130
7.3 Investments; Joint Ventures..................................131
(ii)
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7.4 Contingent Obligations.....................................132
7.5 Restricted Junior Payments.................................133
7.6 Financial Covenants........................................134
7.7 Restriction on Fundamental Changes; Asset
Sales and Acquisitions.....................................136
7.8 Consolidated Capital Expenditures..........................138
7.9 Restriction on Leases......................................138
7.10 Sales and Lease-Backs......................................139
7.11 Sale or Discount of Receivables............................139
7.12 Transactions with Shareholders and Affiliates..............139
7.13 Disposal of Subsidiary Stock...............................140
7.14 Conduct of Business........................................140
7.15 Amendments of Certain Documents............................140
7.16 Fiscal Year................................................140
Section 8. EVENTS OF DEFAULT..........................................140
8.1 Failure to Make Payments When Due..........................141
8.2 Default in Other Agreements................................141
8.3 Breach of Certain Covenants................................141
8.4 Breach of Warranty.........................................141
8.5 Defaults Under Loan Documents..............................142
8.6 Involuntary Bankruptcy; Appointment of Receiver,
etc........................................................142
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.........142
8.8 Judgments and Attachments..................................143
8.9 Dissolution................................................143
8.10 Employee Benefit Plans.....................................143
8.11 Material Adverse Effect....................................143
8.12 Change in Control..........................................143
8.13 Invalidity of Any Guaranty.................................144
8.14 Failure of Security........................................144
8.15 Amendment of Certain Documents of Holdings.................145
8.16 Conduct of Business Relating to Holdings...................145
Section 9. AGENT......................................................146
9.1 Appointment................................................146
9.2 Powers and Duties; General Immunity........................146
9.3 Representations and warranties; No Responsibility
For Appraisal of Creditworthiness..........................148
9.4 Right to Indemnity.........................................148
9.5 Successor Agent............................................149
9.6 Collateral Documents and Guaranties........................149
Section 10. MISCELLANEOUS..............................................150
(iii)
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10.1 Assignments and Participations in Loans and Letters of Credit..150
10.2 Expenses.......................................................153
10.3 Indemnity......................................................153
10.4 Set-Off; Security Interest in Deposit Accounts.................155
10.5 Ratable Sharing................................................156
10.6 Amendments and Waivers.........................................157
10.7 Independence of Covenants......................................158
10.8 Notices........................................................158
10.9 Survival of Representations, Warranties and Agreements.........159
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative..........159
10.11 Marshalling; Payments Set Aside................................159
10.12 Severability...................................................160
10.13 Obligations Several; Independent Nature of Lenders' Rights.....160
10.14 Headings.......................................................160
10.15 Applicable Law.................................................160
10.16 Successors and Assigns.........................................160
10.17 Consent to Jurisdiction and Service of Process.................161
10.18 Waiver of Jury Trial...........................................161
10.19 Confidentiality................................................162
10.20 Judgment Currency..............................................162
10.21 Counterparts; Effectiveness....................................163
Signature pages.....................................................S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV FORM OF ACQUISITION TERM NOTE
V-A FORM OF WORKING CAPITAL REVOLVING NOTE
V-B FORM OF ACQUISITION REVOLVING NOTE
VI FORM OF CANADIAN NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF FINANCIAL CONDITION CERTIFICATE
IX FORM OF BORROWING BASE CERTIFICATE
X FORM OF OPINION OF ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
XI FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇
XII FORM OF ASSIGNMENT AGREEMENT
XIII FORM OF AUDITOR'S LETTER
XIV FORM OF CERTIFICATE RE NON-BANK STATUS
XV FORM OF COLLATERAL ACCOUNT AGREEMENT
XVI FORM OF BLOCKED ACCOUNT AGREEMENT
XVII FORM OF HOLDINGS GUARANTY
XVIII FORM OF HOLDINGS PLEDGE AGREEMENT
XIX FORM OF COMPANY GUARANTY
XX FORM OF COMPANY SECURITY AGREEMENT
XXI FORM OF COMPANY PLEDGE AGREEMENT
XXII FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
XXIII FORM OF COMPANY PATENT SECURITY AGREEMENT
XXIV FORM OF DOMESTIC SUBSIDIARY GUARANTY
XXV FORM OF DOMESTIC SUBSIDIARY SECURITY AGREEMENT
XXVI FORM OF DOMESTIC SUBSIDIARY PLEDGE AGREEMENT
XXVII FORM OF DOMESTIC SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXVIII FORM OF DOMESTIC SUBSIDIARY PATENT SECURITY AGREEMENT
XXIX FORM OF CANADIAN SUBSIDIARY SECURITY AGREEMENT
XXX FORM OF CANADIAN SUBSIDIARY PLEDGE AGREEMENT
XXXI FORM OF CANADIAN SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXXII FORM OF CANADIAN SUBSIDIARY PATENT SECURITY AGREEMENT
XXXIII FORM OF COLLATERAL ACCESS AGREEMENT
XXXIV FORM OF CANADIAN SUBSIDIARY GUARANTY
XXXV FORM OF LOCKBOX AGREEMENT
(v)
SCHEDULES
1.1 EXISTING LETTERS OF CREDIT
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1F ORGANIZATIONAL AND OWNERSHIP STRUCTURE
5.1 SUBSIDIARIES OF COMPANY
5.3 NON-CONFORMITY WITH GAAP
5.5 REAL PROPERTY ASSETS
5.7 CERTAIN TAX RELATED MATTERS
5.12 CERTAIN FEES
7.1 CERTAIN EXISTING INDEBTEDNESS
7.3 CERTAIN EXISTING INVESTMENTS
(vi)
▇▇▇▇▇ II, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of December 16, 1997 and entered
into by and among ▇▇▇▇▇ II, INC. ("Company" or "Borrower"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), and BT COMMERCIAL
CORPORATION ("BTCC"), as agent for Lenders (in such capacity, "Agent").
R E C I T A L S
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WHEREAS, Borrower desires that Lenders extend certain credit
facilities to Borrower to provide funds necessary to finance the acquisition of
companies, and/or the assets or operations of companies, engaged in the nursery
business or businesses related thereto, and to provide financing for working
capital and other general corporate purposes of Company and its Subsidiaries,
including the issuance of letters of credit, for the company and business
operations so acquired;
WHEREAS, Holdings has agreed to guaranty the Obligations (this and
other capitalized terms used in these recitals without definition being used as
defined in subsection 1.1) of Borrower and to secure such guaranty by pledging
to Agent for the benefit of Lenders all of the capital stock of Company;
WHEREAS, Borrower has agreed to secure its obligations as Borrower,
and each of Company's Domestic Subsidiaries has agreed to guaranty the
Obligations of Borrower and secure its Obligations as a Guarantor, by pledging
to Agent for the benefit of Lenders all of the capital stock of its Domestic
Subsidiaries and 66% of the capital stock of its Canadian Subsidiaries, if any,
and by granting to Agent for the benefit of Lenders a security interest in
substantially all of its other personal property and certain of its real
property;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Lenders and Agent agree as
follows:
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Section 1. DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Account" means, with respect to any Person, all present and future
rights of such Person to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether now
existing or hereafter arising and wherever arising, and whether or not they have
been earned by performance.
"Acquisition Conversion Date" means December 31, 1999, the date on
which the Acquisition Revolving Loans are converted to Acquisition Term Loans
pursuant to subsection 2.1A(iv).
"Acquisition Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the Acquisition Conversion Date, that
Lender's Acquisition Revolving Loan Commitment and (ii) after the Acquisition
Conversion Date, the outstanding principal amount of the Acquisition Term Loans
of that Lender.
"Acquisition Revolving Loans" means the Acquisition Revolving Loans
made by Lenders to Company pursuant to subsection 2.1A(iii).
"Acquisition Revolving Notes" means (i) the promissory notes of
Company issued pursuant to subsection 2.1F on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Acquisition Revolving Loan
Commitments and Acquisition Revolving Loans of any Lenders, in each case
substantially in the form of Exhibit V-B annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"Acquisition Term Loan Commitment" means the commitment of a Lender to
convert Acquisition Revolving Loans to Acquisition Term Loans pursuant to
subsection 2.1A(iv).
"Acquisition Term Loan Notes" means (i) the promissory notes of
Company issued pursuant to subsection 2.1A(iv) on the Acquisition Conversion
Date and (ii) any promissory notes issued by Company pursuant to the last
sentence of subsection 10.1B(i) in connection with assignments of the
Acquisition Term Loans of any Lenders, in each case substantially in the form of
Exhibit IV annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time.
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"Acquisition Term Loans" means the Acquisition Term Loans made by
Lenders to Company pursuant to subsection 2.1A(iv).
"Acquisition Revolving Loan Commitment" means the commitment of a
Lender to make Acquisition Revolving Loans to Company pursuant to Section
2.1A(iii).
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
nearest 1/16 of one percent) to first class banks in the interbank Eurodollar
market by BTCo for U.S. dollar deposits of amounts in same day funds comparable
to the principal amount of the Eurodollar Rate Loan of BTCC for which the
Adjusted Eurodollar Rate is then being determined with maturities comparable to
such Interest Period as of approximately 10:00 a.m. (New York time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Adjusted Pro Rata Share" means, with respect to any Domestic Lender,
the percentage obtained by dividing (i) the Revolving Loan Exposure of that
Domestic Lender by (ii) the aggregate Revolving Loan Exposure of all Domestic
Lenders other than Daily Funding Lender.
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Agent appointed
pursuant to subsection 9.5.
"Agreement" means this Credit Agreement dated as of December 16, 1997,
as it may be amended, supplemented or otherwise modified from time to time.
"Applicable Acquisition Base Rate Margin" means as of any date of
determination, a percentage per annum as set forth below opposite the applicable
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Consolidated Interest Coverage Ratio; provided that such Consolidated Interest
Coverage Ratio (or better) shall have been achieved for each of the two four-
Fiscal Quarter periods ending as of the last day of the two Fiscal Quarters
immediately preceding the Fiscal Quarter in which such date of determination
occurs; and provided further that for the period beginning on and including the
Closing Date to and including the anniversary of the Closing Date, the
Applicable Acquisition Base Rate Margin shall be 1.25% per annum:
Applicable Acquisition
Consolidated Interest Coverage Ratio Base Rate Margin
less than 2.25 1.25%
greater than or equal to 2.25 1.00%
but less than 2.75
greater than or equal to 2.75 0.75%
but less than 3.25
greater than or equal to 3.25 0.50%
"Applicable Acquisition Eurodollar Rate Margin" means as of any date
of determination, a percentage per annum set forth below opposite the applicable
Consolidated Interest Coverage Ratio; provided that such Consolidated Interest
Coverage Ratio (or better) shall have been achieved for each of the two four-
Fiscal Quarter periods ending as of the last day of the two Fiscal Quarters
immediately preceding the Fiscal Quarter in which such date of determination
occurs; and provided further that for the period beginning on and including the
Closing Date to and including the anniversary of the Closing Date, the
Applicable Acquisition Eurodollar Rate Margin shall be 2.75% per annum:
Applicable Acquisition
Consolidated Interest Coverage Ratio Eurodollar Rate Margin
less than 2.25 2.75%
greater than or equal to 2.25 2.50%
but less than 2.75
greater than or equal to 2.75 2.25%
but less than 3.25
greater than or equal to 3.25 2.00%
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"Applicable Canadian Base Rate Margin" means as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Interest Coverage Ratio; provided that such Consolidated Interest
Coverage Ratio (or better) shall have been achieved for each of the two four-
Fiscal Quarter periods ending as of the last day of the two Fiscal Quarters
immediately preceding the Fiscal Quarter in which such date of determination
occurs; and provided further that for the period beginning on and including the
Closing Date to and including the anniversary of the Closing Date, the
Applicable Canadian Base Rate Margin shall be 1.25% per annum:
Applicable Canadian
Consolidated Interest Coverage Ratio Base Rate Margin
less than 2.25 1.25%
greater than or equal to 2.25 1.00%
but less than 2.75
greater than or equal to 2.75 .75%
but less than 3.25
greater than or equal to 3.25 .50%
"Applicable Canadian Eurodollar Rate Margin" means as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Interest Coverage Ratio; provided that such Consolidated Interest
Coverage Ratio (or better) shall have been achieved for each of the two four-
Fiscal Quarter periods ending as of the last day of the two Fiscal Quarters
immediately preceding the Fiscal Quarter in which such date of determination
occurs; and provided further that for the period beginning on and including the
Closing Date to and including the anniversary of the Closing Date, the
Applicable Canadian Eurodollar Rate Margin shall be 2.75% per annum:
Applicable Canadian
Consolidated Interest Coverage Ratio Eurodollar Rate Margin
less than 2.25 2.75%
greater than or equal to 2.25 2.50%
but less than 2.75
greater than or equal to 2.75 2.25%
but less than 3.25
greater than or equal to 3.25 2.00%
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"Applicable Working Capital Base Rate Margin" means as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Interest Coverage Ratio; provided that such Consolidated Interest
Coverage Ratio (or better) shall have been achieved for each of the two four-
Fiscal Quarter periods ending as of the last day of the two Fiscal Quarters
immediately preceding the Fiscal Quarter in which such date of determination
occurs; and provided further that for the period beginning on and including the
Closing Date to and including the anniversary of the Closing Date, the
Applicable Working Capital Base Rate Margin shall be 0.75% per annum:
Applicable Working
Consolidated Interest Coverage Ratio Capital Base Rate Margin
less than 2.25 0.75%
greater than or equal to 2.25 0.50%
but less than 2.75
greater than or equal to 2.75 0.25%
but less than 3.25
greater than or equal to 3.25 0%
"Applicable Working Capital Eurodollar Rate Margin" means as of any
date of determination, a percentage per annum set forth below opposite the
applicable Consolidated Interest Coverage Ratio; provided that such Consolidated
Interest Coverage Ratio (or better) shall have been achieved for each of the two
four-Fiscal Quarter periods ending as of the last day of the two Fiscal Quarters
immediately preceding the Fiscal Quarter in which such date of determination
occurs; and provided further that for the period beginning on and including the
Closing Date to and including the anniversary of the Closing Date, the
Applicable Working Capital Eurodollar Rate Margin shall be 2.25% per annum:
Applicable Working Capital
Consolidated Interest Coverage Ratio Eurodollar Rate Margin
less than 2.25 2.25%
greater than or equal to 2.25 2.00%
but less than 2.75
greater than or equal to 2.75 1.75%
but less than 3.25
greater than or equal to 3.25 1.50%
"Asset Sale" means the sale by Company or any of its Subsidiaries to
any Person other than Company or any of its wholly-owned Subsidiaries of (i) any
of the stock of
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any of Company's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of Company or any of its Subsidiaries, or (iii) any
other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of business
and (b) any such other assets to the extent that the aggregate value of such
assets sold in any single transaction or related series of transactions is equal
to $250,000 or less).
"Assignment Agreement" means an Assignment Agreement in substantially
the form of Exhibit XII annexed hereto.
"Auditor's Letter" means a letter, substantially in the form of
Exhibit XIII annexed hereto, executed by Price Waterhouse and delivered to Agent
pursuant to subsection 4.1Q or 6.1(iii).
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (x) the Prime Rate and
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Domestic Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"Blocked Account Agreement" means the Blocked Account Agreement
executed and delivered by a Concentration Bank, Agent and the applicable Loan
Party, substantially in the form of Exhibit XVI annexed hereto, as such Blocked
Account Agreement may be amended, supplemented or otherwise modified from time
to time, and "Blocked Account Agreements" means all such Blocked Account
Agreements, collectively.
"Borrower" has the meaning assigned to that term in the introduction
to this Agreement and, upon compliance with the terms and conditions set forth
in subsection 4.4, shall mean and include Lakeland Canada.
"Borrowing Base" means, as at any date of determination, an aggregate
amount equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
plus
(ii) the lesser of (a) fifty percent (50%) of Eligible Inventory
and (b) $5,000,000, minus
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(iii) the aggregate amount of reserves, if any, established by
Agent in the exercise of its Permitted Discretion against Eligible
Accounts Receivable and Eligible Inventory;
provided that Agent, in the exercise of its Permitted Discretion, may (a)
increase or decrease reserves against Eligible Accounts Receivable and Eligible
Inventory and (b) reduce the advance rates provided in this definition, or
restore such advance rates to any level equal to or below the advance rates in
effect as of the Closing Date.
"Borrowing Base Certificate" means a certificate substantially in the
form of Exhibit IX annexed hereto delivered to Lenders by Company pursuant to
subsection 4.1N or subsection 6.1(xx).
"▇▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇▇'▇ Co., Inc., ▇▇▇▇▇▇▇▇'▇ Wholesale, Inc., and
Power Plants II, Inc., each a Pennsylvania corporation.
"BT Canada" means BT Bank of Canada.
"BT Canada Account" means an account maintained by BT Canada into
which the applicable Concentration Banks are instructed to transfer funds on
deposit in the applicable Concentration Accounts pursuant to the terms of the
applicable Blocked Account Agreements, if any.
"BTCC" has the meaning assigned to that term in the introduction to
this Agreement.
"BTCC Account" means an account maintained by Agent at BTCo into which
the applicable Concentration Banks are instructed to transfer funds on deposit
in the applicable Concentration Accounts pursuant to the terms of the applicable
Blocked Account Agreements, if any.
"BTCC Investment Account" means the blocked investment account
maintained by Agent at BTCo pursuant to BTCo's customary terms and conditions
for such accounts.
"BTCo" means Bankers Trust Company.
"BT Concentration Account" means an account under the exclusive
dominion and control of Agent that is maintained by any Loan Party with BTCo
into which the applicable Lock Box Banks are instructed to transfer funds on
deposit in the Lock Box Accounts pursuant to the terms of the Lock Box
Agreements.
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"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or California or is a day
on which banking institutions located in either such state are authorized or
required by law or other governmental action to close, and (ii) with respect to
all notices, determinations, fundings and payments in connection with any
Canadian Loans, any day that is a Business Day described in clause (i) above but
excluding any day which, under the laws of the Province of Ontario, Canada, is a
day on which banking institutions located in such province are authorized or
required by law or other governmental action to close.
"Canadian Agent" means initially BT Canada and any successor Canadian
Agent appointed by Company and Agent.
"Canadian Base Rate" means, as at any date with respect to any
Canadian Loan, the rate of interest per annum equal to the greater of (a) the
rate which BTCo announces in Canada from time to time as the reference rate of
interest for loans in Dollars to its Canadian borrowers, adjusted automatically
with each change in such rates all without the necessity of any notice to any
Borrower or any other Person, and (b) the aggregate of (i) the Federal Funds
Effective Rate per annum for such day and (ii) 1/2 of 1% per annum. As to any
loan, the Canadian Base Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any Canadian customer for
loans denominated in Dollars. BTCo may make commercial or other loans to
Canadian customers denominated in Dollars at rates of interest at, above or
below the Canadian Base Rate.
"Canadian Base Rate Loans" means Canadian Loans denominated in Dollars
and bearing interest at rates determined by reference to the Canadian Base Rate
as provided in subsection 2.2A.
"Canadian Commitment" means the commitment of a Canadian Lender to
make Term Loans to Lakeland Canada pursuant to subsection 2.1A(ii), and
"Canadian Commitments" means such commitments of all Canadian Lenders in the
aggregate.
"Canadian Dollars" means the lawful money of Canada.
"Canadian Eurodollar Rate" means, with respect to each Interest Period
to be applicable to a Canadian Eurodollar Rate Loan comprising part of the same
borrowing, the interest rate per annum equal to the arithmetic average (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum) of the rates per
annum which leading banks in the interbank Eurodollar markets shall quote and
offer to Canadian Reference Bank for placing deposits with Canadian Reference
Bank in Dollars, at approximately 10:00 A.M. (New York time), two Business Days
before the first day of such Interest Period, for a period comparable to such
Interest Period and in an amount approximately equal to the amount of such
Canadian Eurodollar Rate Loan.
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"Canadian Eurodollar Rate Loans" means Canadian Loans denominated in
Dollars and bearing interest at rates determined by reference to the Canadian
Eurodollar Rate as provided in subsection 2.2A.
"Canadian Funding and Payment Office" means (i) the office of BT
Canada located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ or (ii) such other
office of Canadian Agent as may from time to time hereafter be designated as
such in a written notice delivered by Canadian Agent to Borrower and each
Lender.
"Canadian Lender" means any Lender having a Canadian Commitment or, on
and after the termination of the Canadian Commitment, having a Canadian Loan
outstanding.
"Canadian Loan Exposure" means, with respect to any Canadian Lender as
of any date of determination (i) prior to the funding of the Canadian Loans,
that Lender's Canadian Loan Commitment and (ii) after the funding of the
Canadian Loans, the outstanding principal amount of the Canadian Loan of that
Lender.
"Canadian Loan Funding Date" means the date on or prior to January 31,
1998, on which the Canadian Loans are funded.
"Canadian Loans" means the Term Loans made by Canadian Lenders to
Lakeland Canada pursuant to subsection 2.1A(ii).
"Canadian Lock Box Account" means a Deposit Account under the
exclusive dominion and control of Agent that is maintained by Lakeland Canada or
any of its Subsidiaries with a Lock Box Bank pursuant to a Lock Box Agreement.
"Canadian Note" means (i) the promissory notes of Lakeland Canada
issued pursuant to subsection 2.1A(ii) any promissory notes issued by Lakeland
Canada pursuant to the last sentence of subsection 10.1B(i) in connection with
assignments of the Canadian Loans of any Lenders, in each case substantially in
the form of Exhibit VI annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"Canadian Reference Bank" means BT Canada.
"Canadian Subsidiary" means a Subsidiary of Company that is
incorporated or organized under the laws of Canada or any of its provinces.
"Canadian Subsidiary Guaranty" means the Canadian Subsidiary Guaranty
to be executed and delivered by Canadian Subsidiaries from time to time after
the Closing Date in accordance with subsection 6.11, substantially in the form
of Exhibit XXXIV annexed hereto, as such Canadian Subsidiary Guaranty may be
amended, supplemented or otherwise modified from time to time.
10
"Canadian Subsidiary Patent Security Agreement" means each Canadian
Subsidiary Patent Collateral Security Agreement and Conditional Assignment
executed and delivered by Canadian Subsidiaries on the Closing Date or to be
executed and delivered by Canadian Subsidiaries from time to time thereafter in
accordance with subsection 6.11, in each case substantially in the form of
Exhibit XXXII annexed hereto, as such Canadian Subsidiary Patent Collateral
Security Agreement and Conditional Assignment may be amended, supplemented or
otherwise modified from time to time, and "Canadian Subsidiary Patent Security
Agreements" means all such Canadian Subsidiary Patent Collateral Security
Agreement and Conditional Assignments, collectively.
"Canadian Subsidiary Pledge Agreement" means each Canadian Subsidiary
Pledge Agreement executed and delivered by Canadian Subsidiaries on the Closing
Date or to be executed and delivered by Canadian Subsidiaries from time to time
thereafter in accordance with subsection 6.11, in each case substantially in the
form of Exhibit XXX annexed hereto, as such Canadian Subsidiary Pledge Agreement
may be amended, supplemented or otherwise modified from time to time, and
"Canadian Subsidiary Pledge Agreements" means all such Canadian Subsidiary
Pledge Agreements, collectively.
"Canadian Subsidiary Security Agreement" means each Canadian
Subsidiary Security Agreement executed and delivered by Canadian Subsidiaries on
the Closing Date or to be executed and delivered by Canadian Subsidiaries from
time to time thereafter in accordance with subsection 6.11, in each case
substantially in the form of Exhibit XXIX annexed hereto, as such Canadian
Subsidiary Security Agreement may be amended, supplemented or otherwise modified
from time to time, and "Canadian Subsidiary Security Agreements" means all such
Canadian Subsidiary Security Agreements, collectively.
"Canadian Subsidiary Trademark Security Agreement" means each Canadian
Subsidiary Trademark Collateral Security Agreement executed and delivered by
Canadian Subsidiaries on the Closing Date or to be executed and delivered by
Canadian Subsidiaries from time to time thereafter in accordance with subsection
6.11, in each case substantially in the form of Exhibit XXXI annexed hereto, as
such Canadian Subsidiary Trademark Collateral Security Agreement may be amended,
supplemented or otherwise modified from time to time, and "Canadian Subsidiary
Trademark Security Agreements" means all such Canadian Subsidiary Trademark
Collateral Security Agreements, collectively.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means, as at any date of determination, (i) (a)
marketable securities (1) issued or directly and unconditionally guaranteed as
to interest and principal by
11
the United States Government or (2) issued by any agency of the United States
the obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (b) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time of
the acquisition thereof, the highest rating obtainable from either Standard &
Poor's Ratings Group ("S&P") or ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"); (c)
commercial paper maturing no more than one year from the date of creation
thereof and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody's; (d) certificates of deposit or
bankers' acceptances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia that
(1) is at least "adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (2) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000; and (e) shares of any money
market mutual fund that (1) has at least 95% of its assets invested continuously
in the types of investments referred to in clauses (a) and (b) above, (2) has
net assets of not less than $500,000,000, and (3) has the highest rating
obtainable from either S&P or Moody's, and (ii) comparable Canadian short term
investments.
"Cash Proceeds" means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale.
"Certificate re Non-Bank Status" means a certificate substantially in
the form of Exhibit XIV annexed hereto delivered by a Lender to Agent pursuant
to subsection 2.7B(iii).
"Class" means, as applied to Lenders, each of the two classes of
Lenders consisting of (i) Domestic Lenders and (ii) Canadian Lenders.
"Closing Date" means the date on or before December 16, 1997, on which
the initial Loans are made.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted by
the Collateral Documents.
"Collateral Access Agreement" means any landlord waiver, mortgagee
waiver, bailee letter or any similar acknowledgement agreement of any landlord
or mortgagee in respect of any Real Property Asset where any Inventory is
located or any warehouseman or processor in possession of Inventory,
substantially in the form of
12
Exhibit XXXIII annexed hereto, with such changes thereto as may be agreed to by
Agent in the reasonable exercise of its discretion.
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account Agreements
executed and delivered by Company and Agent on the Closing Date, substantially
in the form of Exhibit XV annexed hereto, pursuant to which Company may pledge
cash to Agent to secure the obligations of Company to reimburse Issuing Lenders
for payments made under one or more Letters of Credit as provided in Section 8,
as such Collateral Account Agreements may hereafter be amended, supplemented or
otherwise modified from time to time.
"Collateral Documents" means the Collateral Account Agreement, the
Holdings Pledge Agreement, the Company Security Agreement, the Company Pledge
Agreement, the Company Trademark Security Agreement, the Company Patent Security
Agreement, the Domestic Subsidiary Security Agreements, the Domestic Subsidiary
Pledge Agreements, the Domestic Subsidiary Trademark Security Agreements, the
Domestic Subsidiary Patent Security Agreements, the Canadian Subsidiary Security
Agreements, the Canadian Subsidiary Pledge Agreements, the Canadian Subsidiary
Trademark Security Agreements, the Canadian Subsidiary Patent Security
Agreements, the Blocked Account Agreements, the Lockbox Agreements and the
Mortgages.
"Commitments" means the Working Capital Loan Commitment, the
Acquisition Revolving Loan Commitment, the Acquisition Term Loan Commitment or
the Canadian Commitment or any combination thereof.
"Commitment Fee Percentage" means, as of any date of determination, a
percentage per annum equal to .50% per annum.
"Commitment Termination Date" means December 31, 2002.
"Company" has the meaning assigned to that term in the introduction to
this Agreement.
"Company Common Stock" means the common stock of Company, par value
$.01 per share.
"Company Guaranty" means the Company Guaranty executed and delivered
by Company on the Closing Date, substantially in the form of Exhibit XIX annexed
hereto, as such Company Guaranty may be amended, supplemented or otherwise
modified from time to time.
13
"Company Patent Security Agreement" means the Company Patent
Collateral Assignment and Security Agreement executed and delivered by Company
on the Closing Date, substantially in the form of Exhibit XXIII annexed hereto,
as such Company Patent Collateral Assignment and Security Agreement may be
amended, supplemented or otherwise modified from time to time.
"Company Pledge Agreement" means the Company Pledge Agreement executed
and delivered by Company on the Closing Date, substantially in the form of
Exhibit XXI annexed hereto, as such Company Pledge Agreement may be amended,
supplemented or otherwise modified from time to time.
"Company Preferred Stock" means the ___% Cumulative Redeemable Senior
Preferred Stock of Company, par value $.01 per share, with a liquidation
preference of $_____ per share and the provisions of Company's Articles of
Incorporation relating to the terms and conditions of such preferred stock, in
each case in the form delivered to Agent prior to the Closing Date and as
amended from time to time to the extent permitted under subsection 7.15.
"Company Security Agreement" means the Company Security Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XX annexed hereto, as such Company Security Agreement may be amended
or supplemented or otherwise modified from time to time.
"Company Trademark Security Agreement" means the Company Trademark
Collateral Security Agreement executed and delivered by Company on the Closing
Date, substantially in the form of Exhibit XXII annexed hereto, as such Company
Trademark Collateral Security Agreement may be amended, supplemented or
otherwise modified from time to time.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit VII annexed hereto delivered to Agent and Lenders by Company pursuant
to subsection 6.1(iv).
"Concentration Accounts" means, collectively, the BT Concentration
Accounts and the Other Bank Concentration Accounts.
"Concentration Bank" means BTCo or any commercial bank satisfactory to
Agent at which any Loan Party maintains a Concentration Account.
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in
14
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries; provided that, (a) in connection with the
purchase or other acquisition of any asset (the "Replacement Asset") by Company
or any of its Subsidiaries substantially concurrently with the sale of, or
pursuant to an exchange for or trade-in of, any existing asset of Company or
such Subsidiary of like kind and character (which, in the case of a Real
Property Asset, shall be located within a 30-mile radius of the Replacement
Asset) (the "Replaced Asset"), there shall be included in Consolidated Capital
Expenditures only the excess, if any, of the gross purchase price of the
Replacement Asset over the credit given by the seller of the Replacement Asset
for the trade-in or exchange of the Replaced Asset or the amount of proceeds
received from the sale of the Replaced Asset, as the case may be, and (b) in
connection with the purchase, repair or other acquisition of any asset by
Company or any of its Subsidiaries with insurance proceeds received by Company
or any of its Subsidiaries in respect of the actual or constructive loss of any
similar asset, there shall be included in Consolidated Capital Expenditures only
the excess of the gross amount of the purchase price over the amount of such
insurance proceeds.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).
"Consolidated Current Assets" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP, excluding
Cash and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding the current portion of any Indebtedness.
"Consolidated EBITDA" means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)
total depreciation expense, (v) total amortization expense, and (vi) other non-
cash items reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any period, an amount equal
to (i) the sum, without duplication, of the amounts for such period of (a)
Consolidated EBITDA and (b) the Consolidated Working Capital Adjustment minus
(ii) the sum, without duplication, of the amounts for such period of (a)
voluntary and scheduled repayments of Consolidated Total Debt (excluding
repayments of Revolving Loans except to the extent the
15
Revolving Loan Commitments are permanently reduced in connection with such
repayments), (b) Consolidated Capital Expenditures (net of any proceeds of any
related financings with respect to such expenditures), (c) Consolidated Cash
Interest Expense, and (d) the provision for current taxes based on income of
Company and its Subsidiaries and payable in cash with respect to such period.
"Consolidated Interest Coverage Ratio" means as at any date of
determination, the ratio of Consolidated EBITDA to Consolidated Cash Interest
Expense for the four-Fiscal Quarter period ending as of the last day of the
Fiscal Quarter immediately preceding the Fiscal Quarter in which such date of
determination occurs.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agent
and Lenders on or before the Closing Date.
"Consolidated Leverage Ratio" means as at any date of determination,
the ratio of Consolidated Total Debt as of the last day of the Fiscal Quarter
immediately preceding the Fiscal Quarter in which such date of determination
occurs to Consolidated EBITDA for the four Fiscal Quarters ending as of such
last day of such immediately preceding Fiscal Quarter.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) for purposes of calculating
Consolidated Net Income for the first Fiscal Quarter, 1998, the income (or loss)
of any Person accrued prior to the date that Person's assets are acquired by
Company or any of its Subsidiaries, (iii) the income of any Subsidiary of
Company to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary, (iv) any after-tax gains or losses attributable to Asset Sales or
returned surplus assets of any Pension Plan, and (v) (to the extent not included
in clauses (i) through (iv) above) any net extraordinary gains or net non-cash
extraordinary losses.
16
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which Company or any of its Subsidiaries is a party as lessee.
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which the
Consolidated Working Capital of Company and its Subsidiaries as of the beginning
of such period exceeds (or is less than) the Consolidated Working Capital of
Company and its Subsidiaries as of the end of such period.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
17
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement.
"Daily Funding Lender" means Agent, in its individual capacity as a
Lender hereunder.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Dollar Equivalents" means Dollars or, with respect to any amount of
Canadian Dollars, an equivalent amount of Dollars determined at the rate of
exchange quoted by Agent in New York City, at 9:00 A.M. (New York time) on the
date of determination, to prime banks in New York City for the spot purchase in
the New York foreign exchange market of Dollars with Canadian Dollars.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Domestic Commitments" means the Revolving Loan Commitments or the
Acquisition Term Loan Commitments or both.
"Domestic Funding and Payment Office" means (i) the office of Agent
located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or (ii) such other office of
Agent as may from time to time hereafter be designated as such in a written
notice delivered by Agent to Borrower and each Lender.
"Domestic Lenders" means any Lenders having Domestic Commitments or,
on and after the termination of the Domestic Commitments, having Domestic Loans
outstanding.
"Domestic Loans" means the Revolving Loans or the Acquisition Term
Loans or both.
"Domestic Lock Box Account" means a Deposit Account under the
exclusive dominion and control of Agent that is maintained by Company or any
Loan Party which is a Domestic Subsidiary with a Lock Box Bank pursuant to a
Lock Box Agreement.
18
"Domestic Subsidiary" means a Subsidiary of Company that is
incorporated or organized under the laws of a state of the United States of
America.
"Domestic Subsidiary Guaranty" means the Domestic Subsidiary Guaranty
executed and delivered by Domestic Subsidiaries on the Closing Date and to be
executed and delivered by Domestic Subsidiaries from time to time thereafter in
accordance with subsection 6.11, substantially in the form of Exhibit XXIV
annexed hereto, as such Domestic Subsidiary Guaranty may be amended,
supplemented or otherwise modified from time to time.
"Domestic Subsidiary Patent Security Agreement" means each Domestic
Subsidiary Patent Collateral Security Agreement and Conditional Assignment
executed and delivered by Domestic Subsidiaries on the Closing Date or to be
executed and delivered by Domestic Subsidiaries from time to time thereafter in
accordance with subsection 6.11, in each case substantially in the form of
Exhibit XXVIII annexed hereto, as such Domestic Subsidiary Patent Collateral
Security Agreement and Conditional Assignment may be amended, supplemented or
otherwise modified from time to time, and "Domestic Subsidiary Patent Security
Agreements" means all such Domestic Subsidiary Patent Collateral Security
Agreement and Conditional Assignments, collectively.
"Domestic Subsidiary Pledge Agreement" means each Domestic Subsidiary
Pledge Agreement executed and delivered by Domestic Subsidiaries on the Closing
Date or to be executed and delivered by Domestic Subsidiaries from time to time
thereafter in accordance with subsection 6.11, in each case substantially in the
form of Exhibit XXVI annexed hereto, as such Domestic Subsidiary Pledge
Agreement may be amended, supplemented or otherwise modified from time to time,
and "Domestic Subsidiary Pledge Agreements" means all such Domestic Subsidiary
Pledge Agreements, collectively.
"Domestic Subsidiary Security Agreement" means each Domestic Subsidiary
Security Agreement executed and delivered by Domestic Subsidiaries on the
Closing Date or to be executed and delivered by Domestic Subsidiaries from time
to time thereafter in accordance with subsection 6.11, in each case
substantially in the form of Exhibit XXV annexed hereto, as such Domestic
Subsidiary Security Agreement may be amended, supplemented or otherwise modified
from time to time, and "Domestic Subsidiary Security Agreements" means all such
Domestic Subsidiary Security Agreements, collectively.
"Domestic Subsidiary Trademark Security Agreement" means each Domestic
Subsidiary Trademark Collateral Security Agreement executed and delivered by
Domestic Subsidiaries on the Closing Date or to be executed and delivered by
Domestic Subsidiaries from time to time thereafter in accordance with subsection
6.11, in each case substantially in the form of Exhibit XXVII annexed hereto, as
such Domestic Subsidiary Trademark Collateral Security Agreement may be amended,
supplemented or otherwise
19
modified from time to time, and "Domestic Subsidiary Trademark Security
Agreements" means all such Domestic Subsidiary Trademark Collateral Security
Agreements, collectively.
"Eligible Accounts Receivable" means, with respect to Company and each
Domestic Subsidiary which is a Loan Party, Accounts of such Loan Party deemed by
Agent in the exercise of its Permitted Discretion to be eligible for inclusion
in the calculation of the Borrowing Base. In determining the amount to be so
included, the face amount of such Accounts shall be reduced by the amount of all
returns, discounts, deductions, claims, credits, charges, or other allowances.
Unless otherwise approved in writing by Agent, an Account shall not be an
Eligible Account Receivable if:
(a) it arises out of a sale made by such Loan Party to an Affiliate; or
(b) its payment terms are longer than 60 days from date of invoice,
except that up to $5,000,000 (or during the period commencing on January 1
of any year and ending May 31 of such year, up to $7,500,000) of Accounts
with payment terms in excess of 60 days but not more than 210 days may be
included in Eligible Accounts Receivable to the extent otherwise
constituting an Eligible Account Receivable; or
(c) it is unpaid (i) more than 60 days after the original payment due
date on payment terms of 150 days or less from date of invoice, or (ii) more
than 30 days after the original payment due date on payment terms of more
than 150 days from date of invoice; or
(d) it is from the same account debtor or its Affiliate and fifty
percent (50%) or more of all Accounts from that account debtor (and its
Affiliates) are ineligible under (c) above; or
(e) when aggregated with all other Accounts of an account debtor, such
Account exceeds 15% in face value of all Accounts of such Loan Party then
outstanding, but only to the extent of such excess, unless such excess is
supported by an irrevocable letter of credit satisfactory to Agent (as to
form, substance and issuer) and assigned to and directly drawable by Agent;
or
(f) the account debtor for such Account is a creditor of such Loan
Party, has or has asserted a right of setoff against such Loan Party, or has
disputed its liability or otherwise has made any claim with respect to such
Account or any other Account which has not been resolved, in each case to
the extent of the amount owed by such Loan Party to such account debtor, the
amount of such actual or asserted right of setoff, or the amount of such
dispute or claim, as the case may be; or
(g) the account debtor is (or its assets are) the subject of an
Insolvency Event; or
20
(h) such Account is not payable in Dollars or the account debtor for
such Account is located outside the continental United States, unless such
Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance and issuer) and assigned to and directly
drawable by Agent; or
(i) the sale to the account debtor is on a ▇▇▇▇-and-hold, guarantied
sale, sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or return;
or
(j) Agent determines by its own credit analysis that collection of such
Account is uncertain or that such Account may not be paid; or
(k) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such Loan Party duly
assigns its rights to payment of such Account to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. (S)(S) 3727 et
seq.); or
(l) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the account debtor, the services giving rise to
such Account have not been performed and accepted, or such Account otherwise
does not represent a final sale; or
(m) such Account does not comply with all Requirements of Law,
including without limitation the Federal Consumer Credit Protection Act, the
Federal Truth in Lending Act and Regulation Z of the Board of Governors of
the Federal Reserve System; or
(n) such Account is subject to any adverse security deposit, progress
payment or other similar advance made by or for the benefit of the
applicable account debtor; or
(o) it is not subject to a valid and perfected first priority Lien in
favor of Agent or does not otherwise conform to the representations and
warranties contained in the Loan Documents;
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition; provided further that Agent, after reviewing the
initial collateral audit to be delivered pursuant to subsection 4.1L or 6.10C,
may impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in this definition.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank
21
organized under the laws of the United States or any state thereof; (iii) a
commercial bank organized under the laws of any other country or a political
subdivision thereof; provided that (x) such bank is acting through a branch or
agency located in the United States or (y) such bank is organized under the laws
of a country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds and lease
financing companies, in each case (under clauses (i) through (iv) above) that is
reasonably acceptable to Agent; and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
"Eligible Inventory" means, with respect to Company or a Domestic
Subsidiary which is a Loan Party, the aggregate amount of Inventory of such Loan
Party deemed by Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base minus the Inventory Scrap
Reserve. In determining the amount to be so included, Inventory shall be valued
at the lower of cost or market on a basis consistent with such Loan Party's
current and historical accounting practice. Unless otherwise approved in
writing by Agent, an item of Inventory shall not be included in Eligible
Inventory if:
(a) it is not owned solely by such Loan Party or such Loan Party does
not have good, valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by such Loan Party or
in a contract warehouse, in each case subject to a Collateral Access
Agreement executed by any applicable mortgagee, lessor or contract
warehouseman, as the case may be, and segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises; or
(d) it is not subject to a valid and perfected first priority Lien in
favor of Agent except, with respect to Inventory stored at sites described
in clause (c) above, for Liens for unpaid rent or normal and customary
warehousing charges; or
(e) it consists of goods returned or rejected by such Loan Party's
customers or goods in transit to third parties (other than to warehouse
sites covered by a Collateral Access Agreement); or
(f) it is not first-quality goods, is obsolete or slow moving, or does
not otherwise conform to the representations and warranties contained in the
Loan Documents;
22
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition; provided further that Agent, after reviewing the
initial collateral audit to be delivered pursuant to subsection 4.1L or 6.10C,
may impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in this definition.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or was at any time, maintained or contributed to
by Company or any of its ERISA Affiliates.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
"Environmental Laws" means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and requirements having the force of law
relating to (i) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare from environmental hazards, in any manner applicable to
Company or any of its Subsidiaries or any of their respective properties,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.) ("CERCLA"), the
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal
Water Pollution Control Act ( 33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S)
136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et seq.)
and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001
et seq.), each as amended or supplemented, and any analogous future or present
local, state and federal statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
23
"ERISA Affiliate", as applied to any Person, means (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which that Person
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of a
Person shall continue to be considered an ERISA Affiliate within the meaning of
this definition with respect to the period such entity was an ERISA Affiliate of
the Person and with respect to liabilities arising after such period for which
the Person could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company or any of its ERISA Affiliates from any Pension Plan with
two or more contributing sponsors or the termination of any such Pension Plan
resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Company or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or any
of its ERISA Affiliates in a complete or partial withdrawal (within the meaning
of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by Company or any of its ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company or any of its ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against
24
Company or any of its ERISA Affiliates in connection with any such Employee
Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the
failure of any Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant
to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to
ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Domestic Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Existing Letters of Credit" means the letters of credit described on
Schedule 1.1 annexed hereto.
"Facilities" means the nurseries, peat bogs, offices, warehouses and
all other real property (including, without limitation, all buildings, fixtures
or other improvements located thereon) and related facilities now, hereafter or
heretofore owned, leased, operated or used by Company or any of its Subsidiaries
or any of their respective predecessors or Affiliates.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"Fee Property" means a Real Property Asset consisting of a fee interest
in real property.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xiv).
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
25
"Fiscal Year" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Guaranties" means the Holdings Guaranty, the Company Guaranty, the
Domestic Subsidiary Guaranty and the Canadian Subsidiary Guaranty.
"Guarantor" means, at any time, Holdings, Company or any of their
respective Subsidiaries that is then a party to any of the Guaranties.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar meaning and regulatory effect import under any
applicable Environmental Laws; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (ix) pesticides; and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any Persons in the vicinity of the
Facilities.
26
"▇▇▇▇▇ I Credit Agreement" means that certain Credit Agreement dated as
of August 4, 1995, among ▇▇▇▇▇ Horticulture, Inc., Sun Gro Horticulture Inc.,
Sun Gro Horticulture Canada Ltd., ▇▇▇▇▇ I Lenders and BTCC, as Agent.
"▇▇▇▇▇ I Exposure" means at any date of determination the sum of (i)
the aggregate principal amount of domestic term loans outstanding under the
▇▇▇▇▇ I Credit Agreement, (ii) the aggregate principal amount of Canadian term
loans outstanding under the ▇▇▇▇▇ I Credit Agreement and (iii) the aggregate
revolving loan exposure of all ▇▇▇▇▇ I Lenders.
"▇▇▇▇▇ I Lender" means each of the lenders signatory to the ▇▇▇▇▇ I
Credit Agreement.
"▇▇▇▇▇ II Exposure" means at any date of determination the sum of (i)
the Canadian Loan Exposure of all Lenders under this Agreement, (ii) the
Acquisition Exposure of all Lenders under this Agreement, and (iii) the Working
Capital Revolving Loan Exposure of all Lenders under this Agreement.
"Holdings" means ▇▇▇▇▇ Holdings, Inc., a Nevada corporation.
"Holdings Certificate of Designations" means the provisions of
Holdings' Restated Articles of Incorporation relating to the Holdings Preferred
Stock, in the form delivered to Agent and Lenders prior to their execution of
this Agreement and as such provisions may be amended from time to time to the
extent permitted under subsection 7.15.
"Holdings Common Stock" means the common stock of Holdings, par value
$.01 per share.
"Holdings Guaranty" means the Holdings Guaranty executed and delivered
by Holdings on the Closing Date, substantially in the form of Exhibit XVII
annexed hereto, as such Holdings Guaranty may be amended, supplemented or
otherwise modified from time to time.
"Holdings Pledge Agreement" means the Holdings Pledge Agreement
executed and delivered by Holdings on the Closing Date, substantially in the
form of Exhibit XVIII annexed hereto, as such Holdings Pledge Agreement may be
amended, supplemented or otherwise modified from time to time.
"Holdings Preferred Stock" means the 12% Cumulative Redeemable Junior
Preferred Stock of Holdings, par value $.01 per share, with a liquidation
preference of $1.00 per share, and the 12% Cumulative Redeemable Senior
Preferred Stock of Holdings, par value $.01 per share, with a liquidation
preference of $1,000 per share.
27
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute Contingent Obligations and not Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Insolvency Event" means, with respect to any Person, the occurrence of
any of the events described in subsection 8.6 or 8.7; provided that, solely for
purposes of this definition, any references to any Borrower or any of its
Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference to such
Person.
"Insolvency Laws" means the Bankruptcy Code, the Bankruptcy and
Insolvency Act (Canada), the Company Creditors' Arrangement Act (Canada), the
Winding-Up Act (Canada) or any comparable law of Canada or any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect in the United
States of America or any state thereof or Canada or any province thereof.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate Loan or
any Canadian Base Rate Loan, the first Business Day of each calendar month,
commencing on the first such date to occur after the Closing Date, and (ii) with
respect to any Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan; provided that in the
case of each Interest Period of six months "Interest Payment Date" shall also
include the date that is three months after the commencement of such Interest
Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
28
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Inventory" means, with respect to any Person, all goods, merchandise
and other personal property which are held by such Person for sale or lease,
including those held for display or demonstration.
"Inventory Scrap Reserve" means, with respect to Company and each of
its Domestic Subsidiaries which is a Loan Party as of any date of determination,
fifteen percent (15%) of the aggregate amount of Inventory of such Loan Party as
of such date of determination, as such percentage may be adjusted from time to
time by Agent in its Permitted Discretion based on information available to
Agent, which Inventory shall be valued at the lower of cost or market on a basis
consistent with such Loan Party's current and historical accounting practice.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was a wholly-owned Domestic Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Company from any Person other than
Company or any of its Subsidiaries, of any equity Securities of such Subsidiary,
or (iii) any direct or indirect loan, advance (other than advances to employees
for moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person other than a wholly-owned
Domestic Subsidiary of Company, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"IP Collateral" means, collectively, the Collateral under the IP
Collateral Documents.
"IP Collateral Documents" means, collectively, the Company Trademark
Security Agreement, the Company Patent Security Agreement, the Domestic
Subsidiary Trademark Security Agreements, the Domestic Subsidiary Patent
Security Agreements, the
29
Canadian Subsidiary Trademark Security Agreements and the Canadian Subsidiary
Patent Security Agreements.
"Issuing Lender" means, with respect to any Letter of Credit, BTCo or
any other Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Lakeland" means Lakeland USA, Inc., a Delaware corporation.
"Lakeland Canada" means Lakeland Peat ▇▇▇▇ Canada Ltd., a Canadian
corporation.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include BTCo as an Issuing Lender unless the context otherwise requires;
provided that the term "Lenders", when used in the context of a particular
Commitment, shall mean Lenders having that Commitment.
"Letter of Credit" or "Letters of Credit" means Standby Letters of
Credit issued or to be issued by Issuing Lenders for the account of Company
pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company. For purposes of this
definition, any amount described in clause (i) or (ii) of the preceding sentence
which is denominated in Canadian Dollars shall be valued in Dollar Equivalents
as of the applicable date of determination.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Acquisition Term Loans,
Canadian Loans or Revolving Loans or any combination thereof.
30
"Loan Documents" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to the
Letters of Credit), the Guaranties, any Interest Rate Agreements and the
Collateral Documents and, solely for purposes of the use of the term "Loan
Documents" in the definition of "Obligations", the Currency Agreements to which
any Lender or any of its Affiliates is a party.
"Loan Parties" means each of the Borrowers and Guarantors.
"Lock Box" means a lockbox maintained by any Loan Party pursuant to
arrangements satisfactory to Agent.
"Lock Box Accounts" means, collectively, the Canadian Lock Box Accounts
and the Domestic Lock Box Accounts.
"Lock Box Agreement" means a Lock Box Agreement executed and delivered
by a Lock Box Bank, Agent and the applicable Loan Party, substantially in the
form of Exhibit XXXV annexed hereto, as such Lock Box Agreement may be amended,
supplemented or otherwise modified from time to time, and "Lock Box Agreements"
means all such Lock Box Agreements, collectively.
"Lock Box Bank" means any commercial bank satisfactory to Agent at
which any Loan Party maintains a Lock Box Account.
"Margin Determination Certificate" means an Officers' Certificate of
Company delivered with the financial statements required pursuant to subsections
6.1(ii) or 6.1(iii) setting forth the Consolidated Interest Coverage Ratio which
is applicable as of the last day of the fiscal period for which such financial
statements and Officers' Certificate are being delivered.
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole, (ii) the impairment
of the ability of any Loan Party to perform, or of Agent or Lenders to enforce,
the Obligations, or (iii) a material adverse effect on the value of the
Collateral or the amount which Agent or Lenders would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of the Collateral.
"Material Contract" means any contract or other arrangement to which
any Borrower or any of its Subsidiaries is a party (other than the Loan
Documents) for which
31
breach, nonperformance, cancellation or failure to renew could have a Material
Adverse Effect.
"Material Leasehold" means a Real Property Asset consisting of a
leasehold interest in an Operating Lease or a Capital Lease which is reasonably
determined by Agent to be of material value as collateral for the Obligations.
"MDCP" means Madison Dearborn Capital Partners, L.P., a Delaware
limited partnership.
"Mortgage" means an instrument (whether designated as a deed of trust,
a trust deed or a mortgage or by any similar title) executed and delivered by
any Borrower or any of its Subsidiaries encumbering a Fee Property or a Material
Leasehold, as such instrument may be amended, supplemented or otherwise modified
from time to time, and "Mortgages" means all such instruments, including the
Initial Mortgages (as defined in subsection 6.10) and any Additional Mortgages
(as defined in subsection 6.12), collectively.
"Multiemployer Plan" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs incurred in connection
with such Asset Sale, including without limitation (i) income taxes reasonably
estimated to be actually payable as a result of such Asset Sale within two years
of the date of such Asset Sale and (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is secured by a Lien on the stock or assets in question and
that is required to be repaid under the terms thereof as a result of such Asset
Sale; provided that, in connection with the sale of any existing asset (the
"Replaced Asset") by Company or any of its Subsidiaries substantially
concurrently with the purchase of a replacement asset by Company or such
Subsidiary of like kind and character (which, in the case of a Real Property
Asset, shall be located within a 30-mile radius of the Replacement Asset) (the
"Replacement Asset"), there shall be included in Net Cash Proceeds only the
excess, if any, of the Net Cash Proceeds received for the Replaced Asset
(calculated without giving effect to this proviso) over the purchase price of
the Replacement Asset.
"Notes" means one or more of the Working Capital Revolving Notes,
Acquisition Revolving Notes, Acquisition Term Loan Notes and the Canadian Notes
or any combination thereof.
32
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by a Borrower to Agent pursuant to subsection
2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by a Borrower to Agent pursuant to
subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Agent, Lenders or any of them under the Loan
Documents, whether for principal, interest (including interest accruing on or
after the occurrence of an Insolvency Event), reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"Other Bank Concentration Account" means an account under the exclusive
dominion and control of Agent that is maintained by any Loan Party with a Bank
(other than BTCo) that is satisfactory to Agent pursuant to a Blocked Account
Agreement into which the applicable Lock Box Banks are instructed to transfer
funds on deposit in the Lock Box Accounts pursuant to the terms of the Lock Box
Agreements.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
33
"Permitted Discretion" means Agent's good faith judgment based upon any
factor which it believes in good faith: (i) will or could adversely affect the
value of any Collateral, the enforceability or priority of Agent's Liens thereon
or the amount which Agent and Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral; (ii) suggests that any collateral report or financial
information delivered to Agent by any Person on behalf of any Loan Party is
incomplete, inaccurate or misleading in any material respect; (iii) materially
increases the likelihood of a bankruptcy, reorganization or other insolvency
proceeding involving any Borrower or any of its Subsidiaries or any of the
Collateral, or (iv) creates or reasonably could be expected to create a
Potential Event of Default or Event of Default. In exercising such judgment,
Agent may consider such factors already included in or tested by the definition
of Eligible Accounts Receivable or Eligible Inventory, as well as any of the
following: (i) the financial and business climate of any Loan Party's industry
and general macroeconomic conditions, (ii) changes in collection history and
dilution with respect to Loan Parties' Accounts, (iii) changes in demand for,
and pricing of, Loan Parties' Inventory, (iv) changes in any concentration of
risk with respect to such Accounts or Inventory, and (v) any other factors that
change the credit risk of lending to any Borrower on the security of such
Accounts or Inventory. The burden of establishing lack of good faith shall be
on the Borrower.
"Permitted Encumbrances" means the following types of Liens (other than
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
34
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or any
of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, minor
defects or irregularities in title, and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease to
any restriction or encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(x) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PPSA" means the Personal Property Security Act or any other statute
pertaining to the creation, perfection or priority of security interests in any
collateral, in each case as in effect in any Canadian province.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Prime Rate" means the rate that BTCo announces from time to time as
its prime lending rate in the United States for Dollar denominated loans, as in
effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or
35
best rate actually charged to any customer. BTCC or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"Pro Rata Share" means (i) with respect to all payments, computations
and other matters relating to the Working Capital Revolving Loan Commitments or
the Working Capital Revolving Loans of any Domestic Lender or any Letters of
Credit issued or participations therein purchased by any Domestic Lender, the
percentage obtained by dividing (x) the Working Capital Revolving Loan Exposure
of that Domestic Lender by (y) the aggregate Working Capital Revolving Loan
Exposure of all Domestic Lenders, (ii) with respect to all payments,
computations and other matters relating to the Acquisition Revolving Loan
Commitments, the Acquisition Term Loan Commitments, the Acquisition Revolving
Loans or the Acquisition Term Loans of any Domestic Lender, the percentage
obtained by dividing (x) the Acquisition Exposure of that Domestic Lender by (y)
the aggregate Acquisition Exposure of all Domestic Lenders, (iii) with respect
to all payments, computations and other matters relating to the Canadian
Commitment or the Canadian Loan of any Canadian Lender, the percentage obtained
by dividing (x) the Canadian Loan Exposure of that Lender by (y) the aggregate
Canadian Loan Exposure of all Canadian Lenders, and (iv) for all other purposes
with respect to each Lender, the percentage obtained by dividing (x) the sum of
the Working Capital Revolving Loan Exposure of that Lender plus the Acquisition
Exposure of that Lender plus the Canadian Loan Exposure of that Lender by (y)
the sum of the aggregate Acquisition Term Loan Exposure of all Lenders plus the
aggregate Revolving Loan Exposure of all Lenders plus the aggregate Canadian
Loan Exposure of all Lenders, in any such case as the applicable percentage may
be adjusted by assignments permitted pursuant to subsection 10.1. The initial
Pro Rata Share of each Lender for purposes of each of clauses (i), (ii), (iii)
and (iv) of the preceding sentence is set forth opposite the name of that Lender
in Schedule 2.1 annexed hereto.
"Public Offering" means any bona fide primary underwritten public
offering of any Person's Common Stock pursuant to an effective registration
statement under the Securities Act (other than pursuant to a registration
statement on Form S-8 or otherwise relating to equity securities issuable
exclusively under any employee benefit plan of Holdings, or Holdings'
Subsidiaries).
"Real Property Assets" means all real property from time to time owned
in fee by any Loan Party and all rights, title and interest in and to any and
all leases of real property as to which any Loan Party has a leasehold interest,
including without limitation any such fee or leasehold interests acquired by any
Loan Party after the date hereof.
"Register" has the meaning assigned to that term in subsection 2.1E.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
36
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means, collectively, the ▇▇▇▇▇▇▇▇'▇ Stock Purchase
Agreement dated of even date herewith among Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the Pacific Color Nursery Asset Purchase Agreement, the
Holdings Certificate of Designations, Company Preferred Stock, the Promissory
Note issued by Holdings in favor of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
and all other agreements or instruments delivered pursuant to or in connection
with any of the foregoing including any purchase agreement or registration
rights agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"Request for Issuance of Letter of Credit" means a notice substantially
in the form of Exhibit III annexed hereto delivered by a Borrower to Agent
pursuant to subsection 3.1B(i) with respect to the proposed issuance of a Letter
of Credit.
"Requisite Class Lenders" means, at any time of determination (i) for
the Class of Lenders consisting of Domestic Lenders, Domestic Lenders having or
holding more than 66 2/3% of the sum of the aggregate Acquisition Term Loan
Exposure of all Domestic Lenders plus the aggregate Revolving Loan Exposure of
all Domestic Lenders and (ii) for the Class of Lenders consisting of Canadian
Lenders, Canadian Lenders having or holding more than 66 2/3% of the aggregate
Canadian Loan Exposure of all Canadian Lenders.
"Requirement of Law" means (a) the certificates or articles of
incorporation, by-laws and other organizational or governing documents of a
Person, (b) any law, treaty, rule, regulation or determination of an arbitrator,
court or other governmental authority, or (c) any franchise, license, lease,
permit, certificate, authorization, qualification, easement, right of way, right
or approval binding on a Person or any of its property.
"Requisite Lenders" means Lenders having or holding 51% or more of the
sum of the aggregate Acquisition Term Loan Exposure of all Lenders plus the
aggregate Revolving Loan Exposure of all Lenders plus the aggregate Canadian
Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the
37
holders of that class, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of Company now or hereafter outstanding, (iii) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of Company now
or hereafter outstanding, and (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness.
"Revolving Loan Commitment" means the commitment of a Domestic Lender
to make Revolving Loans to Company pursuant to subsections 2.1A(i) and (iii),
and "Revolving Loan Commitments" means such commitments of all Domestic Lenders
in the aggregate.
"Revolving Loan Commitment Termination Date" means December 31, 2000.
"Revolving Loan Exposure" means, with respect to any Domestic Lender as
of any date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender (in each case net of
any participations purchased by other Domestic Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit.
"Revolving Loans" means the Working Capital Revolving Loans and the
Acquisition Revolving Loans.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
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"Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"Stockholders Agreement" means that certain Stockholders Agreement
dated as of the Closing Date, entered into by and among Holdings, MDCP, and the
individuals listed on the signature pages thereto.
"Subordinated Indebtedness" means any Indebtedness of Company (other
than Indebtedness to any of its Subsidiaries) that is subordinated in right of
payment to the Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms in form and substance satisfactory to Agent and
Requisite Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
39
functions) having the power to direct or cause the direction of the management
and policies thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located or in which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
"Term Loan Commitments" means the Acquisition Term Loan Commitments or
the Canadian Commitments or both.
"Term Loans" means the Acquisition Term Loans or the Canadian Loans or
both.
"Term Notes" means (i) the promissory notes of any Borrower issued
pursuant to subsection 2.1F on the Canadian Loan Funding Date or the Acquisition
Conversion Date and (ii) any promissory notes issued by any Borrower pursuant to
the last sentence of subsection 10.1B(i) in connection with assignments of the
Term Loan Commitments or Term Loans of any Lenders, in each case substantially
in the forms of Exhibit VI or Exhibit IV annexed hereto, respectively, as they
may be amended, supplemented or otherwise modified from time to time.
"Title Policy" means an ALTA mortgagee title insurance policy issued by
a title insurer reasonably satisfactory to Agent, in an amount reasonably
satisfactory to Agent, assuring Agent that the applicable Mortgage creates a
valid and enforceable first priority mortgage lien (or such other priority lien
as may be specified in such Mortgage) on the applicable Fee Property or Material
Leasehold, in each case which is located in the United States, free and clear of
all defects and encumbrances except Permitted Encumbrances and subject to a
standard survey exception, which title insurance policy shall be in form and
substance reasonably satisfactory to Agent and shall include an endorsement (to
the extent available in the relevant jurisdiction) for mechanics' liens, for
future advances under this Agreement, the Notes and the other Loan Documents,
and for any other matters that Agent may reasonably request, and shall provide
for affirmative insurance and such reinsurance as Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to Agent.
40
"Total ▇▇▇▇▇ Exposure" means at any date of determination the sum of
the ▇▇▇▇▇ I Exposure and the ▇▇▇▇▇ II Exposure.
"Total Utilization of Working Capital Revolving Loan Commitments"
means, as at any date of determination, the sum of (i) the aggregate principal
amount of all outstanding Working Capital Revolving Loans made to Company (other
than Working Capital Revolving Loans made to Company for the purpose of
reimbursing the applicable Issuing Lender for any amount drawn under any Letter
of Credit issued for the account of Company but not yet so applied) plus (ii)
the Letter of Credit Usage with respect to all Letters of Credit issued for the
account of Company.
"Transaction Costs" means the fees, costs and expenses payable by any
Loan Party on or before the Closing Date in connection with the transactions
contemplated hereby.
"Working Capital Revolving Loan Commitment" means the commitment of a
Lender to make Working Capital Revolving Loans to Company pursuant to subsection
2.1A(i).
"Working Capital Revolving Loan Exposure" means, with respect to any
Lender as of any date of determination (i) prior to the termination of the
Working Capital Revolving Loan Commitments, that Lender's Working Capital
Revolving Loan Commitment and (ii) after the termination of the Working Capital
Revolving Loan Commitments, the outstanding principal amount of the Working
Capital Revolving Loans of that Lender.
"Working Capital Revolving Loans" means the Working Capital Revolving
Loans made by Lenders to Company pursuant to subsection 2.1A(i).
"Working Capital Revolving Notes" means (i) the promissory notes of
Company issued pursuant to subsection 2.1F on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Working Capital Revolving Loan
Commitments and Working Capital Revolving Loans of any Lenders, in each case
substantially in the form of Exhibit V-A annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiv) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered
41
together with the reconciliation statements provided for in subsection 6.1(vi)).
Calculations in connection with the definitions, covenants and other provisions
of this Agreement shall utilize accounting principles and policies in conformity
with those used to prepare the financial statements referred to in subsection
5.3.
1.3 Other Definitional Provisions.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. An Event of Default shall "continue" or be "continuing" until such
Event of Default has been waived in accordance with subsection 10.6 hereof.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Borrower herein set
forth, each Lender hereby severally agrees to make the Loans described in this
subsection 2.1A.
(i) Working Capital Revolving Loans. Each Domestic Lender severally
agrees, subject to the limitations set forth below with respect to the
maximum amount of Working Capital Revolving Loans permitted to be
outstanding from time to time, to lend to Company from time to time during
the period from the Closing Date to but excluding the Commitment Termination
Date an aggregate amount not exceeding its Pro Rata Share of the aggregate
amount of the Working Capital Revolving Loan Commitment to be used for the
purposes identified in subsection 2.5A. The original amount of each
Domestic Lender's Working Capital Revolving Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate original
amount of the Working Capital Revolving Loan Commitment is $10,000,000;
provided that the Working Capital Revolving Loan Commitments of Domestic
Lenders shall be adjusted to give effect to any assignments of the Working
Capital Revolving Loan Commitments pursuant to subsection 10.1B; and
provided, further that the amount of the Working Capital Revolving Loan
Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4C(ii) and 2.4C(iii).
Each Domestic Lender's Working Capital Revolving Loan Commitment shall
expire on the Commitment Termination Date and all Working Capital Revolving
Loans and all other amounts owed hereunder with respect to the Working
Capital Revolving Loans and the Working Capital Revolving Loan Commitments
shall be paid in full no later than that date; provided that each
42
Lender's Working Capital Revolving Loan Commitment shall expire immediately
and without further action on January 31, 1998 if the initial Working
Capital Revolving Loans are not made on or before that date. Amounts
borrowed under this subsection 2.1A(i) may be repaid and reborrowed to but
excluding the Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
Working Capital Revolving Loans and the Working Capital Revolving Loan
Commitments shall be subject to the following limitations:
(a) in no event shall the Total Utilization of Working Capital
Revolving Loan Commitments at any time exceed the Working Capital Revolving
Loan Commitments then in effect;
(b) in no event shall the Total Utilization of Working Capital
Revolving Loan Commitments at any time exceed the Borrowing Base then in
effect; and
(c) for thirty consecutive days, at any time, during each twelve
consecutive month period after the Closing Date there shall be no
outstanding Working Capital Revolving Loans.
(ii) Canadian Loans. Each Canadian Lender severally agrees, subject to
Lakeland Canada's compliance with subsection 4.4, to lend to Lakeland Canada
on or prior to the Canadian Loan Funding Date an amount in Dollars not
exceeding its Pro Rata Share of the aggregate amount of the Canadian
Commitments to be used for the purposes identified in subsection 2.5C. The
amount of each Canadian Lender's Canadian Commitment is set forth opposite
its name on Schedule 2.1 annexed hereto and the aggregate amount of the
Canadian Commitments is $5,000,000; provided that the Canadian Commitments
of Canadian Lenders shall be adjusted to give effect to any assignments of
the Canadian Commitments pursuant to subsection 10.1B. Each Canadian
Lender's Canadian Commitment shall expire immediately and without further
action on February 15, 1998, if the Canadian Loans are not made on or before
that date. Company may make only one borrowing under the Canadian
Commitments. Amounts borrowed under this subsection 2.1A(ii) and
subsequently repaid or prepaid may not be reborrowed.
(iii) Acquisition Revolving Loans. Each Domestic Lender severally
agrees to lend to Company from time to time during the period from the
Closing Date to but excluding the Acquisition Conversion Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Acquisition Revolving Loan Commitments to be used for the purposes
identified in subsection 2.5B. The original amount of each Domestic
Lender's Acquisition Revolving Loan Commitment is set forth
43
opposite its name on Schedule 2.1 annexed hereto and the aggregate original
amount of the Acquisition Revolving Loan Commitments is $25,000,000;
provided that the Acquisition Revolving Loan Commitments of Domestic Lenders
shall be adjusted to give effect to any assignments of the Acquisition
Revolving Loan Commitments pursuant to subsection 10.1B; and provided,
further that the amount of the Acquisition Revolving Loan Commitments shall
be reduced from time to time by the amount of any reductions thereto made
pursuant to subsections 2.4C(ii) and 2.4C(iii). Each Domestic Lender's
Acquisition Revolving Loan Commitment shall expire on the Acquisition
Conversion Date and all Acquisition Revolving Loans shall be converted to
Acquisition Term Loans pursuant to subsection 2.1A(iv) on the Acquisition
Conversion Date; provided that each Domestic Lender's Acquisition Revolving
Loan Commitment shall expire immediately and without further action on
January 31, 1998 if the initial Acquisition Revolving Loans are not made on
or before that date. Amounts borrowed under this subsection 2.1A(iii) may be
repaid and reborrowed to but excluding the Acquisition Conversion Date.
(iv) Acquisition Term Loans. Each Domestic Lender severally agrees to
convert all of its Acquisition Revolving Loans outstanding on the
Acquisition Conversion Date into Acquisition Term Loans upon the terms and
conditions set forth in this Agreement. As a condition precedent to the
conversion of the Acquisition Revolving Loans to Acquisition Term Loans on
the Acquisition Conversion Date, Company shall deliver to Agent an Officers'
Certificate stating that no Potential Event of Default or Event of Default
has occurred and is continuing. On the Acquisition Conversion Date,
Company shall deliver to each Domestic Lender a Term Loan Note in
substantially the form of Exhibit IV annexed hereto and such further
documents as Agent may reasonably request. Acquisition Term Loans which are
repaid or prepaid may not be reborrowed.
B. Borrowing Mechanics. Revolving Loans made on any Funding Date as Base
Rate Loans shall not be subject to any minimum amounts. Term Loans made on any
Funding Date as Base Rate Loans shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of that amount and Term
Loans or Revolving Loans made on any Funding Date as Eurodollar Rate Loans or
Canadian Eurodollar Rate Loans with a particular Interest Period shall be in an
aggregate minimum amount of $2,000,000 and integral multiples of $250,000 in
excess of that amount. Whenever any Borrower desires that Lenders make Term
Loans or Revolving Loans it shall deliver to Agent a Notice of Borrowing no
later than 12:00 Noon (New York time) at least three Business Days in advance of
the proposed Funding Date (in the case of a Eurodollar Rate Loan) or no later
than 12:00 Noon (New York time) on the proposed Funding Date (in the case of a
Base Rate Loan) or no later than 12:00 Noon (Toronto time) at least one Business
Day in advance of the proposed Funding Date (in the case of a Canadian Base Rate
Loan). The Notice of Borrowing shall specify (i) the proposed Borrower, (ii)
the proposed Funding Date (which shall be a Business Day), (iii) the amount and
type of Loans requested, (iv) in
44
the case of Loans made on the Closing Date, that such Loans shall be Base Rate
Loans or Canadian Base Rate Loans, as applicable, (v) in the case of Revolving
Loans not made on the Closing Date, whether such Loans shall be Base Rate Loans
or Eurodollar Rate Loans, (vi) in the case of any Loans requested to be made as
Eurodollar Rate Loans, the initial Interest Period requested therefor and (vii)
in the case of Working Capital Revolving Loans, that, after giving effect to the
requested Loans, the Total Utilization of Working Capital Revolving Loan
Commitments will not exceed the Working Capital Revolving Loan Commitments or
the Borrowing Base then in effect. Acquisition Term Loans and Revolving Loans
may be continued as or converted into Base Rate Loans and Eurodollar Rate Loans
in the manner provided in subsection 2.2D. Canadian Loans may be continued as or
converted into Canadian Base Rate Loans and Canadian Eurodollar Rate Loans in
the manner provided in subsection 2.2D. In lieu of delivering the above-
described Notice of Borrowing, a Borrower may give Agent telephonic notice by
the required time of any proposed borrowing under this subsection 2.1B; provided
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to Agent on or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to any Borrower
in acting upon any telephonic notice referred to above that Agent believes in
good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of such Borrower or for otherwise acting in good
faith under this subsection 2.1B, and upon funding of Loans by Daily Funding
Lender and/or Lenders in accordance with this Agreement pursuant to any such
telephonic notice such Borrower shall have effected Loans hereunder.
The applicable Borrower shall notify Agent prior to the funding of any
Loans in the event that any of the matters to which such Borrower is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by such Borrower of the
proceeds of any Loans shall constitute a re-certification by such Borrower, as
of the applicable Funding Date, as to the matters to which such Borrower is
required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and the applicable Borrower shall be bound to make a
borrowing in accordance therewith.
C. Disbursement of Funds.
(i) Subject to this subsection 2.1C and subsection 2.1D, all Loans
under this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other Lender in
that other Lender's obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender to make the particular
45
type of Loan requested be increased or decreased as a result of a default by
any other Lender in that other Lender's obligation to make a Loan requested
hereunder.
(ii) Upon receipt by Agent of a Notice of Borrowing pursuant to
subsection 2.1B (or telephonic notice in lieu thereof) for Working Capital
Revolving Loans that consist of Base Rate Loans and upon satisfaction or
waiver of the conditions precedent specified in subsection 4.1 (in the case
of Loans made on the Closing Date) and, subject to the provisions set forth
in the immediately succeeding paragraph, subsection 4.2 (in the case of all
Loans), Daily Funding Lender shall, without prior notice to the other
Domestic Lenders, make such Working Capital Revolving Loans for its own
account on the applicable Funding Date (subject to settlement with the other
Domestic Lenders in accordance with subsection 2.1D) by making the proceeds
of such Working Capital Revolving Loans available to the Company on such
Funding Date by causing an amount of same day funds equal to the proceeds of
such Working Capital Revolving Loans to be credited to the account of
Company at the Domestic Funding and Payment Office. Such Working Capital
Revolving Loans shall constitute Working Capital Revolving Loans by Daily
Funding Lender for all purposes under the Loan Documents, subject to
settlement with the other Domestic Lenders pursuant to subsection 2.1D. All
interest accrued on any such Working Capital Revolving Loans from the date
made by Daily Funding Lender to the Settlement Date with respect thereto
shall be for Daily Funding Lender's own account. Daily Funding Lender shall
make Working Capital Revolving Loans for its own account pursuant to this
subsection 2.1C(ii) notwithstanding the fact that the principal amount of
such Working Capital Revolving Loans, when added to the aggregate principal
amount of Daily Funding Lender's Working Capital Revolving Loans then
outstanding, may exceed Daily Funding Lender's Working Capital Revolving
Loan Commitment then in effect; provided that such Working Capital Revolving
Loans shall at all times be Obligations owed to Daily Funding Lender under
this Agreement; and provided, further that in no event shall the aggregate
principal amount of all Working Capital Revolving Loans, including such
Working Capital Revolving Loans, outstanding at any time exceed the
aggregate Working Capital Revolving Loan Commitments then in effect minus
the Letter of Credit Usage as of such time.
Notwithstanding anything in this Agreement to the contrary, if the
conditions precedent specified in subsection 4.2 cannot be fulfilled with
respect to any proposed Working Capital Revolving Loans that consist of Base
Rate Loans, Company shall, in its Notice of Borrowing or otherwise, give
immediate written notice thereof (specifying the circumstances which prevent
the conditions precedent from being fulfilled) to Agent, with a copy to each
Domestic Lender, and Daily Funding Lender may (and each Domestic Lender
hereby authorizes Daily Funding Lender to), but is not obligated to,
continue to make Working Capital Revolving Loans that are Base Rate Loans
for 20 Business Days from the date Agent first receives such notice, or
until sooner instructed by Requisite Lenders to cease making
46
such Working Capital Revolving Loans (the "Daily Funding Lender
Discretionary Period"). Once notice is given by Company that circumstances
exist which prevent the conditions precedent to borrowing from being
fulfilled, no additional notice with respect to the same circumstances will
be effective to commence a new Daily Funding Lender Discretionary Period.
(iii) Promptly after receipt by Agent of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof) for any
Loans (other than for Working Capital Revolving Loans that consist of Base
Rate Loans), Agent shall notify each Domestic Lender (in the case of a
Domestic Loan) or each Canadian Lender (in the case of a Canadian Loan) of
the proposed borrowing. Each Lender shall make the amount of its Loan
available to Agent (in the case of a Domestic Loan) or Canadian Agent (in
the case of a Canadian Loan), in same day funds in Dollars, at the Domestic
Funding and Payment Office, not later than 12:00 Noon (New York time) (in
the case of a Domestic Loan) or at the Canadian Funding and Payment Office,
not later than 12:00 Noon (Toronto time) (in the case of a Canadian Loan) on
the applicable Funding Date. Except as provided in subsection 3.3B with
respect to Working Capital Revolving Loans used to reimburse any Issuing
Lender for the amount of a drawing under a Letter of Credit issued by it,
upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date) and, subject
to the provisions set forth in the immediately preceding paragraph, 4.2 (in
the case of all Loans), Agent or Canadian Agent, as the case may be, shall
make the proceeds of such Loans available to the applicable Borrower on the
applicable Funding Date by causing an amount of same day funds in Dollars
equal to the proceeds of all such Loans received by Agent or Canadian Agent,
as the case may be, from Lenders to be credited to the account of the
applicable Borrower at the Domestic Funding and Payment Office or at the
Canadian Funding and Payment Office, as applicable.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans pursuant to this subsection 2.1C(ii) that such
Lender does not intend to make available to Agent the amount of such
Lender's Loan requested on such Funding Date, Agent may assume that such
Lender has made such amount available to Agent on such Funding Date and
Agent may, in its sole discretion, but shall not be obligated to, make
available to the applicable Borrower a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to Agent
by such Lender, Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest thereon, for each day from
such Funding Date until the date such amount is paid to Agent, at the
customary rate set by Agent for the correction of errors among banks for
three Business Days and thereafter at the Base Rate. If such Lender does
not pay such corresponding amount forthwith upon Agent's demand therefor,
Agent shall promptly notify the applicable Borrower and such Borrower shall
immediately pay such corresponding amount to Agent
47
together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Agent, at the rate payable under this
Agreement for Base Rate Loans. Nothing in this subsection 2.1C shall be
deemed to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that such Borrower may have against any
Lender as a result of any default by such Lender hereunder.
D. Settlement Procedures.
(i) Daily Funding Lender will from time to time notify the other
Domestic Lenders, not later than 12:00 Noon (New York time) (a) on at least
one Business Day during each seven calendar-day period, (b) on each date on
which payment of interest on any Working Capital Revolving Loans is required
to be made pursuant to subsection 2.2C, (c) on the Revolving Loan Commitment
Termination Date, and (d) at such other times as Daily Funding Lender in its
discretion may determine (each such notice by Daily Funding Lender being a
"Settlement Notice" and the date of each Settlement Notice being a
"Settlement Date") of the aggregate principal amount of outstanding Working
Capital Revolving Loans made by Daily Funding Lender and each other Domestic
Lender as of the close of business on the Business Day immediately preceding
the applicable Settlement Date.
(ii) If a Settlement Notice indicates that the aggregate principal
amount of outstanding Working Capital Revolving Loans made by Daily Funding
Lender (including Working Capital Revolving Loans made for its own account
pursuant to subsection 2.1C(ii)) is in excess of Daily Funding Lender's Pro
Rata Share of the aggregate principal amount of outstanding Working Capital
Revolving Loans made by all Domestic Lenders (the amount of such excess
being the "Excess Funded Amount"), each other Domestic Lender will, not
later than 4:00 P.M. (New York time) on the applicable Settlement Date, pay
to Daily Funding Lender, by depositing same day funds in the account
specified by Daily Funding Lender at the Domestic Funding and Payment
Office, an amount equal to such Domestic Lender's Adjusted Pro Rata Share of
the Excess Funded Amount, upon which payment Daily Funding Lender shall be
deemed to have sold, and such Domestic Lender shall be deemed to have
purchased, as of the applicable Settlement Date, a portion of the
outstanding Working Capital Revolving Loans made by Daily Funding Lender for
its own account pursuant to subsection 2.1C(ii) on or after the immediately
preceding Settlement Date equal to such Lender's Adjusted Pro Rata Share of
the Excess Funded Amount. The obligation of each Domestic Lender to
purchase a portion of any Working Capital Revolving Loan made by Daily
Funding Lender as provided in this subsection 2.1D(ii) is subject to the
condition that at the time such Working Capital Revolving Loan was made by
Daily Funding Lender (a) the duly authorized officer of Daily Funding Lender
responsible for the administration of Daily Funding Lender's credit
relationship with Borrower believed in good faith that either (X) no Event
of
48
Default had occurred and was continuing or (Y) any Event of Default that
had occurred and was continuing had been waived by Requisite Lenders at the
time such Working Capital Revolving Loan was made or (b) a Daily Funding
Lender Discretionary Period was in effect.
(iii) If a Settlement Notice indicates that the aggregate principal
amount of outstanding Working Capital Revolving Loans made by Daily Funding
Lender is less than Daily Funding Lender's Pro Rata Share of the aggregate
principal amount of outstanding Working Capital Revolving Loans made by all
Domestic Lenders (the amount of such difference being the "Excess Paydown
Amount"), Daily Funding Lender will, no later than 4:00 P.M. (New York time)
on the applicable Settlement Date, unconditionally pay to each other
Domestic Lender, by depositing same day funds in the account specified by
such Domestic Lender to Daily Funding Lender, an amount equal to such
Domestic Lender's Adjusted Pro Rata Share of the Excess Paydown Amount, upon
which payment such Domestic Lender shall be deemed to have sold, and Daily
Funding Lender shall be deemed to have purchased, as of the applicable
Settlement Date, a portion of the outstanding Working Capital Revolving
Loans of such Domestic Lender equal to such Domestic Lender's Adjusted Pro
Rata Share of the Excess Paydown Amount.
(iv) Except as provided in subsection 2.1D(ii), the obligations of
Daily Funding Lender and each other Domestic Lender pursuant to subsections
2.1D(ii) and 2.1D(iii) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (a) any set-
off, counterclaim, recoupment, defense or other right which Agent or any
Lender may have against Agent, any other Lender, any Loan Party or any other
Person for any reason whatsoever; (b) the occurrence or continuance of an
Event of Default or a Potential Event of Default; (c) any adverse change in
the condition (financial or otherwise) of any Loan Party; (d) any breach of
this Agreement by any Borrower, Agent or any Lender; or (e) any other
circumstance, happening, or event whatsoever, whether or not similar to any
of the foregoing. In the event that any Person (the "Payor") obligated to
make a payment to any other Person (the "Payee") pursuant to this subsection
2.1D fails to make available to the Payee the amount of such payment
required to be made by the Payor, the Payee shall be entitled to recover
such amount on demand from the Payor together with interest at the customary
rate set by BTCo for the correction of errors among Lenders for three
Business Days and thereafter at the sum of the Base Rate plus 1.50% per
annum.
(v) In the event that all or any portion of any repayment of principal
of the Working Capital Revolving Loans is thereafter recovered by or on
behalf of any Borrower from Daily Funding Lender (including any such
recovery in a proceeding under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect) in an amount that is
proportionately greater (based on the respective Pro Rata
49
Shares of Domestic Lenders) than any such recovery from the other Domestic
Lenders, the loss of the amount so recovered shall be ratably shared among
all Domestic Lenders in the manner contemplated by subsection 10.5.
E. The Register.
(i) Agent shall maintain, at its address referred to in subsection
10.8, a register for the recordation of the names and addresses of Lenders
and the Commitments and Loans of each Lender from time to time (the
"Register"). The Register shall be available for inspection by either
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Agent shall record in the Register the Working Capital Revolving
Loan Commitment, the Acquisition Revolving Loan Commitment, the Acquisition
Term Loan Commitment, the Canadian Commitment, the Working Capital Revolving
Loans, the Acquisition Revolving Loans, the Acquisition Term Loans and the
Canadian Loans from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Term Loan(s) or
Revolving Loans of each Lender. Any such recordation shall be conclusive
and binding on each Borrower and each Lender, absent manifest error;
provided that failure to make any such recordation, or any error in such
recordation, shall not affect Borrower's Obligations in respect of the
applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of each Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on each Borrower, absent manifest error; provided
that failure to make any such recordation, or any error in such recordation,
shall not affect such Borrower's Obligations in respect of the applicable
Loans; and provided, further that in the event of any inconsistency between
the Register and any Lender's records, the recordations in the Register
shall govern.
(iv) Borrower, Agent and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be
effective, in each case unless and until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by Agent and
recorded in the Register as provided in subsection 10.1B(ii). Prior to such
recordation, all amounts owed with respect to the applicable Commitment or
Loan shall be owed to the Lender listed in the Register as the owner
thereof, and any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is listed
in the Register as a
50
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitments or Loans.
(v) Each Borrower hereby designates BTCC to serve as such Borrower's
agent solely for purposes of maintaining the Register as provided in this
subsection 2.1E, and each Borrower hereby agrees that, to the extent BTCC
serves in such capacity, BTCC and its officers, directors, employees, agents
and affiliates shall constitute Indemnitees for all purposes under
subsection 10.3.
F. Notes. Company shall execute and deliver to each Domestic Lender (or
to Agent for that Lender) (i) on the Closing Date (a) a Working Capital
Revolving Note substantially in the form of Exhibit V-A annexed hereto to
evidence that Domestic Lender's Working Capital Revolving Loan, in the principal
amount of that Domestic Lender's Working Capital Revolving Loan Commitment and
with other appropriate insertions, and (b) an Acquisition Revolving Note
substantially in the form of Exhibit V-B annexed hereto to evidence that
Domestic Lender's Acquisition Revolving Loans, in the principal amount of that
Domestic Lender's Acquisition Revolving Loan Commitment and with other
appropriate insertions, and (ii) on the Acquisition Conversion Date, an
Acquisition Term Loan Note substantially in the form of Exhibit IV annexed
hereto to evidence that Domestic Lender's Acquisition Term Loans, in the
principal amount of that Domestic Lender's Acquisition Term Loan Commitment and
with other appropriate insertions. Lakeland Canada shall execute and deliver to
each Canadian Lender (or to Canadian Agent for that Lender) on the Canadian Loan
Funding Date a Canadian Note substantially in the form of Exhibit VI annexed
hereto to evidence that Canadian Lender's Canadian Loan, in the principal amount
of that Canadian Lender's Canadian Commitment and with other appropriate
insertions.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to, in the case of Domestic Loans, the Base Rate or
the Adjusted Eurodollar Rate and, in the case of Canadian Loans, the Canadian
Base Rate or the Canadian Eurodollar Rate. The applicable basis for determining
the rate of interest with respect to any Loan shall be selected by the
applicable Borrower initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B, and the basis for determining
the interest rate with respect to any Loan may be changed from time to time
pursuant to subsection 2.2D. If on any day a Loan is outstanding with respect to
which notice has not been delivered to Agent in accordance with the terms of
this Agreement specifying the applicable basis for determining the rate of
interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate (in the case of a Domestic Loan) and to the Canadian
Base Rate (in the case of a Canadian Loan).
51
(i) Subject to the provisions of subsections 2.2E and 2.7, the Working
Capital Revolving Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Working Capital Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Working Capital Eurodollar Rate Margin.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the
Acquisition Revolving Loans and the Acquisition Term Loans shall bear
interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Acquisition Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Acquisition Eurodollar Rate Margin.
(iii) Subject to the provisions of subsections 2.2E and 2.7, the
Canadian Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Canadian Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Canadian Eurodollar Rate Margin.
Upon delivery of the Margin Determination Certificate by Company to
Agent pursuant to subsection 6.1(v), the Applicable Working Capital Base Rate
Margin, the Applicable Acquisition Base Rate Margin, the Applicable Canadian
Base Rate, the Applicable Working Capital Eurodollar Rate Margin, the Applicable
Acquisition Eurodollar Rate Margin and the Applicable Canadian Eurodollar Rate
Margin shall automatically be adjusted in accordance with such Margin
Determination Certificate, such adjustment to become effective on the first day
of the next succeeding month following the receipt by Agent of such Margin
Determination Certificate; provided that if a Margin Determination Certificate
erroneously indicates an applicable margin more favorable to Company than should
be afforded by the actual calculation of the Consolidated Interest Coverage
Ratio, Company shall promptly pay additional interest and letter of credit fees
to correct for such error. If Company fails to deliver a Margin Determination
Certificate by the time required by subsection 6.1(v), from such time the Margin
Determination Certificate was required to be delivered until delivery of such
Margin Determination Certificate, the Applicable Working Capital Base Rate
Margin, the Applicable Acquisition Base Rate Margin, the
52
Applicable Canadian Base Rate Margin, the Applicable Working Capital Eurodollar
Rate Margin, the Applicable Acquisition Eurodollar Rate Margin and the
Applicable Canadian Eurodollar Rate Margin shall automatically be adjusted to
reflect the highest percentage per annum as set forth in their definitions,
respectively.
B. Interest Periods. In connection with each Eurodollar Rate Loan or
Canadian Eurodollar Rate Loan, Company may, pursuant to the applicable Notice of
Borrowing or Notice of Conversion/Continuation, as the case may be, select an
interest period (each an "Interest Period") to be applicable to such Loan, which
Interest Period shall be, at Company's option, either a one, two, three or six
month period; provided that:
(i) the initial Interest Period for any such Loan shall commence
on the Funding Date in respect of such Loan, in the case of a Loan initially
made as a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan, as
applicable, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar
Rate Loan or a Canadian Eurodollar Rate Loan, as applicable;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan, as applicable,
continued as such pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that, if any Interest Period would otherwise expire
on a day that is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall, subject
to clause (v) of this subsection 2.2B, end on the last Business Day of a
calendar month;
(v) no Interest Period with respect to any portion of the Acquisition
Revolving Loans shall extend beyond the Acquisition Conversion Date and no
Interest Period with respect to any portion of the Loans shall extend beyond
the Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Term Loans
of any Borrower shall extend beyond a date on which such Borrower is
required to make a scheduled payment of principal of the Term Loans of such
Borrower unless the sum
53
of (a) the aggregate principal amount of Term Loans of such Borrower that
are Base Rate Loans or Canadian Base Rate Loans, as applicable, plus (b) the
aggregate principal amount of Term Loans of such Borrower that are
Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, with
Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Term Loans of such Borrower on
such date;
(vii) there shall be no more than five Interest Periods outstanding at
any time; and
(viii) in the event a Borrower fails to specify an Interest Period for
any Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan, as
applicable, in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, such Borrower shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Revolving Loans that are Base Rate
Loans are prepaid pursuant to subsection 2.4C(i), interest accrued on such
Revolving Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Borrower shall have the option (i) from and after the earlier to occur of
(a) the date which is 90 days after the Closing Date and (b) the date on which
Agent notifies Borrower that the primary syndication of the Commitments and the
Loans has been completed, to convert at any time all or any part of its
outstanding Term Loans or Revolving Loans equal to $2,000,000 and integral
multiples of $250,000 in excess of that amount from Loans bearing interest at a
rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan or a Canadian
Eurodollar Rate Loan, as applicable, to continue all or any portion of such Loan
equal to $2,000,000 and integral multiples of $250,000 in excess of that amount
as a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan, as applicable;
provided, however, that a Eurodollar Rate Loan or a Canadian Eurodollar Rate
Loan may only be converted into a Base Rate Loan or a Canadian Base Rate Loan,
as applicable, on the expiration date of an Interest Period applicable thereto.
The applicable Borrower shall deliver a Notice of Conversion/
Continuation to Agent no later than 12:00 Noon (New York time) of the proposed
conversion date (in the case of a conversion to a Base Rate Loan), at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion into a Canadian Base Rate Loan) and at
54
least three Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan or a Canadian Eurodollar Rate Loan, as applicable). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/ continuation,
(iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan or a Canadian Eurodollar Rate Loan, the requested Interest Period, and (v)
in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan or
a Canadian Eurodollar Rate Loan, that no Potential Event of Default or Event of
Default has occurred and is continuing. In lieu of delivering the above-
described Notice of Conversion/Continuation, the applicable Borrower may give
Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to any Borrower
in acting upon any telephonic notice referred to above that Agent believes in
good faith to have been given by a duly authorized officer or other person
authorized to act on behalf of such Borrower or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and the applicable Borrower shall be bound to effect a
conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable Insolvency Laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to Base Rate Loans or Canadian Base
Rate Loans, as applicable. Payment or acceptance of the increased rates of
interest provided for in this subsection 2.2E is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or any Lender.
55
F. Computation of Interest. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, (i)
the date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan or, with respect to a Canadian Base Rate Loan being
converted from a Canadian Eurodollar Rate Loan, the date of conversion of such
Canadian Eurodollar Rate Loan to such Canadian Base Rate Loan, as the case may
be, shall be included, and (ii) the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of
conversion of such Base Rate Loan to such Eurodollar Rate Loan or, with respect
to a Canadian Base Rate Loan being converted to a Canadian Eurodollar Rate Loan,
the date of conversion of such Canadian Base Rate Loan to such Canadian
Eurodollar Rate Loan, as the case may be, shall be excluded; provided that if a
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on that Loan.
G. Canadian Interest Provisions. For purposes of the Interest Act
(Canada) and disclosure thereunder, whenever interest to be paid under this
Agreement is to be calculated on the basis of a year of 360 days, the yearly
rate of interest to which the rate determined pursuant to such calculation is
equivalent to is the rate so determined multiplied by the actual number of days
in the calendar year in which the same is to be ascertained divided by 360.
2.3 Fees.
A. Commitment Fees.
(i) Working Capital Revolving Loan Commitment Fee. Company agrees to
pay to Agent, for distribution to each Domestic Lender in
proportion to that Lender's Pro Rata Share, commitment fees for
the period from and including the Closing Date to and excluding
the Commitment Termination Date equal to the average of the daily
excess of the Working Capital Revolving Loan Commitments over the
Total Utilization of Working Capital Revolving Loan Commitments
multiplied by the Commitment Fee Percentage, such commitment fees
to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date,
and on the Commitment Termination Date.
(ii) Acquisition Revolving Loan Commitment Fee. Company agrees to pay
to Agent, for distribution to each Lender in proportion to that
Lender's
56
Pro Rata Share, commitment fees for the period from and
including the Closing Date to and excluding the Acquisition
Conversion Date equal to the average of the daily excess of the
Acquisition Revolving Loan Commitments over the aggregate
principal amount of all outstanding Acquisition Revolving Loans
multiplied by the Commitment Fee Percentage, such commitment
fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of
each year, commencing on the first such date to occur after the
Closing Date, and on the Acquisition Conversion Date.
(iii) Canadian Loan Commitment Fee. Lakeland Canada agrees to pay to
Agent, for distribution to each Canadian Lender in proportion to
that Lender's Pro Rata Share, commitment fees for the period
from and including the Closing Date to and excluding the
Canadian Loan Funding Date equal to the Canadian Commitments
multiplied by the Commitment Fee Percentage, such commitment
fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable on the later of
the Canadian Loan Funding Date and January 31, 1998.
B. Other Fees. Borrowers jointly and severally agree to pay to Agent such
other fees in the amounts and at the times separately agreed upon between
Holdings or Company and Agent.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by any Borrower of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to Agent
not later than 12:00 Noon (New York time) on the date due at the Domestic
Funding and Payment Office for the account of Domestic Lenders or not later
than 12:00 Noon (Toronto time) on the date due at the Canadian Funding and
Payment Office for the account of Canadian Lenders, as applicable. Funds
received by Agent or Canadian Agent after that time on such due date shall
be deemed to have been paid by the applicable Borrower on the next
succeeding Business Day. In order to effect timely payment of any interest,
fees, commissions or other amounts due hereunder, Company hereby authorizes
Agent to request Daily Funding Lender to make Working Capital Revolving
Loans for its own account (subject to settlement pursuant to subsection
2.1D) in a principal amount equal to such interest, fees, commissions or
other amounts; provided that Agent shall not have the right to request
Working Capital Revolving Loans if, after giving effect to such Working
Capital Revolving Loans, (y) the aggregate outstanding principal
57
amount of Working Capital Revolving Loans would exceed the Working Capital
Revolving Loan Commitments then in effect minus the Letter of Credit Usage,
or (z) the Total Utilization of Working Capital Revolving Loan Commitments
would exceed the Borrowing Base then in effect. Daily Funding Lender shall
make the amount of such Working Capital Revolving Loans (which shall be made
as Base Rate Loans) available to Agent, in same day funds, at the Domestic
Funding and Payment Office, not later than 1:00 P.M. (New York time) on the
date requested by Agent, and Company and Domestic Lenders hereby authorize
Agent, whether or not the conditions specified in subsection 4.2 have been
satisfied or waived, to apply the proceeds of such Working Capital Revolving
Loans directly to the payment of such unpaid interest, fees, commissions or
other amounts. Company hereby agrees that, upon the funding of any such
Working Capital Revolving Loans by Daily Funding Lender in accordance with
the provisions of this subsection 2.3C(i), Company shall have effected
Working Capital Revolving Loans hereunder, which Working Capital Revolving
Loans shall for all purposes of this Agreement be deemed to have been made
by Daily Funding Lender pursuant to and in accordance with the provisions of
subsection 2.1C(ii). Agent shall deliver prompt notice to Company of the
amount of Working Capital Revolving Loans made pursuant to this subsection
2.3C together with copies of all invoices or other statements evidencing the
fees, commissions or other amounts due hereunder (other than interest) paid
with the proceeds of such Working Capital Revolving Loans; provided that
Agent shall give notice to Company five days in advance of the making of any
such Working Capital Revolving Loans for the payment of any amounts owed
under subsection 10.2 together with copies of all invoices or other
statements evidencing such amounts. In addition, each Borrower hereby
authorizes Agent to charge its accounts with Agent in order to cause timely
payment to be made to Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts
for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal amount
of any Loan shall include payment of accrued interest on the principal
amount being repaid or prepaid, and all such payments (and, in any event,
any payments in respect of any Loan on a date when interest is due and
payable with respect to such Loan) shall be applied to the payment of
interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Domestic Lenders'
respective Pro Rata Shares or Canadian Lenders' respective Pro Rata Shares,
as applicable, of such Loans; provided that (i) payments of principal in
respect of the Working Capital Revolving Loans pursuant to subsection
2.4C(iii)(g) shall be applied to reduce the outstanding Working Capital
Revolving Loans of Daily Funding Lender (subject to settlement pursuant to
subsection 2.1D) prior to application to the outstanding Working Capital
Revolving
58
Loans of any other Domestic Lender and (ii) payments of interest in respect
of Working Capital Revolving Loans which are Base Rate Loans shall be
apportioned ratably among Domestic Lenders in proportion to the average
daily amount of such Base Rate Loans of each Domestic Lender outstanding
during the period in which such interest shall have accrued. Agent shall
promptly distribute to each Domestic Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all such
payments received by Agent in respect of Domestic Loans and the commitment
fees of such Lender when received by Agent pursuant to subsection 2.3.
Agent or Canadian Agent, as applicable, shall promptly distribute to each
Canadian Lender, at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such Lender
may request, its Pro Rata Share of all such payments received by Agent or
Canadian Agent, as applicable, in respect of Canadian Loans.
Notwithstanding the foregoing provisions of this subsection 2.3C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of Conversion/
Continuation is withdrawn as to any Affected Lender or if any Affected
Lender makes Base Rate Loans or Canadian Base Rate Loans in lieu of its Pro
Rata Share of any Eurodollar Rate Loans or Canadian Eurodollar Rate Loans,
as applicable, Agent shall give effect thereto in apportioning payments
received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of any Borrower hereunder or under such Note with respect to
any Loan or any payments of principal or interest on such Note.
2.4 Repayments, Prepayments and Reductions in Commitments; General Provisions
Regarding Payments.
A. Scheduled Payments of Acquisition Term Loans. Company shall make
principal payments on the Acquisition Term Loans in installments on the dates
and in the amounts, expressed as a percentage of the principal amount of
Acquisition Term Loans outstanding on the Acquisition Conversion Date, set forth
below:
59
Percentage Repayment
of Acquisition Term Loans
Outstanding on the
Date Acquisition Conversion Date
------ -----------------------------
March 31, 2000 2.5%
June 30, 2000 2.5
September 30, 2000 2.5
December 31, 2000 2.5
March 31, 2001 3.75
June 30, 2001 3.75
September 30, 2001 3.75
December 31, 2001 3.75
March 31, 2002 5.00
June 30, 2002 5.00
September 30, 2002 5.00
December 31, 2002 60.00
-------
TOTAL 100.00%
=======
; provided that the scheduled installments of principal of the Acquisition
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Acquisition Term Loans in
accordance with subsection 2.4C(iv); and provided, further that the
Acquisition Term Loans and all other amounts owed hereunder with respect to
the Acquisition Term Loans shall be paid in full no later than December 31,
2002, and the final installment payable by Company in respect of the
Acquisition Term Loans on such date shall be in an amount, if such amount
is different from the amount equal to the percentage specified above,
sufficient to repay all amounts owing by Company under this Agreement with
respect to the Acquisition Term Loans.
60
B. Scheduled Payments of Canadian Loans. Lakeland Canada shall make
principal payments on the Loans in installments on the dates and in the amounts,
expressed as a percentage of the principal amount of Canadian Loans outstanding
on the Canadian Loan Funding Date, set forth below:
of Canadian Loans
Outstanding on the
Date Canadian Loan Funding Date
------ --------------------------
March 31, 2000 2.50%
June 30, 2000 2.50%
September 30, 2000 2.50%
December 31, 2000 2.50%
March 31, 2001 3.75%
June 30, 2001 3.75%
September 30, 2001 3.75%
December 31, 2001 3.75%
March 31, 2002 5.00%
June 30, 2002 5.00%
September 30, 2002 5.00%
December 31, 2002 60.00%
------
TOTAL 100.00%
======
; provided that the scheduled installments of principal of the Canadian
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Canadian Loans in accordance with subsection
2.4C(iv); and provided, further that the Canadian Loans and all other
amounts owed hereunder with respect to the Canadian Loans shall be paid in
full no later than December 31, 2002, and the final installment payable by
Lakeland Canada in respect of the Canadian Loans on such date shall be in
an amount, if such amount is different from the amount equal to the
percentage specified above, sufficient to repay all amounts owing by
Lakeland Canada under this Agreement with respect to the Canadian Loans.
C. Prepayments and Reductions in Revolving Loan Commitments; Voluntary and
Mandatory Prepayments.
(i) Voluntary Prepayments. The applicable Borrower may, upon not less
than one Business Day's prior written or telephonic notice, in the case of
Base Rate Loans and Canadian Base Rate Loans, and three Business Days'
prior written or telephonic notice, in the case of Eurodollar Rate Loans
and Canadian Eurodollar Rate
61
Loans, in each case given to Agent by 12:00 Noon (New York time) on the date
required and, if given by telephone, promptly confirmed in writing to Agent
(which original written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Domestic Lender or each Canadian Lender,
as applicable), at any time and from time to time prepay any Loans on any
Business Day in whole or in part in an aggregate minimum amount of $500,000
and integral multiples of $250,000 in excess of that amount; provided,
however, that a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan may
only be prepaid on the expiration of the Interest Period applicable thereto.
Notice of prepayment having been given as aforesaid, the principal amount of
the Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4C(iv).
(ii) Voluntary Reductions of Commitments. Company may, upon not less
than three Business Days' prior written or telephonic notice confirmed in
writing to Agent (which original written or telephonic notice Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time
and from time to time terminate in whole or permanently reduce in part,
without premium or penalty, (a) the Working Capital Revolving Loan
Commitments in an amount up to the amount by which the Working Capital
Revolving Loan Commitments exceed the Total Utilization of Working Capital
Revolving Loan Commitments at the time of such proposed termination or
reduction and (b) the Acquisition Revolving Loan Commitments in an amount up
to the amount by which the Acquisition Revolving Loan Commitments exceed the
aggregate principal amount of outstanding Acquisition Revolving Loans;
provided that any such partial reduction of such Commitments shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount. Company's notice to Agent shall designate the date
(which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of such
Commitments shall be effective on the date specified in Company's notice and
shall reduce such Commitment of each Lender proportionately to its Pro Rata
Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Commitments.
(a) Prepayments and Reductions Due to Initial Public Offering. On
the date of receipt by Holdings or any of its Subsidiaries other than
the Company and its Subsidiaries of the cash proceeds (net of under
writing discounts and commissions and other reasonable costs associated
therewith) from an initial Public Offering, the Commitments shall
terminate and the Borrowers shall (x) prepay in full the outstanding
principal amount of all outstanding Working Capital Revolving Loans,
Canadian Loans, Acquisition Revolving Loans and/or Acquisition Term
Loans, together with all accrued and unpaid interest thereon, (y) pay
in full all fees and other amounts payable
62
under the Loan Documents and (z) fully cash collateralize all
outstanding Letters of Credit or make such other arrangements as are
satisfactory in form and substance to Agent for the termination of such
Letters of Credit.
(b) Prepayments and Reductions Due to Issuance of Company's or its
Subsidiaries' Securities. No later than the first Business Day
following the date of receipt by Company or any of its Subsidiaries
(other than Lakeland Canada and its Subsidiaries) of the Cash proceeds
(net of underwriting discounts and commissions and other reasonable
costs and expenses associated therewith) from the issuance of any
equity or debt Securities of Company or any such Subsidiary (other than
any Indebtedness permitted pursuant to subsection 7.1 as in effect on
the Closing Date), (1) Company shall prepay its Acquisition Term Loans
in an aggregate amount equal to such Net Cash proceeds and (2) to the
extent the amount of such Net Cash proceeds exceeds the aggregate
outstanding principal amount of the Acquisition Term Loans, Company
shall prepay the Canadian Loans to the full extent thereof and
thereafter its Working Capital Revolving Loans. Any such mandatory
prepayments shall be applied as specified in subsection 2.4C(iv).
(c) Prepayments and Reductions Due to Issuance of Lakeland
Canada's Securities. No later than the first Business Day following the
date of receipt by Lakeland Canada or any of its Subsidiaries of Cash
proceeds (net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith) from the issuance
of any equity or debt Securities of Lakeland Canada or any such
Subsidiary, Lakeland Canada shall prepay its outstanding Canadian Loans
to the full extent thereof in an aggregate amount equal to such Net
Cash proceeds. Any such mandatory prepayments shall be applied as
specified in subsection 2.4C(iv).
(d) Prepayments and Reductions Due to Issuance of Certain
Holdings' Securities. No later than the first Business Day following
the date of receipt by Holdings of the Cash Proceeds (net of
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith) from the issuance of any of its equity
or debt Securities other than the proceeds of an initial Public
Offering pursuant to subsection 2.4C(iii)(a) above, such Net Cash
Proceeds shall be applied to prepay Indebtedness pursuant to the ▇▇▇▇▇
I Credit Agreement based on the proportionate percentage which the
▇▇▇▇▇ I Exposure bears to the Total ▇▇▇▇▇ Exposure and to prepay
Indebtedness under this Agreement based on the proportionate percentage
which the ▇▇▇▇▇ II Exposure bears to the Total ▇▇▇▇▇ Exposure, such
prepayments under this Agreement being applied to prepay first
Acquisition Term Loans to the full extent thereof, and then to prepay
Canadian Loans to the full extent thereof,
63
and then to prepay Working Capital Revolving Loans. Any such mandatory
prepayment shall be applied as specified in subsection 2.4C(iv).
(e) Prepayments and Reductions from Consolidated Excess Cash Flow.
In the event that there shall be Consolidated Excess Cash Flow for any
Fiscal Year, (i) for the Fiscal Year ending December 31, 1998, 25% of
such Consolidated Excess Cash Flow, and (ii) for the Fiscal Year ending
December 31, 1999 and for each Fiscal Year thereafter, 50% of such
Consolidated Excess Cash Flow, shall be applied by Company, within 90
days after the last day of such Fiscal Year to prepay its Acquisition
Term Loans to the full extent thereof and then to prepay the Canadian
Loans to the full extent thereof. Any such mandatory prepayment shall
be applied as specified in subsection 2.4C(iv).
(f) Prepayments and Reductions from Asset Sales. No later than the
second Business Day following the date of receipt by Company or any of
its Subsidiaries (other than Lakeland Canada and its Subsidiaries) of
the Cash Proceeds of any Asset Sale resulting in Cash Proceeds in
excess of $1,000,000 for all Asset Sales consummated subsequent to the
Closing Date (the "Available Net Cash Proceeds"), (1) Company shall
prepay its Acquisition Term Loans in an aggregate amount equal to such
Net Cash Proceeds, (2) to the extent the amount of such Net Cash
Proceeds exceeds the aggregate outstanding principal amount of the
Acquisition Term Loans, Company shall prepay the Canadian Loans to the
full extent thereof and (3) to the extent the amount of such Net Cash
Proceeds exceeds the aggregate outstanding amount of Canadian Loans,
Company shall prepay its Working Capital Revolving Loans, and the
Revolving Loan Commitments shall be permanently reduced, in an
aggregate amount equal to such excess. No later than the second
Business Day following the date of receipt by Lakeland Canada or any of
its Subsidiaries of Available Net Cash Proceeds, Lakeland Canada shall
prepay its outstanding Canadian Loans in an aggregate amount equal to
such Net Cash Proceeds. Concurrently with any prepayment of the Loans
and/or reduction of the Working Capital Revolving Loan Commitments
pursuant to this subsection 2.4C(iii)(f), Company shall deliver to
Agent an Officers' Certificate demonstrating the derivation of the Net
Cash Proceeds of the correlative Asset Sale from the gross sales price
thereof. In the event that Borrower shall, at any time after receipt of
Cash Proceeds of any Asset Sale requiring a prepayment or a reduction
of the Working Capital Revolving Loan Commitments pursuant to this
subsection 2.4C(iii)(f), determine that the prepayments and/or
reductions of the Working Capital Revolving Loan Commitments previously
made in respect of such Asset Sale were in an aggregate amount less
than that required by the terms of this subsection 2.4C(iii)(f),
Borrower shall promptly make an additional prepayment of its
64
Loans (and, if applicable, the Working Capital Revolving Loan
Commitments shall be permanently reduced), in the manner described
above in an aggregate amount equal to the amount of any such deficit,
and Company shall concurrently therewith deliver to Agent an Officers'
Certificate demonstrating the derivation of the additional Net Cash
Proceeds resulting in such deficit. Any such mandatory prepayments
shall be applied as specified in subsection 2.4C(iv).
(g) Prepayments of Working Capital Revolving Loans from Amounts
Transferred to BTCC Account. If any amounts are transferred to the BTCC
Account on any Business Day pursuant to the terms of any Blocked
Account Agreement, if any, then on such Business Day, if such amounts
are transferred to the BTCC Account prior to 12:00 Noon (New York time)
on such Business Day, or on the next succeeding Business Day, if such
amounts are transferred to the BTCC Account on or after 12:00 Noon (New
York time) on such Business Day, (1) Company shall prepay Company's
Working Capital Revolving Loans in an amount equal to the amount
transferred to the BTCC Account pursuant to the terms of the applicable
Blocked Account Agreement, if any, on such Business Day until all of
Company's Working Capital Revolving Loans shall have been paid in full,
(2) to the extent any such amount transferred to the BTCC Account
exceeds the amount required to be prepaid pursuant to clause (1), such
amount shall be transferred to the BTCC Investment Account and Company
hereby irrevocably authorizes Agent to apply funds transferred to the
BTCC Account in accordance with the provisions of this subsection
2.4C(iii)(g). Any such mandatory prepayments shall be applied as
specified in subsection 2.4C(iv). The BTCC Investment Account shall be
an interest-bearing account with such interest to be payable to Company
for its own account.
(h) Prepayments Due to Reductions or Restrictions of Working
Capital Revolving Loan Commitments or Due to Insufficient Borrowing
Base. Company shall from time to time prepay the Working Capital
Revolving Loans to the extent necessary so that (1) the Total
Utilization of Working Capital Revolving Loan Commitments shall not at
any time exceed the Working Capital Revolving Loan Commitments then in
effect and (2) the Total Utilization of Working Capital Revolving Loan
Commitments shall not exceed at any time the Borrowing Base then in
effect. Any such mandatory prepayments shall be applied as specified in
subsection 2.4C(iv).
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Any voluntary prepayments pursuant to subsection
2.4C(i)
65
shall be applied as specified by Borrower in the applicable notice of
prepayment; provided that in the event Borrower fails to specify the
Loans to which any such prepayment shall be applied, such prepayment
shall be applied (I) in the case of Company first to repay outstanding
Working Capital Revolving Loans of Company to the full extent thereof,
and second to repay outstanding Acquisition Revolving Loans, or after
the Acquisition Conversion Date, Acquisition Term Loans of Company to
the full extent thereof and thereafter to repay outstanding Canadian
Loans of Lakeland Canada to the full extent thereof; and (II) in the
case of Lakeland Canada, to repay outstanding Canadian Loans to the
full extent thereof. Any voluntary prepayments of the Acquisition Term
Loans or the Canadian Loans pursuant to subsection 2.4C(i) shall be
applied to reduce the scheduled installments of principal of the
Acquisition Term Loans or the Canadian Loans set forth in subsection
2.4A in inverse order of maturity.
(b) Application of Mandatory Prepayments of Term Loans by Type and
by Order of Maturity and Mandatory Prepayments of Revolving Loans. Any
mandatory prepayments of the Term Loans pursuant to subsection
2.4C(iii) shall be applied to reduce the scheduled installments of
principal of the Term Loans set forth in subsection 2.4A in inverse
order of maturity. Any mandatory prepayments of the Revolving Loans
pursuant to subsections 2.4C(iii)(a)-(e) and (g)-(h) shall be applied
to prepay Company's Revolving Loans but without any corresponding
reduction of the applicable Revolving Loan Commitment.
(c) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Any prepayment of Domestic Loans shall be applied first to
Base Rate Loans to the full extent thereof before application to
Eurodollar Rate Loans, in each case in a manner which minimizes the
amount of any payments required to be made by the Company pursuant to
subsection 2.6D. Any prepayment of Canadian Loans shall be applied
first to Canadian Base Rate Loans to the full extent thereof before
application to Canadian Eurodollar Rate Loans, in each case in a manner
which minimizes the amount of any payments required to be made by
Lakeland Canada pursuant to subsection 2.6D.
2.5 Use of Proceeds.
A. Working Capital Revolving Loans. The proceeds of the Working Capital
Revolving Loans shall be applied by Company for working capital and general
corporate purposes which may include the making of intercompany loans to any of
Company's wholly-owned Subsidiaries, in accordance with subsection 7.1(iv), for
their own working capital and general corporate purposes.
66
B. Acquisition Revolving Loans and Acquisition Term Loans. The proceeds of
the Acquisition Revolving Loans, shall be utilized to finance the acquisition of
companies and/or the assets or operations of companies, engaged in the nursery
business, the peat or potting soil or mix business or businesses related thereto
and the proceeds of the Acquisition Term Loans shall be utilized to repay the
Acquisition Revolving Loans outstanding on the Acquisition Conversion Date.
C. Canadian Loans. The proceeds of the Canadian Loans shall be utilized by
Lakeland Canada to finance the acquisition of Canadian companies and/or the
assets or operations of Canadian companies, engaged in the nursery business, the
peat or potting soil or mix business or businesses related thereto.
D. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans and Canadian
Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans and
Canadian Eurodollar Rate Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
10:00 A.M. (New York time or Toronto time, as the case may be) on each Interest
Rate Determination Date, Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties) the
interest rate that shall apply to the Eurodollar Rate Loans or Canadian
Eurodollar Rate Loans for which an interest rate is then being determined for
the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the applicable Borrower and
each Domestic Lender or each Canadian Lender, as applicable.
B. Inability to Determine Applicable Interest Rate. In the event that
Agent shall have determined (which determination shall be final and conclusive
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any Eurodollar Rate Loans or any Canadian Eurodollar Rate Loans,
that by reason of circumstances affecting the interbank Eurodollar market
adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate or Canadian Eurodollar Rate, as applicable, Agent shall on such
date give notice (by telefacsimile or by telephone confirmed in writing) to the
67
applicable Borrower and each Domestic Lender or each Canadian Lender, as
applicable, of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as
applicable, until such time as Agent notifies such Borrower and such Lenders
that the circumstances giving rise to such notice no longer exist and (ii) any
Notice of Borrowing or Notice of Conversion/Continuation given by a Borrower
with respect to the Loans in respect of which such determination was made shall
be deemed to be rescinded by such Borrower.
C. Illegality or Impracticability of Eurodollar Rate Loans and Canadian
Eurodollar Rate Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive and binding upon
all parties hereto but shall be made only after consultation with Company and
Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans
or Canadian Eurodollar Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "Affected
Lender" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Agent of such determination (which notice
Agent shall promptly transmit to each other Lender). Thereafter (a) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, shall be
suspended until such notice shall be withdrawn by the Affected Lender, (b) to
the extent such determination by the Affected Lender relates to a Eurodollar
Rate Loan or a Canadian Eurodollar Rate Loan then being requested by a Borrower
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, the
Affected Lender shall make such Loan as (or convert such Loan to, as the case
may be) a Base Rate Loan or a Canadian Base Rate Loan, as applicable, (c) the
Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans
or Canadian Eurodollar Rate Loans, as applicable (the "Affected Loans"), shall
be terminated at the earlier to occur of the expiration of the Interest Period
then in effect with respect to the Affected Loans or when required by law, and
(d) the Affected Loans shall automatically convert into Base Rate Loans or
Canadian Base Rate Loans, as applicable, on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan or a Canadian
Eurodollar Rate Loan then being requested by a Borrower pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, such Borrower shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Agent of such
rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Agent shall
promptly
68
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as
applicable, in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods. The
applicable Borrower shall compensate each Lender, upon written request by that
Lender (which request shall set forth the basis for requesting such amounts),
for all reasonable losses, expenses and liabilities (including, without
limitation, any interest paid by that Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as
applicable, and any loss, expense or liability sustained by that Lender in
connection with the liquidation or re-employment of such funds) which that
Lender may sustain: (i) if for any reason (other than a default by that Lender)
a borrowing of any Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan
does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan or any Canadian Eurodollar Rate Loan does not occur on a
date specified therefor in a Notice of Conversion/Continuation or a telephonic
request for conversion or continuation, (ii) if any prepayment or other
principal payment or any conversion of any of its Eurodollar Rate Loans or
Canadian Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans or Canadian Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by the applicable Borrower, or (iv) as
a consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans or Canadian Eurodollar Rate Loans when required by the terms of this
Agreement.
E. Booking of Eurodollar Rate Loans and Canadian Eurodollar Rate Loans.
Any Lender may make, carry or transfer Eurodollar Rate Loans and Canadian
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans and Canadian
Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this
subsection 2.6 and under subsection 2.7A shall be made as though that Lender had
actually funded each of its relevant Eurodollar Rate Loans and Canadian
Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Adjusted Eurodollar Rate or pursuant to the definition of Canadian Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan or Canadian
Eurodollar Rate Loan, as applicable, and having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar deposit
from an offshore office of that Lender to a domestic office of that Lender in
the United States of America or in Canada, as applicable ; provided, however,
that each Lender may fund each of its Eurodollar
69
Rate Loans and Canadian Eurodollar Rate Loans in any manner it sees fit and the
foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans and Canadian Eurodollar Rate Loans After Default.
After the occurrence of and during the continuation of a Potential Event of
Default or an Event of Default, (i) Borrower may not elect to have a Loan be
made or maintained as, or converted to, a Eurodollar Rate Loan or Canadian
Eurodollar Rate Loan, as applicable, after the expiration of any Interest Period
then in effect for that Loan and (ii) subject to the provisions of subsection
2.6D, any Notice of Borrowing or Notice of Conversion/Continuation given by any
Borrower with respect to a requested borrowing or conversion/continuation that
has not yet occurred shall be deemed to be rescinded by such Borrower.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B, in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Lender (other than any
such reserve or other requirements with respect to Eurodollar Rate Loans
that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
70
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, each Borrower shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the applicable Borrower (with a copy to
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by any Borrower
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any deduction
or withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by or
within the United States of America or Canada or any political subdivision
in or of the United States of America or Canada or any other jurisdiction
from or to which a payment is made by or on behalf of any Borrower or by any
federation or organization of which the United States of America or Canada
or any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If any Borrower or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by any Borrower to Agent or any Lender
under any of the Loan Documents:
(a) such Borrower shall notify Agent of any such requirement or
any change in any such requirement as soon as such Borrower becomes
aware of it;
(b) such Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on such Borrower) for its own account or (if that
liability is imposed on Agent or such Lender, as the case may be) on
behalf of and in the name of Agent or such Lender;
(c) the sum payable by such Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to
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the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Agent or such Lender, as the case
may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b)
above to pay, such Borrower shall deliver to Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which such
Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from Withholding Taxes.
(a) (1) Each Domestic Lender that is organized under the laws of
any jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Agent for transmission
to Company, on or prior to the Closing Date (in the case of each
Domestic Lender listed on the signature pages hereof) or on or prior to
the date of the Assignment Agreement pursuant to which it becomes a
Domestic Lender (in the case of each other Domestic Lender), and at
such other times as may be necessary in the determination of Company or
Agent (each in the reasonable exercise of its discretion), (X) two
original copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under
any of the Loan Documents or (Y) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form 1001 or
4224 pursuant to clause (X) above, a Certificate re Non-Bank
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Status together with two original copies of Internal Revenue Service
Form W-8 (or any successor form), properly completed and duly executed
by such Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with
respect to any payments to such Lender of interest payable under any of
the Loan Documents.
(2) Each Canadian Lender that is organized under the laws of any
jurisdiction other than Canada or any province thereof or is not
resident in Canada agrees to deliver to Lakeland Canada and Agent upon
request such certificates, documents or other evidence as may be
required from time to time, properly completed and duly executed by
such Canadian Lender, to establish the basis for any applicable
exemption from or reduction of Taxes with respect to any payments to
such Canadian Lender of principal, interest, fees, commissions or any
other amount payable under this Agreement or the Canadian Loans.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters or Canadian income tax withholding matters pursuant
to subsection 2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or other
evidence, whenever a lapse in time or change in circumstances renders
such forms, certificates or other evidence obsolete or inaccurate in
any material respect, that such Lender shall (1) promptly deliver to
Agent for transmission to Company (X) in the case of any Domestic
Lender, two new original copies of Internal Revenue Service Form 1001
or 4224, or a Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be, or (Y) in the
case of any Canadian Lender, such certificates, documents or other
evidence as may be required from time to time under the second
paragraph of subsection 2.7B(iii)(a), in each case properly completed
and duly executed by such Lender, together with any other certificate
or statement of exemption required in order to confirm or establish
that such Lender is not subject to deduction or withholding of United
States or Canadian (as applicable) federal income tax with respect to
payments to such Lender under the Loan Documents or (2) notify Agent
and Company of its inability to deliver any such forms, certificates or
other evidence.
(c) The applicable Borrower shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of subsection
2.7B(ii) if such Lender shall have failed to satisfy the requirements
of clause (a) or (b) of this subsection 2.7B(iii); provided that if
such Lender shall have satisfied the requirements of subsection
2.7B(iii)(a) on the Closing Date (in the
73
case of each Lender listed on the signature pages hereof) or on the
date of the Assignment Agreement pursuant to which it became a Lender
(in the case of each other Lender), nothing in this subsection
2.7B(iii)(c) shall relieve the applicable Borrower of its obligation to
pay any additional amounts pursuant to clause (c) of subsection
2.7B(ii) in the event that, as a result of any change in any applicable
law, treaty or governmental rule, regulation or order, or any change in
the interpretation, administration or application thereof, such Lender
is no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender is
not subject to withholding as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Domestic Loans, Domestic Commitments or Letters of Credit or
participations therein or other obligations hereunder with respect to the
Domestic Loans or the Letters of Credit, in the case of any Domestic Lender, or
such Lender's Canadian Loans, Canadian Commitments or other obligations
hereunder with respect to the Canadian Loans, in the case of a Canadian Lender,
to a level below that which such Lender or such controlling corporation could
have achieved but for such adoption, effectiveness, phase-in, applicability,
change or compliance (taking into consideration the policies of such Lender or
such controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such additional
amounts, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive
74
payments under subsection 2.7 or subsection 3.6, it will, to the extent not
inconsistent with the internal policies of such Lender or Issuing Lender and any
applicable legal or regulatory restrictions, use reasonable efforts (i) to make,
issue, fund or maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Loans or Letters of Credit through such other
lending or letter of credit office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect such
Commitments or Loans or Letters of Credit or the interests of such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8 unless Borrower agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by Borrower pursuant
to this subsection 2.8 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Lender or Issuing Lender to Company
(with a copy to Agent) shall be conclusive absent manifest error.
2.9 Collection, Deposit and Transfer of Payments in Respect of Accounts.
Each Borrower shall, and shall cause each of its Subsidiaries to,
maintain in effect at all times a system of accounts and procedures reasonably
satisfactory to Agent for the collection and deposit of payments in respect of
such Person's Accounts and the transfer of amounts so deposited to the
applicable Concentration Account, BTCC Account and BT Canada Account. Without
limiting the generality of the foregoing:
A. Maintenance of Lock Boxes, Lock Box Accounts and Concentration
Accounts.
(i) Except as permitted under subsection 2.9A(ii), each Borrower shall,
and shall cause each of its Subsidiaries to, at all times maintain any Lock
Boxes, Lock Box Accounts and Concentration Accounts established pursuant to
the terms of this Agreement, the Lock Box Agreements and the Blocked Account
Agreements, if any.
(ii) Each Borrower shall not, and shall not permit any of its
Subsidiaries to, close any Lock Box Account or Concentration Account or open
a new Lock Box Account or Concentration Account unless it shall have (a)
notified Agent in writing at least 30 days (or such lesser number of days as
may be agreed to by Agent) prior to
75
the proposed closing or opening, (b) in the case of a new Lock Box Account,
entered into a Lock Box Agreement with the applicable Lock Box Bank and (c)
in the case of a new Other Bank Concentration Account, entered into a
Blocked Account Agreement with the applicable Concentration Bank.
B. Collection and Deposit of Payments in Respect of Accounts.
(i) Each Borrower shall, and shall cause each of its Subsidiaries to,
deliver such notices to account debtors and take all such other actions as
may reasonably be necessary to cause all payments in respect of such
Person's Accounts to be made directly to a Lock Box.
(ii) Each Borrower shall, or shall cause its applicable Subsidiary to,
direct its authorized representative, at least once on each Business Day, to
retrieve all checks and other instruments delivered to a Lock Box and, as
promptly as possible on the same Business Day so retrieved, to endorse for
payment and deposit each such check or other instrument in the Lock Box
Account related to such Lock Box. Notwithstanding the foregoing, from and
after such time as Agent shall have notified Borrowers of its election to
exercise its rights under this subsection 2.9B(ii), Borrowers shall not, and
shall not permit their Subsidiaries to, retrieve any items from any Lock Box
unless accompanied by a representative of Agent, and Borrowers hereby
appoint Agent or any of its designees as Borrowers' attorneys-in-fact with
powers, upon notification by Agent as aforesaid, to (a) access all Lock
Boxes and (b) endorse for payment any checks or other instruments
representing payment in respect of any Accounts of such Persons that are
delivered to any Lock Box. All acts of said attorneys or designees are
hereby ratified and approved, and said attorneys or designees shall not be
liable for any acts of omission or commission (other than acts or omissions
constituting gross negligence or wilful misconduct as determined in a final
order by a court of competent jurisdiction), nor for any error of judgment
or mistake of fact or law. The power of attorney set forth in this
subsection 2.9B(ii) is irrevocable until all Obligations shall have been
paid in full and the Commitments shall have terminated.
(iii) In the event that any Borrower or any of its Subsidiaries
receives any check, cash, note or other instrument representing payment of
an Account (other than any item delivered to a Lock Box), such Borrower
shall, or shall cause such Subsidiary to, hold such item in trust for Agent
and shall, as soon as practicable (and in any event within one Business Day)
after receipt thereof, cause such item to be deposited into a Lock Box
Account with any necessary endorsements.
(iv) Each Borrower hereby agrees, from and after such time, if any, as
Agent shall have notified Borrowers in writing that the provisions of this
subsection 2.9B(iv) are to become effective until such later time, if any,
as Agent shall have
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notified Borrowers in writing that such provisions are no longer to be
effective, not to deposit any monies into the Lock Box Accounts or to
Concentration Accounts or to otherwise permit any monies to be deposited
into any of such accounts, except payments received in respect of such
Borrower's Accounts.
C. Transfer of Amounts Deposited in the Lock Box Accounts to the
Concentration Accounts. Borrowers shall cause all amounts deposited in each Lock
Box Account to be transferred on each Business Day to the applicable
Concentration Account in accordance with the terms of the applicable Lock Box
Agreement.
D. Transfer of Amounts Deposited in the Concentration Accounts to the
BTCC Account and BT Canada Account. Borrowers shall cause all amounts deposited
in each Concentration Account to be transferred on each Business Day to the BTCC
Account or BT Canada Account, as applicable. Any amounts so transferred to the
BTCC Account shall be applied as provided in subsection 2.4C(iii)(g).
E. Treatment of Accounts. Borrowers shall not, without Agent's prior
written consent, grant any extension of the time of payment of any Account,
compromise or settle any Account for less than the full amount thereof, release,
in whole or in part, any person or property liable for the payment thereof, or
allow any credit or discount whatsoever thereon, except, prior to the occurrence
of an Event of Default, in accordance with their usual and customary business
practices.
F. Borrowers to Provide Information. Borrowers shall, at such
intervals as Agent may reasonably request, furnish such statements, schedules
and/or information as Agent may request relating to Borrowers' and their
Subsidiaries' Accounts and the collection, deposit and transfer of payments in
respect thereof, including, without limitation, all invoices evidencing such
Accounts.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Domestic Lenders' Purchase of
Participations Therein.
A. Letters of Credit. In addition to Company requesting that Domestic
Lenders make Working Capital Revolving Loans pursuant to subsection 2.1A(i),
Company may request, in accordance with the provisions of this subsection 3.1,
from time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date, that one or more Domestic Lenders
issue Standby Letters of Credit for the account of Company for the purposes
specified in the definitions of Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, any one or more Domestic
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Lenders may, but (except as provided in subsection 3.1B(ii)) shall not be
obligated to, issue such Letters of Credit in accordance with the provisions of
this subsection 3.1; provided that Company shall not request that any Domestic
Lender issue (and no Domestic Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Working Capital Revolving Loan Commitments would exceed
the Working Capital Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance, the
Letter of Credit Usage would exceed $1,000,000;
(iii) any Letter of Credit having an expiration date later than the
earlier of (a) five Business Days prior to the Commitment Termination Date
and (b) the date which is one year from the date of issuance of such Letter
of Credit; provided that the immediately preceding clause (b) shall not
prevent any Issuing Lender from agreeing that a Letter of Credit will
automatically be extended for one or more successive periods not to exceed
one year each unless such Issuing Lender elects not to extend for any such
additional period; and provided, further that such Issuing Lender shall
elect not to extend such Letter of Credit if it has knowledge that an Event
of Default has occurred and is continuing (and has not been waived in
accordance with subsection 10.6) at the time such Issuing Lender must elect
whether or not to allow such extension;
(vi) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Working Capital Revolving Loan Commitments would exceed
the Borrowing Base then in effect; or
(v) any Letter of Credit denominated in a currency other than Dollars
or Canadian Dollars.
B. Mechanics of Issuance.
(i) Request for Issuance. Whenever Company desires the issuance of a
Letter of Credit, it shall deliver to Agent a Request for Issuance of Letter
of Credit substantially in the form of Exhibit III annexed hereto no later
than 12:00 Noon (New York time) at least three Business Days, or such
shorter period as may be agreed to by the Issuing Lender in any particular
instance, in advance of the proposed date of issuance. The Request for
Issuance of Letter of Credit shall specify (a) the proposed date of issuance
(which shall be a Business Day), (b) the face amount of the Letter of
Credit, (c) whether the Letter of Credit is requested to be denominated in
Dollars or in Canadian Dollars, (d) the expiration date of the Letter of
Credit, (e) the name and address of the beneficiary, (f) that, after giving
effect to the requested Letter of
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Credit, the Total Utilization of Working Capital Revolving Loan Commitments
will not exceed the Working Capital Revolving Loan Commitments then in
effect or the Borrowing Base then in effect, and (g) either the verbatim
text of the proposed Letter of Credit or the proposed terms and conditions
thereof, including a precise description of any documents to be presented by
the beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the Issuing Lender to
make payment under the Letter of Credit; provided that the Issuing Lender,
in its reasonable discretion, may require changes in the text of the
proposed Letter of Credit or any such documents; and provided, further that
no Letter of Credit shall require payment against a conforming draft to be
made thereunder on the same business day (under the laws of the jurisdiction
in which the office of the Issuing Lender to which such draft is required to
be presented is located) that such draft is presented if such presentation
is made after 10:00 a.m. (in the time zone of such office of the Issuing
Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Agent, if Agent
is not such Issuing Lender) prior to the issuance of any Letter of Credit in the
event that any of the matters to which it is required to certify in the
applicable Request for Issuance of Letter of Credit is no longer true and
correct as of the proposed date of issuance of such Letter of Credit, and upon
the issuance of any Letter of Credit it shall be deemed to have re-certified, as
of the date of such issuance, as to the matters to which it is required to
certify in the applicable Request for Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Agent of a
Request for Issuance of Letter of Credit pursuant to subsection 3.1B(i)
requesting the issuance of a Letter of Credit, in the event Agent elects to
issue such Letter of Credit, Agent shall promptly so notify Company, and
Agent shall be the Issuing Lender with respect thereto. In the event that
Agent, in its sole discretion, elects not to issue such Letter of Credit,
Agent shall promptly so notify Company, whereupon Company may request any
other Domestic Lender to issue such Letter of Credit by delivering to such
Domestic Lender a copy of the applicable Request for Issuance of Letter of
Credit. Any Domestic Lender so requested to issue such Letter of Credit
shall promptly notify Company and Agent whether or not, in its sole
discretion, it has elected to issue such Letter of Credit, and any such
Domestic Lender which so elects to issue such Letter of Credit shall be the
Issuing Lender with respect thereto. In the event that all other Domestic
Lenders shall have declined to issue such Letter of Credit, notwithstanding
the prior election of Agent not to issue such Letter of Credit, Agent shall
be obligated to issue such Letter of Credit and shall be the Issuing Lender
with respect thereto, notwithstanding the fact that the Letter of Credit
Usage with respect to such Letter of Credit and with respect to all other
Letters of Credit issued by Agent, when aggregated with Agent's outstanding
Working Capital Revolving Loans, may exceed Agent's Working Capital
Revolving Loan Commitment then in
79
effect; provided that Agent shall not be obligated to issue any Letter of
Credit denominated in a foreign currency other than Canadian Dollars.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Domestic Lenders. Upon the issuance of any Letter
of Credit, the applicable Issuing Lender shall promptly notify Agent and
each other Domestic Lender of such issuance, which notice shall be
accompanied by a copy of such Letter of Credit. Promptly after receipt of
such notice (or, if Agent is the Issuing Lender, together with such notice),
Agent shall notify each Domestic Lender of the amount of such Domestic
Lender's respective participation in such Letter of Credit, determined in
accordance with subsection 3.1C.
(v) Reports to Domestic Lenders. Within 15 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to each other Domestic Lender a report setting
forth for such calendar quarter the daily maximum amount available to be
drawn under the Letters of Credit issued by such Issuing Lender that were
outstanding during such calendar quarter.
C. Domestic Lenders' Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Domestic Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and drawings thereunder
in an amount equal to such Domestic Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts to each Issuing Lender with
respect to Letters of Credit issued by such Issuing Lender at its request:
(i) with respect to each Letter of Credit, (a) a fronting fee equal to
the greater of (X) $500 and (Y) 0.25% per annum of the daily maximum amount
available to be drawn under such Letter of Credit and (b) a letter of credit
fee equal to the Applicable Working Capital Eurodollar Rate Margin
multiplied by the daily maximum amount available to be drawn under such
Letter of Credit, in each case payable in arrears on and to (but excluding)
each March 31, June 30, September 30 and December 31 of each year and
computed on the basis of a 360-day year for the actual number of days
elapsed; and
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(ii) with respect to the issuance, amendment or transfer of each Letter
of Credit and each payment of a drawing made thereunder (without duplication
of the fees payable under clause (i) above), documentary and processing
charges in accordance with such Issuing Lender's standard schedule for such
charges in effect at the time of such issuance, amendment, transfer or
payment, as the case may be.
Promptly upon receipt by such Issuing Lender of any amount described in clause
(i)(b) of this subsection 3.2, such Issuing Lender shall distribute to each
other Domestic Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit.
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to exercise
reasonable care to determine that the documents required to be delivered under
such Letter of Credit have been delivered and that they comply on their face
with the requirements of such Letter of Credit.
B. Reimbursement by Company of Amounts Drawn Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall reimburse such Issuing Lender on or before the Business
Day immediately following the date on which such drawing is honored (the
"Reimbursement Date") in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in Canadian Dollars, shall
be calculated in Dollar Equivalents) and in same day funds equal to the amount
of such drawing; provided that, anything contained in this Agreement to the
contrary notwithstanding, (i) unless Company shall have notified Agent and such
Issuing Lender prior to 12:00 Noon (New York time) on the date such drawing is
honored that Company intends to reimburse such Issuing Lender for the amount of
such drawing with funds other than the proceeds of Working Capital Revolving
Loans, Company shall be deemed to have given a timely Notice of Borrowing to
Agent requesting Domestic Lenders to make Working Capital Revolving Loans that
are Base Rate Loans on the Reimbursement Date in an amount in Dollars (which
amount, in the case of a drawing under a Letter of Credit which is denominated
in Canadian Dollars, shall be calculated in Dollar Equivalents) equal to the
amount of such drawing and (ii) subject to satisfaction or waiver of the
conditions specified in subsection 4.2B, Domestic Lenders shall, on the
Reimbursement Date, make Working Capital Revolving Loans that are Base Rate
Loans in the amount of such drawing, the proceeds of which shall be applied
directly by Agent to reimburse such Issuing Lender for the amount of such
drawing; and provided, further that if for any reason proceeds of Working
Capital Revolving Loans are not received by such Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such drawing, Company
shall reimburse such Issuing Lender, on demand, in an amount in same day funds
equal to the excess of the amount of such drawing over the aggregate amount of
such Working Capital
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Revolving Loans, if any, which are so received. Nothing in this subsection 3.3B
shall be deemed to relieve any Domestic Lender from its obligation to make
Working Capital Revolving Loans on the terms and conditions set forth in this
Agreement, and Company shall retain any and all rights it may have against any
Domestic Lender resulting from the failure of such Domestic Lender to make such
Working Capital Revolving Loans under this subsection 3.3B.
C. Payment by Domestic Lenders of Unreimbursed Drawings Under Letters of
Credit.
(i) Payment by Domestic Lenders. In the event that Company shall fail
for any reason to reimburse any Issuing Lender as provided in subsection
3.3B in an amount (calculated in Dollar Equivalents in the case of a drawing
equal to the amount of any drawing honored by such Issuing Lender under a
Letter of Credit denominated in Canadian Dollars) equal to the amount of any
drawing honored by such issuing Lender under a Letter of Credit issued by
it, such Issuing Lender shall promptly notify each other Domestic Lender of
the unreimbursed amount of such drawing and of such other Domestic Lender's
respective participation therein based on such Domestic Lender's Pro Rata
Share. Each Domestic Lender shall make available to such Issuing Lender an
amount equal to its respective participation, in Dollars and in same day
funds, at the office of such Issuing Lender specified in such notice, not
later than 12:00 Noon (New York time) on the first business day (under the
laws of the jurisdiction in which such office of such Issuing Lender is
located) after the date notified by such Issuing Lender. In the event that
any Domestic Lender fails to make available to such Issuing Lender on such
business day the amount of such Domestic Lender's participation in such
Letter of Credit as provided in this subsection 3.3C, such Issuing Lender
shall be entitled to recover such amount on demand from such Domestic Lender
together with interest thereon at the rate customarily used by such Issuing
Lender for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. Nothing in this subsection 3.3C shall be deemed
to prejudice the right of any Domestic Lender to recover from any Issuing
Lender any amounts made available by such Domestic Lender to such Issuing
Lender pursuant to this subsection 3.3C in the event that it is determined
by the final judgment of a court of competent jurisdiction that the payment
with respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Domestic Lender constituted gross negligence
or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Domestic Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by other
Domestic Lenders pursuant to subsection 3.3C(i) for all or any portion of
any drawing honored by such Issuing Lender under a Letter of Credit issued
by it, such Issuing Lender shall distribute to each other Domestic Lender
which has paid all amounts payable by it under subsection 3.3C(i) with
respect to such drawing such other
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Domestic Lender's Pro Rata Share of all payments subsequently received by
such Issuing Lender from Company in reimbursement of such drawing when such
payments are received. Any such distribution shall be made to a Domestic
Lender at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Domestic Lender may
request.
D. Interest on Amounts Drawn Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each
Issuing Lender, with respect to drawings made under any Letters of Credit
issued by such Issuing Lender at its request, interest on the amount paid by
such Issuing Lender in respect of each such drawing from the date of such
drawing to but excluding the date such amount is reimbursed by Company
(including any such reimbursement out of the proceeds of Working Capital
Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the
period from the date of such drawing to but excluding the Reimbursement
Date, the rate then in effect under this Agreement with respect to Working
Capital Revolving Loans that are Base Rate Loans and (b) thereafter, a rate
which is 2% per annum in excess of the rate of interest otherwise payable
under this Agreement with respect to Working Capital Revolving Loans that
are Base Rate Loans. Interest payable pursuant to this subsection 3.3D(i)
shall be computed on the basis of a 360-day year for the actual number of
days elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related drawing
under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly upon
receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing under a Letter of Credit issued
by it, (a) such Issuing Lender shall distribute to each other Domestic
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date of such drawing to but excluding the date on which
such Issuing Lender is reimbursed for the amount of such drawing (including
any such reimbursement out of the proceeds of Working Capital Revolving
Loans pursuant to subsection 3.3B), the amount that such other Domestic
Lender would have been entitled to receive in respect of the letter of
credit fee that would have been payable in respect of such Letter of Credit
for such period pursuant to subsection 3.2 if no drawing had been made under
such Letter of Credit, and (b) in the event such Issuing Lender shall have
been reimbursed by other Domestic Lenders pursuant to subsection 3.3C(i) for
all or any portion of such drawing, such Issuing Lender shall distribute to
each other Domestic Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such drawing such other Domestic Lender's
Pro Rata Share of any interest received by such Issuing Lender in respect of
that portion of such drawing so reimbursed by other Domestic Lenders for the
period from the date on which such Issuing Lender was so reimbursed by other
Domestic Lenders to but excluding the date on which such
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portion of such drawing is reimbursed by Company. Any such distribution
shall be made to a Domestic Lender at its primary address set forth below
its name on the appropriate signature page hereof or at such other address
as such Domestic Lender may request.
3.4 Obligations Absolute.
The obligation of Company to reimburse each Issuing Lender for
drawings made under the Letters of Credit issued by it and to repay any Working
Capital Revolving Loans made by Domestic Lenders pursuant to subsection 3.3B and
the obligations of Domestic Lenders under subsection 3.3C(i) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company or any Domestic Lender may have at any time against a beneficiary
or any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Domestic Lender, against Company, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Company
or one of its Subsidiaries and the beneficiary for which any Letter of
Credit was procured);
(iii) any draft or document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or document which does not comply
with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
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(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lenders' Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company on the one hand
and any Issuing Lender on the other hand, Company assumes all risks of the acts
and omissions of, or misuse of the Letters of Credit issued by such Issuing
Lender by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Lender shall
not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any such Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) failure of the beneficiary of any such Letter of Credit to comply
fully with any conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they
be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the
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proceeds of any drawing under such Letter of Credit; or (viii) any consequences
arising from causes beyond the control of such Issuing Lender, including without
limitation any Governmental Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of such Issuing Lender's rights or powers
hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
In the event that any Issuing Lender or Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by any Issuing Lender or Lender with any guideline,
request or directive issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law):
(i) subjects such Issuing Lender or Lender (or its applicable lending
or letter of credit office) to any additional Tax (other than any Tax on
the overall net income of such Issuing Lender or Lender) with respect to
the issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
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(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the satisfaction of the following conditions.
4.1 Conditions to Term Loans and Initial Revolving Loans.
The obligations of Lenders to make the initial Loans are, in addition
to the conditions precedent specified in subsection 4.2, subject to prior or
concurrent satisfaction of the following conditions:
A. Borrower Documents. On or before the Closing Date, each Borrower
shall deliver or cause to be delivered to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated as of the
Closing Date:
(i) Certified copies of its Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State (or
comparable official) of its jurisdiction of incorporation and each other
state or province in which it is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
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(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents and Related Agreements to which it is a party, certified as
of the Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents to which it is a party;
(v) Executed originals of this Agreement, the Notes (duly executed in
accordance with subsection 2.1F, drawn to the order of each applicable
Lender and with appropriate insertions) and the other Loan Documents to
which it is a party; and
(vi) Such other documents as Agent may reasonably request.
B. Guarantor Subsidiary Documents. On or before the Closing Date, Company
shall cause each Subsidiary of Company to deliver to Lenders (or to Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated the
Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from the
Secretary of State of the State (or comparable official) of its
jurisdiction of incorporation and each other state or province in which
such Person is qualified as a foreign corporation to do business and, to
the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such jurisdictions, each dated
a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the Closing
Date by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of
the Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the officers of such
Subsidiary executing the Loan Documents to which it is a party;
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(v) Executed originals of the Loan Documents to which such Subsidiary
is a party; and
(vi) Such other documents as Agent may reasonably request.
C. Termination of Existing Credit Agreements; Existing Letters of Credit.
On the Closing Date, Company and its Subsidiaries shall have repaid in full all
amounts outstanding under any existing credit agreements and shall have
terminated any commitments to lend or make other extensions of credit
thereunder. Company and its Subsidiaries shall have delivered to Agent all
termination statements, terminations of lockbox agreements, blocked account
agreements and collateral account agreements, assignment documents,
satisfactions, reconveyances, releases and similar documents as to any financing
statements, mortgages, deeds of trust, assignments and other agreements or
instruments creating or perfecting liens or security interests which shall
release all liens securing any and all indebtedness under any such existing
credit agreements. The terms and conditions of all such remaining Indebtedness
shall be in form and substance satisfactory to Agent. Company and its
Subsidiaries shall have furnished to Agent copies of all Existing Letters of
Credit and all amendments to such Existing Letters of Credit.
D. Necessary Consents. Company shall have obtained all consents
necessary or advisable in connection with the acquisition of ▇▇▇▇▇▇▇▇, the
transactions contemplated by the Loan Documents (except to the extent provided
herein with respect to consents for Mortgages on Material Leaseholds) and the
continued operation of the business conducted by Company and its Subsidiaries in
substantially the same manner as conducted prior to the consummation of such
acquisition, and each of the foregoing shall be in full force and effect, other
than those the failure to obtain, which either individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. All applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority which would restrain, prevent or otherwise impose
adverse conditions on such acquisition or the financing thereof, and no action,
request for stay, petition for review or rehearing, reconsideration or appeal
shall be pending and any time for agency action to set aside its consent on its
own motion has expired.
E. Acquisition.
(i) The aggregate cash consideration paid to the holders of equity
interests in ▇▇▇▇▇▇▇▇ in respect of such holders' equity interests shall
not exceed $15,000,000;
(ii) The Stock Purchase Agreement for the acquisition of ▇▇▇▇▇▇▇▇
shall be in full force and effect and shall not have been amended,
supplemented, waived or otherwise modified without the consent of Agent and
Requisite Lenders, and executed or conformed copies thereof (including all
exhibits and schedules thereto) and any
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amendments thereto and all documents executed in connection therewith shall
have been delivered to Agent;
(iii) All conditions to the ▇▇▇▇▇▇▇▇ acquisition shall have been
satisfied or the fulfillment of any such conditions shall have been waived
with the consent of Agent and Requisite Lenders;
(iv) the ▇▇▇▇▇▇▇▇ acquisition shall have become effective in
accordance with the terms of the related Stock Purchase Agreement; and
(v) Agent shall have received an Officers' Certificate of Company to
the effect set forth in clauses (i) - (iv).
F. Capitalization, Etc.
(i) The organizational and ownership structure of Company and of
Holdings and their respective Subsidiaries (other than ▇▇▇▇▇ Horticulture,
Inc. and its Subsidiaries) shall be as set forth on Schedule 4.1F annexed
hereto and satisfactory to the Agent and the Lenders for all respects.
Agent shall have received copies of and shall be satisfied with the form
and substance of any and all employment contracts with senior management of
Holdings and of Company; and
(ii) On or before the Closing Date, Holdings shall have provided
evidence satisfactory to Agent regarding its ability to raise a minimum of
$20,000,000 in equity contributions to Company in connection with
acquisitions made and to be made by Company.
G. Financial Statements; Pro Forma Balance Sheet. On or before the
Closing Date, Lenders shall have received from Company (i) financial statements
of Company and its Subsidiaries for the last two Fiscal Years in which the
Company or any such Subsidiary has been in existence, consisting of balance
sheets and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows for such Fiscal Years, and (ii) unaudited
financial statements of Company and its Subsidiaries as at September 30, 1997,
consisting of a balance sheet and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows for the nine-month
period ending on such date, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present the financial condition of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments.
H. No Material Adverse Effect. Since September 30, 1997, no Material
Adverse Effect (in the sole opinion of Agent) shall have occurred.
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I. Solvency Assurances. On the Closing Date, Agent and Lenders shall
have received a Financial Condition Certificate dated the Closing Date,
substantially in the form annexed hereto as Exhibit VIII and with appropriate
attachments, in each case demonstrating that, after giving effect to the
consummation of the ▇▇▇▇▇▇▇▇'▇ acquisition and the financing transactions
contemplated hereby, Company and its Subsidiaries, taken as a whole, will be
Solvent.
J. Security Interests in Personal and Mixed Property. Unless otherwise
approved in writing by Agent as an item which may be delivered pursuant to
subsection 6.10, Holdings, Company and Company's Subsidiaries shall have taken
or caused to be taken (and Agent shall have received satisfactory evidence
thereof) such actions (other than the filing or recording of items described in
clauses (ii), (iii) and (iv) below) in such a manner so that Agent has a valid
and perfected first priority security interest as of such date in the entire
personal and mixed property Collateral. Such actions shall include, without
limitation, the following:
(i) delivery to Agent of certificates (which certificates shall be
registered in the name of Agent or properly endorsed in blank for transfer
or accompanied by irrevocable undated stock powers duly endorsed in blank,
all in form and substance satisfactory to Agent) representing the capital
stock pledged pursuant to the Holdings Pledge Agreement, the Company Pledge
Agreement and the Domestic Subsidiary Pledge Agreements and delivery to
Agent of all other instruments (duly endorsed where appropriate) evidencing
the Collateral;
(ii) delivery to Agent of Uniform Commercial Code financing statements
as to the Collateral for all jurisdictions as may be necessary or desirable
to perfect the security interests in the Collateral;
(iii) delivery to Agent of mortgages, charges and hypothecs and other
documents and instruments to be filed in the appropriate jurisdiction;
(iv) delivery to Agent of the IP Collateral Documents, together with
accurate and complete schedules thereto and any cover sheets required for
filing with the United States Patent and Trademark Office (the "PTO");
(v) delivery to Agent of such other documents and instruments that
Agent reasonably deems necessary or advisable to establish, preserve and
perfect the first priority Liens granted to Agent on behalf of Lenders
under the Collateral Documents; and
(vi) evidence reasonably satisfactory to Agent that all other filings
(including, without limitation, Uniform Commercial Code termination
statements), recordings and other actions Agent deems necessary or
advisable to establish,
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preserve and perfect the first priority Liens granted to Agent in personal
and mixed property shall have been made.
K. Real Property Collateral. On or before the Closing Date, Company
shall deliver to Agent a listing of all of Company's and its Subsidiaries' Real
Property Assets, identifying the location of each such Real Property Asset,
whether it is owned or leased and, if leased, setting forth the name and address
of the lessor of such Real Property Asset.
L. Completion of Collateral Audits, Appraisals and Environmental Due
Diligence. Unless otherwise approved in writing by Agent as an item which may be
delivered pursuant to subsection 6.10, on or before the Closing Date, Company
shall, and shall cause its Subsidiaries to, deliver to Agent the following:
(i) audits of the Inventory and Accounts of Company and its
Subsidiaries;
(ii) appraisals, in form, scope and substance satisfactory to Agent
and satisfying the requirements of any applicable laws and regulations,
concerning any Real Property Assets constituting Initial Mortgaged
Properties; and
(iii) the preparation or review of reports and other information, in
form, scope and substance satisfactory to Agent, concerning environmental
liabilities of Company and its Subsidiaries with respect to the Initial
Mortgaged Properties.
M. Evidence of Insurance. Unless otherwise approved in writing by Agent
as an item which may be delivered pursuant to subsection 6.10, on or prior to
the Closing Date, Company shall deliver to Agent, certificates of insurance
naming Agent on behalf of Lenders as loss payee under all casualty insurance
policies maintained by Company and its Subsidiaries, and as an additional
insured under all liability and business interruption insurance policies
maintained by Company and its Subsidiaries, all as required pursuant to
subsection 6.5 or pursuant to the Collateral Documents. All such certificates of
insurance shall contain such endorsements as are reasonably required by Agent.
N. Borrowing Base Certificate. On or before the Closing Date, Company
shall have delivered to Agent and Lenders a Borrowing Base Certificate
substantially in the form of Exhibit IX annexed hereto, prepared as of a recent
date prior to the Closing Date.
O. Opinions of Borrower's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, counsel for Borrower, in form and substance reasonably satisfactory to
Agent and its counsel, dated as of the Closing Date and setting forth
substantially the matters in the opinions designated in Exhibit X annexed hereto
and as to such other matters as Agent acting on behalf of Lenders may reasonably
request.
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P. Opinions of O'Melveny & ▇▇▇▇▇. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & ▇▇▇▇▇,
dated as of the Closing Date, substantially in the form of Exhibit XI annexed
hereto and as to such other matters as Agent acting on behalf of Lenders may
reasonably request.
Q. Auditor's Letter. Agent shall have received an executed Auditor's
Letter if any audited financial statements are available for Company and its
Subsidiaries.
R. Fees. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date referred
to in subsection 2.3.
S. Execution by ▇▇▇▇▇ I Lenders. Each ▇▇▇▇▇ I Lender shall have executed
this Agreement and shall have committed to the same Pro Rata Share of the
Commitments hereunder as such Lender shall have committed to under the ▇▇▇▇▇ I
Credit Agreement.
T. Amendment of ▇▇▇▇▇ I Credit Agreement. On or prior to the Closing
Date, each party to the ▇▇▇▇▇ I Credit Agreement shall execute and deliver an
amendment to the ▇▇▇▇▇ I Credit Agreement amending subsection 2.4B(iii)(c) and
2.4B(iii)(d) thereof to allow for the ratable sharing by the ▇▇▇▇▇ I Lenders and
the Lenders of the proceeds of a Public Offering and making any other amendments
deemed necessary by the Agent to permit the transactions contemplated hereby.
U. Representations and Warranties; Performance of Agreements. Borrower
shall have delivered to Agent an Officers' Certificate, in form and substance
satisfactory to Agent, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Borrower shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agent and Requisite Lenders.
V. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
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4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in accordance with
the provisions of subsection 2.1B, an originally executed Notice of Borrowing,
in each case signed by the chief executive officer, the chief financial officer
or the treasurer of the applicable Borrower or by any executive officer of such
Borrower designated by any of the above-described officers on behalf of the
applicable Borrower in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made on
and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete in
all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Each Borrower shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or govern
mental authority shall purport to enjoin or restrain any Lender from making
the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of any Borrower,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by any Borrower in writing pursuant to subsection 5.6 or 6.1(xi) prior to
the making of the last preceding Loans
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(or, in the case of the initial Loans, prior to the execution of this
Agreement), and there shall have occurred no development not so disclosed in
any such action, suit, proceeding, governmental investigation or arbitration
so disclosed, that, in either event, in the opinion of Agent or of Requisite
Lenders, would be expected to have a Material Adverse Effect; and no
injunction or other restraining order shall have been issued and no hearing
to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or other wise prevent the consummation of, or to recover any damages
or obtain relief as a result of, the transactions contemplated by this
Agreement or the making of Loans hereunder.
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, Agent shall
have received, in accordance with the provisions of subsection 3.1B(i), an
originally executed Request for Issuance of Letter of Credit, in each case
signed by the chief executive officer, the chief financial officer or the
treasurer of Company or by any executive officer of Company designated by any of
the above-described officers on behalf of Company, in a writing delivered to
Agent, together with all other information specified in subsection 3.1B(i) and
such other documents or information as the applicable Issuing Lender may
reasonably require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
4.4 Conditions to Canadian Loans.
The obligations of Lenders to make Canadian Loans on the Canadian Loan
Funding Date are, in addition to satisfaction of the conditions precedent
specified in subsections 4.2 and 7.7(v), subject to satisfaction of the
following further conditions precedent:
A. Lakeland Canada Documents. On or before the Canadian Loan Funding Date,
Lakeland Canada shall deliver or cause to be delivered to Lenders (or to Agent
for
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Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated as of
the Canadian Loan Funding Date:
(i) Certified copies of its Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State (or
comparable official) of its jurisdiction of incorporation and each other
state or province in which it is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Canadian Loan Funding
Date;
(ii) Copies of its Bylaws, certified as of the Canadian Loan Funding
Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other Loan
Documents and Related Agreements to which it is a party, certified as of the
Canadian Loan Funding Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents to which it is a party;
(v) Executed originals of this Agreement, the Canadian Note (duly
executed in accordance with subsection 2.1F, drawn to the order of each
applicable Lender and with appropriate insertions) and the other Loan
Documents to which it is a party; and
(vi) Such other documents as Agent may reasonably request.
B. Guarantor Subsidiary Documents. On or before the Canadian Loan Funding
Date, Lakeland Canada shall cause each of its Subsidiaries to deliver to Lenders
(or to Agent for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) the following, each, unless
otherwise noted, dated the Canadian Loan Funding Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from the Secretary
of State of the State (or comparable official) of its jurisdiction of
incorporation and each other state or province in which such Person is
qualified as a foreign corporation to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing
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authority of each of such jurisdictions, each dated a recent date prior to
the Canadian Loan Funding Date;
(ii) Copies of the Bylaws of such Person, certified as of the Canadian
Loan Funding Date by such Person's corporate secretary or an assistant
secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of the
Canadian Loan Funding Date by the corporate secretary or an assistant
secretary of such Person as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Subsidiary executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Subsidiary
is a party; and
(vi) Such other documents as Agent may reasonably request.
C. Necessary Consents. Lakeland Canada shall have obtained all consents
necessary or advisable in connection with the acquisition of any new businesses
or assets, the transactions contemplated by the Loan Documents (except to the
extent provided herein with respect to consents for Mortgages on Material
Leaseholds) and the continued operation of the business conducted by Lakeland
Canada and its Subsidiaries in substantially the same manner as conducted prior
to the consummation of the acquisition of any new business or assets, and each
of the foregoing shall be in full force and effect, other than those the failure
to obtain, which either individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect. All applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose adverse
conditions on the acquisition or the financing thereof, and no action, request
for stay, petition for review or rehearing, reconsideration or appeal shall be
pending and any time for agency action to set aside its consent on its own
motion has expired.
D. Security Interests in Personal and Mixed Property. Lakeland Canada and
its Subsidiaries shall have taken or caused to be taken (and Agent shall have
received satisfactory evidence thereof) such actions (other than the filing or
recording of items described in clauses (ii), (iii) and (iv) below) in such a
manner so that Agent has a valid and perfected first priority security interest
as of such date in the entire personal and mixed property Collateral. Such
actions shall include, without limitation, the following:
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(i) delivery to Agent of certificates (which certificates shall be
registered in the name of Agent or properly endorsed in blank for transfer
or accompanied by irrevocable undated stock powers duly endorsed in blank,
all in form and substance satisfactory to Agent) representing two thirds of
the capital stock of Lakeland Canada pledged pursuant to the Company Pledge
Agreement and all of the capital stock of Lakeland Canada's subsidiaries
pledged pursuant to the Canadian Subsidiary Pledge Agreements and delivery
to Agent of all other instruments (duly endorsed where appropriate)
evidencing the Collateral;
(ii) delivery to Agent of Uniform Commercial Code financing statements
and comparable filings under the PPSA as to the Collateral for all
jurisdictions as may be necessary or desirable to perfect the security
interests in the Collateral;
(iii) delivery to Agent of mortgages, charges and hypothecs and other
documents and instruments to be filed in the appropriate jurisdiction;
(iv) delivery to Agent of the IP Collateral Documents, together with
accurate and complete schedules thereto and any cover sheets required for
filing with the PTO and or any comparable Canadian registry; (v) delivery to
Agent of such other documents and instruments that Agent reasonably deems
necessary or advisable to establish, preserve and perfect the first priority
Liens granted to Agent on behalf of Lenders under the Collateral Documents;
and
(vi) evidence reasonably satisfactory to Agent that all other filings
(including, without limitation, Uniform Commercial Code termination
statements and comparable instruments under the PPSA), recordings and other
actions Agent deems necessary or advisable to establish, preserve and
perfect the first priority Liens granted to Agent in personal and mixed
property shall have been made.
E. Real Property Collateral. On or before the Canadian Loan Funding Date,
Lakeland Canada shall, and shall cause its Subsidiaries to, deliver to Agent:
(i) fully executed and notarized Mortgages (each a "Lakeland
Mortgage" and collectively the "Lakeland Mortgages") encumbering the fee or
leasehold interest of the applicable Loan Party in each Fee Property or
Material Leasehold (a "Lakeland Mortgaged Property"), including any landlord
or other third party consents necessary to encumber such Material Leasehold
(together with a fully executed and notarized Mortgage);
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(ii) with respect to the Lakeland Mortgaged Properties located in the
United States only, an opinion of counsel (which counsel shall be reasonably
satisfactory to Agent) in each state in which a Lakeland Mortgaged Property
is located with respect to the enforceability of the form of Lakeland
Mortgage to be recorded in such state and such other matters as Agent may
reasonably request, in form and substance reasonably satisfactory to Agent;
(iii) with respect to the Lakeland Mortgaged Properties located in the
United States only, a Title Policy with respect to such Lakeland Mortgaged
Properties (the "Lakeland Mortgage Policies");
(iv) with respect to the Lakeland Mortgaged Properties located in the
United States only, evidence, which may be in the form of a letter from an
insurance broker or a municipal engineer, as to whether (a) such Lakeland
Mortgaged Property (a "Lakeland Flood Hazard Property") is in an area
designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards and (b) the community in which such Lakeland
Flood Hazard Property is located is participating in the National Flood
Insurance Program;
(v) with respect to the Lakeland Mortgaged Properties located in the
United States only, if there are any Lakeland Flood Hazard Properties,
Lakeland Canada's written acknowledgement of receipt of written notification
from Agent (a) as to the existence of each such Lakeland Flood Hazard
Property and (b) as to whether the community in which each such Lakeland
Flood Hazard Property is located is participating in the National Flood
Insurance Program;
(vi) if requested by Agent, a current survey of each (or any) Lakeland
Mortgaged Property, certified to the applicable Loan Party, Agent and the
applicable title insurer, prepared by a surveyor and in form and substance
reasonably satisfactory to Agent; and
(vii) any instrument, document, consent or agreement pursuant to which
Company and its Subsidiaries agree to the appointment by Agent of a Canadian
agent, if any, in connection with any Mortgages relating to Real Property
Assets located in Canada.
F. Appraisals and Environmental Due Diligence. On or before the Canadian
Loan Funding Date, Lakeland Canada shall, and shall cause its Subsidiaries to,
deliver to Agent the following:
(i) appraisals, in form, scope and substance satisfactory to Agent
and satisfying the requirements of any applicable laws and regulations,
concerning any Lakeland Mortgaged Properties; and
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(ii) the preparation or review of reports and other information, in
form, scope and substance satisfactory to Agent, concerning environmental
liabilities of Lakeland Canada and its Subsidiaries with respect to the
Lakeland Mortgaged Properties.
G. Opinions of Lakeland Canada's Counsel. Lenders shall have received (i)
originally executed copies of one or more favorable written opinions of counsel
for Lakeland Canada, in form and substance reasonably satisfactory to Agent and
its counsel, dated as of the Canadian Loan Funding Date as to such matters as
Agent acting on behalf of Lenders may reasonably request, together with evidence
satisfactory to Agent that Lakeland Canada has requested such counsel to deliver
such opinions to Lenders.
H. Representations and Warranties; Performance of Agreements. Lakeland
Canada shall have delivered to Agent an Officers' Certificate, in form and
substance satisfactory to Agent, to the effect that the representations and
warranties in Section 5 hereof are true, correct and complete in all material
respects on and as of the Canadian Loan Funding Date to the same extent as
though made on and as of that date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such representations and
warranties were true, correct and complete in all material respects on and as of
such earlier date) and that Lakeland Canada shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the Canadian Loan
Funding Date except as otherwise disclosed to and agreed to in writing by Agent
and Requisite Lenders.
I. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
J. Company Guaranty. Company shall have executed and delivered to Agent
the Company Guaranty substantially in the form attached hereto as Exhibit XIX.
K. Initial Loans Made. On or before the Canadian Loan Funding Date, the
initial Loans shall have been made.
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Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Loan Party has all requisite corporate power
and authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Loan Documents and
the Related Agreements to which it is a party and to carry out the transactions
contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.14.
D. Subsidiaries. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xviii). The capital stock
of each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. Each of
the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5.1 annexed
hereto (as so supplemented) correctly sets forth, the ownership interest of
Holdings in Company and of Company in each of its Subsidiaries. The capital,
organizational, ownership and management structure of Company and its
Subsidiaries, both before and after giving effect to the ▇▇▇▇▇▇▇▇'▇ acquisition
and the related transactions contemplated in connection therewith, are as set
forth on Schedule 4.1F annexed hereto.
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5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by any Loan Party
of the Loan Documents and the Related Agreements to which it is a party and the
consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to any Loan Party, the
Certificate or Articles of Incorporation or Bylaws of any Loan Party or any
order, judgment or decree of any court or other agency of government binding on
any Loan Party, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation
of any Loan Party, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of any Loan Party (other than any
Liens created under any of the Loan Documents in favor of Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of any Loan Party, except
for such approvals or consents which will be obtained on or before the Closing
Date.
C. Governmental Consents. The execution, delivery and performance by any
Loan Party of the Loan Documents and the Related Agreements to which it is a
party and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, except for (i) filings required by federal or state securities laws and
(ii) such other registrations, consents, approvals, notices or other actions
which have been made, obtained, given or taken on or before the Closing Date or
such later date as may be required by the applicable governmental authority or
regulatory body.
D. Binding Obligation. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. Valid Issuance of Company Common Stock, Holdings Common Stock and
Holdings Preferred Stock.
(i) (A) Company Common Stock. The Company Common Stock is duly and
validly issued, fully paid and nonassessable. No stockholder of Company
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has or will have any preemptive rights to subscribe for any additional
equity Securities of Company. The issuance and sale of Company Common Stock
has been registered or qualified under applicable federal and state
securities laws or is exempt therefrom.
(B) Company Preferred Stock. All issued and outstanding shares
of Company Preferred Stock have been duly and validly issued, fully paid
and nonassessable. No stockholder of Company has or will have any
preemptive rights to subscribe for any additional Company Preferred Stock.
Any issuance and sale of Company Preferred Stock, upon such issuance and
sale, will either (a) have been registered and qualified under applicable
federal and state securities laws or (b) be exempt therefrom.
(ii) (A) Holdings Common Stock. All issued and outstanding shares of
Holdings Common Stock have been duly and validly issued, fully paid and
nonassessable. Except as provided in the Stockholders Agreement, no
stockholder of Holdings has or will have any preemptive rights to subscribe
for any additional equity Securities of Holdings. Any issuance and sale of
Holdings Common Stock, upon such issuance and sale, will either (a) have
been registered or qualified under applicable federal and state securities
laws or (b) be exempt therefrom.
(B) Holdings Preferred Stock. All issued and outstanding shares
of Holdings Preferred Stock have been duly and validly issued, fully paid
and nonassessable. No stockholder of Holdings has or will have any
preemptive rights to subscribe for any additional Holdings Preferred Stock.
Any issuance and sale of Holdings Preferred Stock, upon such issuance and
sale, will either (a) have been registered and qualified under applicable
federal and state securities laws or (b) be exempt therefrom.
5.3 Financial Condition.
Company has heretofore delivered to Lenders, at Lenders' request, the
financial statements and information described in subsection 4.1G. All such
statements were prepared in conformity with GAAP except as set forth in Schedule
5.3 annexed hereto, and fairly present, in all material respects, the financial
position (on a consolidated and, where applicable, consolidating basis) of the
entities described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a consolidated and,
where applicable, consolidating basis) of the entities described therein for
each of the periods then ended, subject, in the case of any such unaudited
financial statements, to changes resulting from audit and normal year-end
adjustments. None of the Loan Parties has (and none of the Loan Parties will
have following the funding of the initial Loans) any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the most
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recent financial statements delivered pursuant to subsection 6.1 or the notes
thereto and which in any such case is material in relation to the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Company and its Subsidiaries, taken as a whole.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since September 30, 1997, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
5.5 Title to Properties; Liens.
Holdings, Company and Company's Subsidiaries have (i) good, sufficient
and legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of their respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent financial
statements delivered pursuant to subsection 6.1 in each case, except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
Schedule 5.5 annexed hereto sets forth all of the Real Property Assets of
Company and its Subsidiaries as of the Closing Date.
5.6 Litigation; Adverse Facts.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Holdings, Company or any
of Company's Subsidiaries) at law or in equity or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to the knowledge of
any Borrower, threatened against or affecting Holdings, Company or any of
Company's Subsidiaries or any property of Holdings, Company or any of Company's
Subsidiaries that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither Holdings nor Company
nor any of Company's Subsidiaries is (i) in violation of any applicable laws
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect or (ii) subject to or in default with respect to
any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
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5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.4 and except as set
forth in Schedule 5.7 annexed hereto, all tax returns and reports of Holdings,
Company and Company's Subsidiaries required to be filed by any of them have been
timely filed, and all taxes, assessments, fees and other governmental charges
upon Holdings, Company and Company's Subsidiaries and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. None of the Borrowers knows of any proposed
tax assessment against Holdings, Company or any of Company's Subsidiaries which
is not being actively contested by Company or such Subsidiary in good faith and
by appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. Neither Holdings nor Company nor any of Company's Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, would not have a Material Adverse
Effect.
B. Neither Holdings nor Company nor any of Company's Subsidiaries is a
party to or is otherwise subject to any agreements or instruments or any charter
or other internal restrictions which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
C. All Material Contracts are in full force and effect and no material
defaults currently exist thereunder.
5.9 Governmental Regulation.
Neither Holdings nor Company nor any of Company's Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company Act of
1940 or under any other federal or state statute or regulation which may limit
its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
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5.10 Securities Activities.
A. Neither Holdings nor Company nor any of Company's Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of any Borrower only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between any Borrower and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
A. Company and each of its ERISA Affiliates are in compliance in all
material respects with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder and the terms of each
Employee Benefit Plan, and have performed all their material obligations under
each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to occur which
could result in any material liability to Company or any of its ERISA
Affiliates.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of Company or any of its ERISA Affiliates.
D. In accordance with the most recent actuarial valuation for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), does not exceed $250,000.
5.12 Certain Fees.
Except as set forth in Schedule 5.12 annexed hereto, no broker's or
finder's fee or commission will be payable with respect to this Agreement or any
of the transactions contemplated hereby, and each Borrower hereby indemnifies
Lenders against, and agrees that it will hold Lenders harmless from, any claim,
demand or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
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5.13 Environmental Protection.
(i) The operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities) comply with all Environmental Laws except for any such
noncompliance which would not reasonably be expected to have a Material
Adverse Effect;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are being
maintained in good standing, and Company and each of its Subsidiaries are in
compliance with such Governmental Authorizations except for any such failure
to obtain, maintain or comply which would not reasonably be expected to have
a Material Adverse Effect;
(iii) neither Company nor any of its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person as a
result of or in connection with any Hazardous Materials or (b) any letter or
request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. (S) 9604) or comparable
state laws, and, to the best of the Borrower's knowledge, none of the
operations of Company or any of its Subsidiaries is the subject of any
federal or state investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other location except for such
of the foregoing which would not reasonably be expected to have a Material
Adverse Effect;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order or agreement with any governmental authority or private party relating
to (a) any actual or potential violation of or liability under Environmental
Laws or (b) any Environmental Claims except for such of the foregoing which
would not reasonably be expected to have a Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any contingent
liability in connection with any Release of any Hazardous Materials by
Company or any of its Subsidiaries except for such of the foregoing which
would not reasonably be expected to have a Material Adverse Effect;
(vii) neither Company nor any of its Subsidiaries nor, to the best
knowledge of the Borrower, any predecessor of Company or any of its
Subsidiaries has filed any
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notice under any Environmental Law indicating past or present treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent except for such of the foregoing which
would not reasonably be expected to have a Material Adverse Effect;
(viii) no Hazardous Materials exist on, under or about any Facility in
a manner that would reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect, and neither Company nor any of its
Subsidiaries has filed any notice or report of a Release of any Hazardous
Materials that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any of their respective predecessors has disposed of
any Hazardous Materials in a manner that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(x) to the best knowledge of Company, no underground storage tanks
or surface impoundments are on or at any Facility that would reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect; and
(xi) no Lien in favor of any Person relating to or in connection with
any Environmental Claim has been filed or has been attached to any Facility
except for any such Lien which would not reasonably be expected to have a
Material Adverse Effect.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 Solvency.
Company and each of its Subsidiaries is and, upon the incurrence of any
Obligations by any Borrower on any date on which this representation is made,
will be, Solvent.
5.16 Disclosure.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or Related Agreement or in any other document,
certificate or written statement furnished to Lenders by or on behalf of Company
or any of its Subsidiaries for use
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in connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to
any Borrower, in the case of any document not furnished by it) necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by the Borrower to be reasonable at the time
made, it being recognized by Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There are no facts known (or which should upon the reasonable exercise of
diligence be known) to the Borrower (other than matters of a general economic
nature) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect and that have not been disclosed herein or
in such other documents, certificates and statements furnished to Lenders for
use in connection with the transactions contemplated hereby.
5.17 Related Agreements.
A. Company has delivered to Lenders complete and correct copies of the
Related Agreements and of all exhibits and schedules thereto.
B. Except to the extent otherwise set forth herein or in the schedules
hereto, each of the representations and warranties in the ▇▇▇▇▇▇▇▇'▇ Stock
Purchase Agreement is true and correct in all material respects as of the
Closing Date, subject to the qualifications set forth in the schedules to the
▇▇▇▇▇▇▇▇'▇ Stock Purchase Agreement.
C. Notwithstanding anything in the ▇▇▇▇▇▇▇▇'▇ Stock Purchase Agreement to
the contrary, the representations and warranties of Borrower set forth in
subsection 5.17B shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Lenders.
Section 6. BORROWER'S AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, such Borrower shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Each Borrower will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business
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practices to permit preparation of financial statements in conformity with GAAP.
Company will deliver to Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event
within 30 days after the end of each month ending after the Closing Date,
(a) the consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the Financial Plan for the current Fiscal Year, to the extent
prepared on a monthly basis, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments, and (b) a narrative report
describing the operations of Company and its Subsidiaries in the form
prepared for presentation to senior management for such month and for the
period from the beginning of the then current Fiscal Year to the end of
such month;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
and consolidating balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year,
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments,
and (b) a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and
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cash flows of Company and its Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year and the corresponding figures from the Financial Plan
for the Fiscal Year covered by such financial statements, all in reasonable
detail and certified by the chief financial officer of Company that they
fairly present, in all material respects, the financial condition of
Company and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior management for such Fiscal
Year, and (c) in the case of such consolidated financial statements, (1) a
report thereon of a nationally recognized independent accounting firm,
which report shall be unqualified as to the scope of the audit, shall
express no doubts about the ability of Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and (2) a letter from
such accounting firm, substantially in the form of Exhibit XIII annexed
hereto with such changes as are approved by Agent, acknowledging that
Lenders will receive such consolidated financial statements in such report
and will use such financial statements and report in their credit analyses
of Company and its Subsidiaries;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Borrower has taken, is taking and proposes to take with respect thereto;
and (b) a Compliance Certificate demonstrating in reasonable detail
compliance during and at the end of the applicable accounting periods with
the restrictions contained in Section 7;
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(v) Margin Determination Certificate: concurrently with the
delivery of the financial statements delivered pursuant to subdivisions
(ii) or (iii) a Margin Determination Certificate;
(vi) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those in effect on the Closing
date, the consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (i), (ii), (iii) or (xiv) of this
subsection 6.1 will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been
made, then (a) together with the first delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiv) of this subsection 6.1
following such change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the two full Fiscal Years immediately preceding the Fiscal
Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to subdivision
(i), (ii), (iii) or (xiv) of this subsection 6.1 following such change, a
written statement of the chief accounting officer or chief financial
officer of Company setting forth the differences (including without
limitation any differences that would affect any calculations relating to
the financial covenants set forth in subsection 7.6) which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vii) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal
Year are not stated in accordance with the terms of this Agreement;
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(viii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(ix) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
(x) Events of Default, etc.: promptly upon any officer of any
Borrower obtaining knowledge (a) of any condition or event that constitutes
an Event of Default or Potential Event of Default, or becoming aware that
any Lender has given any notice (other than to Agent) or taken any other
action with respect to a claimed Event of Default or Potential Event of
Default, (b) that any Person has given any notice to Company or any of its
Subsidiaries or taken any other action with respect to a claimed default or
event or condition of the type referred to in subsection 8.2, (c) of any
condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on Form
8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof)
if Company were required to file such reports under the Exchange Act, or
(d) of the occurrence of any event or change that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken
by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action
Borrower has taken, is taking and proposes to take with respect thereto;
(xi) Litigation or Other Proceedings: (a) promptly upon any officer
of any Borrower obtaining knowledge of (X) the institution of, or non-
frivolous threat of, any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or arbitration against
or affecting Company or any of its Subsidiaries or any property of Company
or any of its Subsidiaries (collectively,
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"Proceedings") not previously disclosed in writing by Company to Lenders or
(Y) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to any Borrower to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $500,000, and promptly after request
by Agent such other information as may be reasonably requested by Agent to
enable Agent and its counsel to evaluate any of such Proceedings;
(xii) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xiii) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company or any of its ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (b) all notices received by
Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Agent shall
reasonably request;
(xiv) Financial Plans: as soon as practicable and in any event no
later than 30 days after the beginning of each Fiscal Year, a consolidated
and consolidating plan and financial forecast for such Fiscal Year (the
"Financial Plan" for such Fiscal Year), including without limitation (a) a
forecasted consolidated and consolidating balance sheet and forecasted
consolidated and consolidating statements of income and cash flows of
Company and its Subsidiaries for such Fiscal Year, together with a pro forma
Compliance Certificate for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, and (b) forecasted
consolidated and consolidating statements of income and cash flows of
Company and its Subsidiaries
114
for each month of such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based;
(xv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Agent outlining all material insurance coverage maintained as of the date
of such report by Company and its Subsidiaries and all material insurance
coverage planned to be maintained by Company and its Subsidiaries in the
immediately succeeding Fiscal Year and confirming the status of Agent as
loss payee under all such insurance to the extent required by subsection
6.5;
(xvi) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim in either case
which could reasonably be expected to result in a Material Adverse Effect;
(xvii) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xviii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto
for all purposes of this Agreement);
(xix) Material Contracts: promptly, and in any event within 10
Business Days after any Material Contract of any Borrower or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Borrower or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto; and
(xx) Borrowing Base Certificates: as soon as available and in any
event within ten Business Days after the last Business Day of each month
ending after the Closing Date, a Borrowing Base Certificate dated as of the
last Business Day of such month, together with any additional schedules and
other information as Agent may reasonably request (it being understood that
(a) Company, in addition to such monthly Borrowing Base Certificates, may
deliver to Agent and Lenders on any Business Day after the last Business
Day of each month an updated Borrowing Base Certificate dated as of such
Business Day, together with any additional schedules and other
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information as Agent may reasonably request), and (b) the most recent
Borrowing Base Certificate described in this clause (xx) that is delivered
to Agent shall be used in calculating the Borrowing Base as of any date of
determination; and
(xxi) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, each Borrower will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to its
business.
6.3 Deposit of Excess Cash; BTCC Account.
At the end of each Business Day, Company will transfer all Cash in excess
of $50,000 into the BTCC Account, which BTCC Account shall be an interest
bearing account with such interest to be payable to Company for its own account.
6.4 Payment of Taxes and Claims; Tax Consolidation.
A. Each Borrower will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any material penalty or
fine shall be incurred with respect thereto; provided that no such charge or
claim need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
B. None of the Borrowers will and will not permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.5 Maintenance of Properties; Insurance.
Each Borrower will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all of their respective material properties
used or useful in the business of Company and its Subsidiaries (including,
without limitation, Intellectual Property) and from
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time to time will make or cause to be made all appropriate repairs, renewals and
replacements thereof. Each Borrower will maintain or cause to be maintained,
with financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and businesses of its Subsidiaries
against loss or damage of the kinds customarily carried or maintained under
similar circumstances by corporations of established reputation engaged in
similar businesses. Without limiting the generality of the foregoing, each
Borrower will maintain or cause to be maintained (i) flood insurance with
respect to each Initial Flood Hazard Property (as defined in subsection 6.10B)
and each Additional Flood Hazard Property (as defined in subsection 6.12A), in
each case to the extent such Initial Flood Hazard Property or Additional Flood
Hazard Property is located in a community that participates in the National
Flood Insurance Program and (ii) public liability insurance, third party
property damage insurance and replacement value insurance on the Collateral
(other than growing crops) under such policies of insurance, with such insurance
companies, in such amounts and covering such risks as are at all times
satisfactory to Agent in its commercially reasonable judgment. Each such policy
of insurance that insures against loss or damage with respect to any Collateral
or against losses due to business interruption shall name Agent for the benefit
of Lenders as the loss payee thereunder for any covered loss in excess of
$500,000 and shall provide for at least 30 days (15 days in the event of non-
payment of premium) prior written notice to Agent of any modification or
cancellation of such policy. Upon receipt by Agent of any insurance proceeds as
loss payee (i) in respect of any such business interruption insurance, (a) Agent
shall, so long as no Event of Default or Potential Event of Default shall have
occurred and be continuing, deliver such insurance proceeds to Company, and (b)
if an Event of Default or Potential Event of Default shall have occurred and be
continuing, Agent shall, and each Borrower hereby authorizes Agent to, apply
such insurance proceeds to prepay the Loans in the same manner as if such
insurance proceeds were Net Cash Proceeds of an Asset Sale to be applied as
provided in subsection 2.4C(iii)(f), and (ii) in respect of any such insurance
against loss or damage with respect to any Collateral, (a) to the extent that
any Borrower or any of its Subsidiaries intends to use any such insurance
proceeds to repair, restore or replace the assets of such Borrower or Subsidiary
in respect of which such insurance proceeds were received, Agent shall, so long
as no Event of Default or Potential Event of Default shall have occurred and be
continuing, (A) in the event the aggregate amount of such insurance proceeds in
respect of any covered loss does not exceed $1,000,000, deliver such insurance
proceeds to such Borrower, and such Borrower shall, or shall cause such
Subsidiary to, use such insurance proceeds to effect such repair, restoration or
replacement, and (B) in the event the aggregate amount of such insurance
proceeds exceeds $1,000,000, hold such proceeds in a cash collateral account and
so long as Company or any of its Subsidiaries proceeds to repair, restore or
replace the assets of Company or such Subsidiary in respect of which such
insurance proceeds were received, Agent shall from time to time disburse to
Company or such Subsidiary amounts necessary to pay the cost of such repair,
restoration or replacement after the receipt by Agent of invoices or other
documentation reasonably satisfactory to Agent describing the amount of costs so
incurred; provided however that if in the reasonable good faith belief of Agent,
Company or such Subsidiary is not proceeding diligently with the repair,
restoration or replacement,
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Agent shall, and each Borrower hereby authorizes Agent to, apply such insurance
proceeds to prepay the Loans in the same manner as if such insurance proceeds
were Net Cash Proceeds of an Asset Sale to be applied as provided in subsection
2.4C(iii)(f) and (b) if an Event of Default or Potential Event of Default shall
have occurred and be continuing or to the extent that neither Company nor any of
its Subsidiaries intends to use any such insurance proceeds to repair, restore
or replace assets of Company or any of its Subsidiaries as described above,
Agent shall, and each Borrower hereby authorizes Agent to, apply such insurance
proceeds to prepay the Loans in the same manner as if such insurance proceeds
were Net Cash Proceeds of an Asset Sale to be applied as provided in subsection
2.4C(iii)(f).
6.6 Inspection; Lender Meeting.
Each Borrower shall, and shall cause each of its Subsidiaries to,
permit (i) any authorized representatives designated by any Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants (provided that
Company may, if it so chooses, be present at or participate in any such
discussion), and (ii) any authorized representatives designated by Agent to
conduct two audits of all Inventory and Accounts of Loan Parties during each
twelve-month period after the Closing Date (exclusive of the audit of Inventory
and Accounts referred to in subsection 6.10C (the "Base Audit")), each such
audit to be substantially similar in scope and substance to the Base Audit, all
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested. Without in any way limiting the
foregoing, Company will, upon the request of Agent or Requisite Lenders,
participate in a meeting of Agent and Lenders once during each Fiscal Year to be
held at Company's corporate offices (or such other location as may be agreed to
by Company and Agent) at such time as may be agreed to by Company and Agent.
6.7 Compliance with Laws, etc.
Each Borrower shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which could reasonably
be expected to cause, individually or in the aggregate at any time, a Material
Adverse Effect.
6.8 Environmental Disclosure and Inspection.
A. Each Borrower shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply in all material respects and cause
(i) all tenants under any leases or occupancy agreements affecting any portion
of the Facilities and (ii) all other Persons on or occupying such property, to
comply in all material respects with all Environmental Laws.
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B. Each Borrower agrees that Agent may, from time to time and in its
reasonable discretion, retain, at Company's expense, an independent professional
consultant to review any report relating to Hazardous Materials prepared by or
for Company and, upon a reasonable belief that any Borrower has breached any
covenant or representation with respect to environmental matters or that there
has been a material violation of Environmental Laws at any Facility or by any
Borrower, to conduct its own reasonable investigation of such matter at any
Facility currently owned, leased, operated or used by Company or any of its
Subsidiaries, and Company agrees to use its best efforts to obtain permission
for Agent's professional consultant to conduct its own investigation of any such
matter at any Facility previously owned, leased, operated or used by Company or
any of its Subsidiaries. Company hereby grants to Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by Company or any of its
Subsidiaries upon reasonable notice to Borrower to perform such assessments on
such property as are reasonably necessary to conduct such a review and/or
investigation. Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by Company and Agent, during normal business hours and, to
the extent reasonably practicable, shall be conducted so as not to interfere
with the ongoing operations at any such Facility or to cause any damage or loss
to any property at such Facility. Borrower and Agent hereby acknowledge and
agree that any report of any investigation conducted at the request of Agent
pursuant to this subsection 6.8B will be obtained and shall be used by Agent and
Lenders for the purposes of Lenders' internal credit decisions, to monitor and
police the Loans and to protect Lenders' security interests, if any, created by
the Loan Documents. Agent agrees to deliver a copy of any such report to Company
with the understanding that each Borrower acknowledges and agrees that (i) it
will indemnify and hold harmless Agent and each Lender from any costs, losses or
liabilities relating to such Borrower's use of or reliance on such report, (ii)
neither Agent nor any Lender makes any representation or warranty with respect
to such report, and (iii) by delivering such report to Company, neither Agent
nor any Lender is requiring or recommending the implementation of any
suggestions or recommendations contained in such report.
C. Each Borrower shall promptly advise Lenders in writing and in
reasonable detail of (i) any material Release of any Hazardous Materials
required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any material Release of Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory agency, (iii) any
remedial action taken by such Borrower or any other Person in response to (x)
any Hazardous Materials on, under or about any Facility, the existence of which
has a reasonable possibility of resulting in an Environmental Claim having a
Material Adverse Effect, or (y) any Environmental Claim that could have a
Material Adverse Effect, (iv) such Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Facility that
could cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability
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or use thereof under any Environmental Laws, and (v) any request for information
from any governmental agency that suggests such agency is investigating whether
such Borrower or any of its Subsidiaries may be potentially responsible for a
Release of Hazardous Materials.
D. Each Borrower shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could reasonably be expected to have
a Material Adverse Effect or that could reasonably be expected to have a
material adverse effect on any Governmental Authorization then held by Company
or any of its Subsidiaries and (ii) any proposed action to be taken by Company
or any of its Subsidiaries to commence manufacturing, industrial or other
operations that could reasonably be expected to subject Company or any of its
Subsidiaries to material additional obligations or requirements under
Environmental Laws.
E. Each Borrower shall, at its own expense, provide copies of such
documents or information as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.8.
6.9 Company's Remedial Action Regarding Hazardous Materials.
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all remedial action in connection with the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any Facility in order to comply in all material respects with all
applicable Environmental Laws and Governmental Authorizations. In the event
Company or any of its Subsidiaries undertakes any remedial action with respect
to any Hazardous Materials on, under or about any Facility, Company or such
Subsidiary shall conduct and complete such remedial action in compliance in all
material respects with all applicable Environmental Laws, and in accordance with
the policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials is being contested in good faith by
Company or such Subsidiary.
6.10 Supplemental Actions Relating to Creation and Perfection of Liens and
Security Interests in Real, Personal and Mixed Property Collateral and
Related Matters.
To the extent not otherwise satisfied pursuant to subsections 4.1▇-▇ as
of the Closing Date and to the extent approved in writing by Agent for delivery
under this subsection 6.10:
A. Personal and Mixed Property Collateral. Within 30 days after the
Closing Date, Borrower shall, and shall cause its Subsidiaries to, take or cause
to be taken (and Agent shall have received satisfactory evidence thereof) such
actions in such a manner
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so that Agent has a valid and perfected first priority security interest in the
entire Collateral. Such actions shall include, without limitation, the
following:
(i) delivery to Agent of Uniform Commercial Code financing
statements and comparable filings under the PPSA as to the Collateral for
all jurisdictions as may be necessary or desirable to perfect the security
interests in the Collateral;
(ii) delivery to Agent of mortgages, charges and hypothecs and other
documents and instruments to be filed in the appropriate jurisdiction;
(iii) delivery to Agent of accurate and complete schedules to the IP
Collateral Documents, together with any cover sheets required for filing
with the PTO (as defined in subsection 4.1J) or any comparable Canadian
registry, and the filing of the IP Collateral Documents and all such other
documents or instruments in the PTO and/or such registry as may be
necessary or desirable to perfect the security interests in favor of Agent
in the IP Collateral;
(iv) delivery to Agent of certificates of title with respect to all
rolling stock of Loan Parties and the taking of all actions necessary to
cause Agent to be noted as lienholder thereon or otherwise necessary to
perfect the first priority Lien granted to Agent on behalf of Lenders in
such rolling stock;
(v) delivery to Agent of such other documents and instruments that
Agent reasonably deems necessary or advisable to establish, preserve and
perfect the first priority Liens granted to Agent on behalf of Lenders
under the Collateral Documents;
(vi) delivery to Agent of evidence reasonably satisfactory to Agent
that all other filings (including, without limitation, Uniform Commercial
Code termination statements and comparable instruments under the PPSA),
recordings and other actions Agent deems necessary or advisable to
establish, preserve and perfect the first priority Liens granted to Agent
in personal and mixed property have been made; and
(vii) delivery to Agent of opinions of counsel under the law of each
jurisdiction in which any Loan Party or any Collateral is located with
respect to the creation and perfection of the security interests in favor
of Agent in any personal or mixed property Collateral.
B. Real Property Collateral. Within 60 days after the Closing
Date, Borrower shall, and shall cause its Subsidiaries to, deliver to Agent:
(i) fully executed and notarized Mortgages (each an "Initial
Mortgage" and collectively the "Initial Mortgages") encumbering the fee or
leasehold interest of the applicable Loan Party in each Fee Property or
Material Leasehold designated in
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Schedule 5.5 annexed hereto, provided that, with respect to each Material
Leasehold, the applicable Loan Party shall use its reasonable best efforts
to deliver any landlord or other third party consents, memoranda of lease
or other documents necessary to encumber such Material Leasehold (together
with a fully executed and notarized Mortgage) within the 60-day period
described above and if, after using reasonable best efforts, the Loan Party
is unable to deliver all of the necessary consents, at the request of
Agent, the Loan Party shall use its reasonable best efforts to deliver the
necessary consents, memoranda of lease or other documents (together with
fully executed and notarized Mortgages), for such Material Leases as Agent
shall designate, within 90 days (or such longer period as Agent may
determine from time to time) after the expiration of the 60-day period
described above (each an "Initially Mortgaged Property" and collectively
the "Initially Mortgaged Properties");
(ii) with respect to Initially Mortgaged Properties located in the
United States only, an opinion of counsel (which counsel shall be
reasonably satisfactory to Agent) in each state in which an Initial
Mortgaged Property is located with respect to the enforceability of the
form of Initial Mortgage to be recorded in such state and such other
matters as Agent may reasonably request, in form and substance reasonably
satisfactory to Agent;
(iii) with respect to Initially Mortgaged Properties located in the
United States only, a Title Policy with respect to each such Initially
Mortgaged Properties;
(iv) with respect to Initially Mortgaged Properties located in the
United States only, evidence, which may be in the form of a letter from an
insurance broker or a municipal engineer, as to whether (a) any Initial
Mortgaged Property (a "Initial Flood Hazard Property") is in an area
designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards and (b) the community in which such Initial
Flood Hazard Property is located is participating in the National Flood
Insurance Program;
(v) with respect to Initially Mortgaged Properties located in the
United States only, if there are any Initial Flood Hazard Properties,
Company's written acknowledgement of receipt of written notification from
Agent (a) as to the existence of each such Initial Flood Hazard Property
and (b) as to whether the community in which each such Initial Flood Hazard
Property is located is participating in the National Flood Insurance
Program; and
(vi) if requested by Agent, a current survey of each (or any)
Initial Mortgaged Property, certified to the applicable Loan Party, Agent
and the applicable title insurer, prepared by a surveyor and in form and
substance reasonably satisfactory to Agent.
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C. Completion of Collateral Audits, Appraisals and Environmental Due
Diligence. Borrower shall, and shall cause its Subsidiaries to, provide such
cooperation and assistance as Agent may request in order to permit Agent (or an
independent auditor, appraiser or environmental consultant, as the case may be,
satisfactory to Agent) to complete, within 30 days after the Closing Date, (i)
audits of the Inventory and Accounts of Borrower and its Subsidiaries, (ii)
appraisals, in form, scope and substance satisfactory to Agent and satisfying
the requirements of any applicable laws and regulations, concerning any Real
Property Assets constituting Initial Mortgaged Properties (in each case to the
extent required under such laws and regulations as determined by Agent in its
sole discretion, and (iii) the preparation or review of reports and other
information, in form, scope and substance satisfactory to Agent, concerning
environmental liabilities of Borrower and its Subsidiaries with respect to the
Initial Mortgaged Properties.
D. Evidence of Insurance. Borrower shall deliver to Agent, within 30
days after the Closing Date, certificates of insurance naming Agent on behalf of
Lenders as loss payee under all casualty insurance policies maintained by
Borrower and its Subsidiaries, and as an additional insured under all liability
and business interruption insurance policies maintained by Borrower and its
Subsidiaries, all as required pursuant to subsection 6.5 or pursuant to the
Collateral Documents. All such certificates of insurance shall contain such
endorsements as are reasonably required by Agent.
E. Balance Sheets of Company. Borrower shall deliver to Agent within
30 days after the Closing Date, pro forma consolidated and consolidating balance
sheets of Company and its Subsidiaries as at the Closing Date, prepared in
accordance with GAAP and reflecting the consummation of the ▇▇▇▇▇▇▇▇'▇
acquisition and the financings and other transactions contemplated hereby, which
pro forma financial statements shall be in form and substance satisfactory to
Lenders.
F. Cash Management. Borrower shall deliver to Agent within 30 days
after the Closing Date, Lock Box Agreements and Blocked Account Agreements with
respect to Loan Parties' deposit accounts.
6.11 Execution of Guaranties and Collateral Documents by Future Subsidiaries.
A. Execution of Domestic Subsidiary Guaranty and Collateral
Documents. In the event that any Person becomes a Domestic Subsidiary of Company
after the date hereof, Company will promptly notify Agent of that fact and cause
such Subsidiary to execute and deliver to Agent a counterpart of the Domestic
Subsidiary Guaranty and a Domestic Subsidiary Pledge Agreement, a Domestic
Subsidiary Security Agreement, a Domestic Subsidiary Trademark Security
Agreement (if required by Agent), a Domestic Subsidiary Patent Security
Agreement (if required by Agent) and (if applicable) Additional Mortgages and to
take all such further action and execute all such further documents and
instruments as may be reasonably required to grant and perfect in favor of
Agent, for the
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benefit of Lenders, a first-priority security interest in all of the shares of
capital stock of such Subsidiary and all of the Real Property Assets and all of
the personal property assets of such Subsidiary described in the applicable
Collateral Documents.
B. Execution of Canadian Subsidiary Guaranty and Collateral
Documents. In the event that any Person becomes a Canadian Subsidiary of Company
after the date hereof, Company will promptly notify Agent of that fact and cause
such Subsidiary to execute and deliver to Agent a counterpart of the Canadian
Subsidiary Guaranty and a Canadian Subsidiary Pledge Agreement, a Canadian
Subsidiary Security Agreement, a Canadian Subsidiary Trademark Security
Agreement, a Canadian Subsidiary Patent Security Agreement and (if applicable)
Additional Mortgages and to take all such further action and execute all such
further documents and instruments as may be reasonably required to grant and
perfect in favor of Agent, for the benefit of Lenders, a first-priority security
interest in not less than two-thirds of the shares of capital stock of such
Subsidiary and all of the Real Property Assets and all of the personal property
assets of such Subsidiary described in the applicable Collateral Documents.
C. Subsidiary Charter Documents, Legal Opinions, Etc. Company shall
deliver to Agent, together with the applicable Guaranty and such Collateral
Documents, (i) certified copies of such Subsidiary's Articles or Certificate of
Incorporation, together with a good standing certificate from the Secretary of
State of the jurisdiction of its incorporation, each to be dated a recent date
prior to their delivery to Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant corporate secretary as of a
recent date prior to their delivery to Agent, (iii) a certificate executed by
the secretary or an assistant secretary of such Subsidiary as to (a) the
incumbency and signatures of the officers of such Subsidiary executing such
Guaranty and the Collateral Documents to which such Subsidiary is a party and
(b) the fact that the attached resolutions of the Board of Directors of such
Subsidiary authorizing the execution, delivery and performance of such Guaranty
and such Collateral Documents are in full force and effect and have not been
modified or rescinded, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Agent and its counsel, as to
(a) the due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Guaranty and
such Collateral Documents, (c) the enforceability of such Guaranty and such
Collateral Documents against such Subsidiary, and (d) such other matters as
Agent may reasonably request, all of the foregoing to be satisfactory in form
and substance to Agent and its counsel.
6.12 Additional Mortgages.
A. From and after the Closing Date, in the event that (i) any
Borrower or any of its Subsidiaries acquires any Fee Property or any Material
Leasehold (each a "Covered Real Property Asset") or (ii) at the time any Person
becomes a Subsidiary of any Borrower, such Person owns or holds any Covered Real
Property Asset, such Borrower or
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such Subsidiary shall, as soon as practicable after the acquisition of such
Covered Real Property Asset or such Person's becoming a Subsidiary of any
Borrower, as the case may be, deliver (a) fully executed counterparts of
Mortgages (each an "Additional Mortgage" and collectively, the "Additional
Mortgages") encumbering such Covered Real Property Asset, together with evidence
that counterparts of such Additional Mortgages have been recorded in all places
to the extent necessary or desirable, in the reasonable judgment of Agent, so as
to effectively create a valid and enforceable first priority lien (or such other
priority lien as may be specified in the applicable Additional Mortgage),
subject to Permitted Encumbrances, on such Covered Real Property Asset in favor
of Agent (or such other trustee as may be required or desired under local law)
for the benefit of Lenders; (b) a title report obtained by Company in respect of
any such Covered Real Property Asset located in the United States (a "U.S.
Covered Real Property Asset"); (c) with respect to U.S. Covered Real Property
Assets only, if required by Agent, an opinion of counsel (which counsel shall be
reasonably satisfactory to Agent) in the state in which such U.S. Covered Real
Property Asset is located with respect to the enforceability of the form of
Additional Mortgage recorded in such state and such other matters as Agent may
reasonably request, in form and substance reasonably satisfactory to Agent; (d)
in the case of each such Covered Real Property Asset consisting of a Material
Leasehold, Borrower or its Subsidiary shall use reasonable best efforts to
obtain such estoppel letters from the landlord on such Material Leasehold as may
be reasonably requested by Agent, in form and substance reasonably satisfactory
to Agent; (e) if required by Agent, in the case of each such Covered Real
Property Asset consisting of a Fee Property, environmental audits prepared by
professional consultants mutually acceptable to Company and Agent, in form,
scope and substance satisfactory to Agent in its reasonable discretion; (f) with
respect to U.S. Covered Real Property Assets only, if required by Agent, in the
case of each such U.S. Covered Real Property Asset consisting of a Fee Property,
a Title Policy; (g) with respect to U.S. Covered Real Property Assets only,
evidence, which may be in the form of a letter from an insurance broker, a
municipal engineer, title company or national flood certification form, as to
whether (1) such U.S. Covered Real Property Asset (an "Additional Flood Hazard
Property") is in an area designated by the Federal Emergency Management Agency
as having special flood or mud slide hazards and (2) the community in which such
U.S. Covered Real Property Asset (if it is an Additional Flood Hazard Property)
is located is participating in the National Flood Insurance Program; and (h) if
such U.S. Covered Real Property Asset is an Additional Flood Hazard Property,
Company's written acknowledgement of receipt of written notification from Agent
(1) as to the existence of such Additional Flood Hazard Property and (2) as to
whether the community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program.
B. Each Borrower shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by Agent, upon reasonable
notice, to visit and inspect any Covered Real Property Asset for the purpose of
obtaining an appraisal of value, conducted by consultants retained by Agent in
compliance with all applicable banking regulations, with respect to such Covered
Real Property Asset.
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6.13 Assignability and Recording of Lease Agreements.
From and after the Closing Date, in the event that any Borrower or any
of its Subsidiaries enters into any lease that is a Material Leasehold, such
Borrower shall, or shall cause such Subsidiary to, (i) obtain lease terms
permitting (or not expressly prohibiting) the encumbrancing of such Material
Leasehold pursuant to an Additional Mortgage and the assignment of such Material
Leasehold interest to the successful bidder at a foreclosure or similar sale
(and to a subsequent third party assignee by Agent or any Lender to the extent
Agent or such Lender is the successful bidder at such sale) in the event of a
foreclosure or similar action pursuant to such Additional Mortgage and (ii)
cause a memorandum of lease with respect thereto, or other evidence of such
lease in form and substance reasonably satisfactory to Agent, to be recorded in
all places to the extent necessary or desirable, in the reasonable judgment of
Agent, so as to enable an Additional Mortgage encumbering such Material
Leasehold to effectively create a valid and enforceable first priority lien
(subject to Permitted Encumbrances) on such Material Leasehold in favor of Agent
(or such other Person as may be required or desired under local law) for the
benefit of Lenders.
Section 7. BORROWER'S NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, such Borrower shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 Indebtedness.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or guaranty, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrower may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 7.9;
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(iv) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any wholly-owned
Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Subsidiary of Company;
provided that (a) all such intercompany Indebtedness shall be evidenced by
promissory notes that are pledged to Agent pursuant to the terms of the
applicable Collateral Document, (b) all such intercompany Indebtedness owed
by any Borrower to any of its Subsidiaries shall be subordinated in right
of payment to the payment in full of the Obligations pursuant to the terms
of the applicable promissory notes or an intercompany subordination
agreement, and (c) any payment by any Subsidiary of any Borrower under any
guaranty of the Obligations shall result in a pro tanto reduction of the
amount of any intercompany Indebtedness owed by such Subsidiary to such
Borrower or to any of its Subsidiaries for whose benefit such payment is
made; provided, further, that the aggregate amount of all such intercompany
Indebtedness owing at any time from all Canadian Subsidiaries to Company or
any Domestic Subsidiary shall not exceed $5,000,000;
(v) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 7.1 annexed hereto; and
(vi) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $500,000 at any time outstanding.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Each Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of such Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents; and
(iii) Other Liens securing Indebtedness in an aggregate amount not to
exceed $500,000 at any time outstanding.
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B. Equitable Lien in Favor of Lenders. If any Borrower or any of its Sub-
sidiaries shall create or assume any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, other than Liens excepted by the
provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, none of the Borrowers or
any of their respective Subsidiaries shall enter into any agreement prohibiting
the creation or assumption of any Lien upon any of its properties or assets,
whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Borrowers or Other
Subsidiaries. Except as provided herein, each Borrower will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by such Borrower
or any other Subsidiary of such Borrower, (ii) repay or prepay any Indebtedness
owed by such Subsidiary to such Borrower or any other Subsidiary of such
Borrower, (iii) make loans or advances to such Borrower or any other Subsidiary
of such Borrower, or (iv) transfer any of its property or assets to such
Borrower or any other Subsidiary of such Borrower.
7.3 Investments; Joint Ventures.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make or own any Investment in any Person, including
any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
Company;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
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(v) Company and its Subsidiaries may make acquisitions to the
extent permitted under 7.7(v);
(vi) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto; and
(vii) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $500,000.
7.4 Contingent Obligations.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or become or remain liable with respect to
any Contingent Obligation, except:
(i) Company may become and remain liable with respect to Contingent
Obligations in respect of Existing Letters of Credit (but not any
extensions or renewals thereof) and in respect of Letters of Credit;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations arising under their respective
Guaranties;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(iv) Company may become and remain liable with respect to Contingent
Obligations arising under Interest Rate Agreements;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company
or any of its Subsidiaries permitted by subsection 7.1;
(vi) Company may become and remain liable with respect to Contingent
Obligations under Currency Agreements pursuant to which Company obtains
foreign currency from another Person (the "Counterparty") in exchange for
Dollars; provided that (a) the aggregate notional amount for all such
Currency Agreements outstanding at any one time shall not exceed the
equivalent of $20,000,000, (b) the aggregate amount of foreign currency
required to be delivered on any one day by one or more Counterparties under
all such Currency Agreements outstanding at any one time shall not exceed
the equivalent of $5,000,000; (c) the tenor of any such Currency Agreement
shall not exceed twenty-four (24) months, and (d) the expiration date of
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any such Currency Agreement under which any Lender or any Lender or any of
its Affiliates is the counterparty shall not be later than the date of
termination of the Working Capital Revolving Loan Commitments; and
(vii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $500,000.
7.5 Restricted Junior Payments
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby (including without limitation a failure to comply with the
provisions of subsection 6.10), (i) Company may make dividend payments to
Holdings in accordance with the terms of the Company Preferred Stock in an
aggregate principal amount not to exceed $200,000 and (ii) Company may make
Restricted Junior Payments to Holdings (X) in an aggregate principal amount not
to exceed $200,000 in any Fiscal Year in order to permit Holdings to pay general
administrative costs and expenses, (Y) in an aggregate principal amount not to
exceed in the aggregate $500,000 in any Fiscal Year or $1,500,000 during the
term of this Agreement in order to permit Holdings to purchase Holdings Common
Stock or Holdings Preferred Stock from management officers and employees of
Company and its Subsidiaries, and (Z) in an amount necessary to permit Holdings
to discharge the consolidated tax liabilities of Holdings and its Subsidiaries.
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7.6 Financial Covenants.
A. Minimum Interest Coverage Ratio. Company shall not permit the ratio of
(i) Consolidated EBITDA to (ii) Consolidated Cash Interest Expense for any four-
Fiscal Quarter period ending during any of the periods set forth below to be
less than the correlative ratio indicated:
Minimum
Period Interest Coverage Ratio
------------------------ -----------------------
1st Fiscal Quarter, 1998 1.55:1:00
2nd Fiscal Quarter, 1998 1:90:1:00
3rd Fiscal Quarter, 1998 1:90:1:00
4th Fiscal Quarter, 1998 2:10:1:00
1st Fiscal Quarter, 1999 2:20:1:00
2nd Fiscal Quarter, 1999 2:60:1:00
3rd Fiscal Quarter, 1999 2:70:1:00
4th Fiscal Quarter, 1999 2:90:1:00
1st Fiscal Quarter, 2000 3:00:1:00
2nd Fiscal Quarter, 2000 3:30:1:00
3rd Fiscal Quarter, 2000 3:40:1:00
4th Fiscal Quarter, 2000 3:50:1:00
1st Fiscal Quarter, 2001 3:80:1:00
2nd Fiscal Quarter, 2001 4:50:1:00
3rd Fiscal Quarter, 2001 4:80:1:00
4th Fiscal Quarter, 2001 5:30:1:00
1st Fiscal Quarter, 2002 6:00:1:00
2nd Fiscal Quarter, 2002 7:00:1:00
3rd Fiscal Quarter, 2002 7:00:1:00
4th Fiscal Quarter, 2002 7:00:1:00
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B. Maximum Leverage Ratio. Company shall not permit the ratio of (i)
Consolidated Total Debt as of the last day of any Fiscal Quarter occurring
during any of the periods set forth below to (ii) Consolidated EBITDA for the
four-Fiscal Quarter period ending on such last day to exceed the correlative
ratio indicated:
Period Maximum Leverage Ratio
---------------------- ---------------------------
1st Fiscal Quarter, 1998 4.75:1:00
2nd Fiscal Quarter, 1998 4:00:1:00
3rd Fiscal Quarter, 1998 4:00:1:00
4th Fiscal Quarter, 1998 4:00:1:00
1st Fiscal Quarter, 1999 4.20:1:00
2nd Fiscal Quarter, 1999 3:50:1:00
3rd Fiscal Quarter, 1999 3:00:1:00
4th Fiscal Quarter, 1999 3:00:1:00
1st Fiscal Quarter, 2000 3.25:1:00
2nd Fiscal Quarter, 2000 2:25:1:00
3rd Fiscal Quarter, 2000 2:25:1:00
4th Fiscal Quarter, 2000 2:25:1:00
1st Fiscal Quarter, 2001 2.25:1:00
2nd Fiscal Quarter, 2001 1:50:1:00
3rd Fiscal Quarter, 2001 1:25:1:00
4th Fiscal Quarter, 2001 1:25:1:00
1st Fiscal Quarter, 2002 1.50:1:00
2nd Fiscal Quarter, 2002 1:00:1:00
3rd Fiscal Quarter, 2002 1:00:1:00
4th Fiscal Quarter, 2002 1:00:1:00
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C. Minimum Consolidated EBITDA. Company shall not permit Consolidated
EBITDA for any four-Fiscal Quarter period ending as of the last day of any
Fiscal Quarter occurring during any of the periods set forth below to be less
than the correlative amount indicated:
Minimum Consolidated
Period EBITDA
------------------------ --------------------
1st Fiscal Quarter, 1998 $ 5,500,000
2nd Fiscal Quarter, 1998 $ 6,575,000
3rd Fiscal Quarter, 1998 $ 6,300,000
4th Fiscal Quarter, 1998 $ 6,600,000
1st Fiscal Quarter, 1999 $ 6,900,000
2nd Fiscal Quarter, 1999 $ 7,600,000
3rd Fiscal Quarter, 1999 $ 7,800,000
4th Fiscal Quarter, 1999 $ 7,900,000
1st Fiscal Quarter, 2000 $ 8,200,000
2nd Fiscal Quarter, 2000 $ 8,700,000
3rd Fiscal Quarter, 2000 $ 8,800,000
4th Fiscal Quarter, 2000 $ 8,900,000
1st Fiscal Quarter, 2001 $ 9,100,000
2nd Fiscal Quarter, 2001 $ 9,800,000
3rd Fiscal Quarter, 2001 $10,000,000
4th Fiscal Quarter, 2001 $10,100,000
1st Fiscal Quarter, 2002 $10,200,000
2nd Fiscal Quarter, 2002 $11,000,000
3rd Fiscal Quarter, 2002 $11,000,000
4th Fiscal Quarter, 2002 $11,000,000
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sub-lessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or fixed assets, whether
now owned or hereafter acquired, or
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acquire by purchase or otherwise all or substantially all the business, property
or fixed assets of, or stock or other evidence of beneficial ownership of, any
Person or any division or line of business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or
any wholly-owned Subsidiary of Company, or may be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary of Company;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (as reasonably determined by the
Board of Directors of Company);
(iv) subject to subsection 7.13, Company and its Subsidiaries may
make Asset Sales of assets having a fair market value not in excess of
$1,000,000; provided that (x) the consideration received for such assets
shall be in an amount at least equal to the fair market value thereof (as
reasonably determined by the Board of Directors of Company); (y) the sole
consideration received shall be cash; and (z) the proceeds of such Asset
Sales shall be applied as required by subsection 2.4C(iii)(f); and
(v) Company and its Subsidiaries may acquire the business, property
or fixed assets of, or all of the stock or other evidence of beneficial
ownership of any Person engaged in the nursery business, the peat or
potting soil or mix business or businesses reasonably related thereto;
provided that (i) no Event of Default or Potential Event of Default has
occurred and is then continuing; (ii) the aggregate amount of Loans made to
effect such acquisition will not exceed an amount equal to the Consolidated
EBITDA for the most recent 12 consecutive month period of the businesses
acquired multiplied by four; (iii) Holdings will contribute cash equity to
Company in an amount equal to at least 20% of the aggregate purchase price
to be paid for such acquisition; (iv) after giving effect (including,
without limitation, any limitation on any assumed or acquired Indebtedness)
to such acquisition and Indebtedness incurred in connection therewith,
Company is in pro forma compliance with its financial covenants; (v) on or
prior to the consummation of the acquisition, Company shall cause to be
executed and delivered all such Loan Documents, and to have been taken all
such other actions (including without limitation the delivery of any
appraisals or environmental reports), in each case as may be required
pursuant to subsections 6.11, 6.12 or 6.13 with respect to the Persons or
assets so acquired and/or to update the schedules to this Agreement and to
provide a collateral audit of
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the Inventory and Accounts Receivables of the Person or assets so acquired;
and (vi) Company obtains Agent's and Requisite Lenders' consents to any
acquisition or series of related acquisitions in excess of $10,000,000 and,
to the extent such consent is required, shall have delivered to Agent and
Lenders on a timely basis such historical and pro forma financial
statements, sources and uses analysis, pro forma covenant calculations and
such other due diligence information as may be reasonably requested by
Agent or Lenders. Agent and Requisite Lenders hereby agree to approve or
disapprove acquisitions as soon as reasonably practicable but in any event
within 10 Business Days of receipt of such information.
7.8 Consolidated Capital Expenditures.
Each Borrower shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any period indicated below,
in an aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such period;
provided that the Maximum Consolidated Capital Expenditures Amount for any
period shall be increased by an amount equal to the excess, if any, (but in no
event more than $1,000,000) of the Maximum Consolidated Capital Expenditures
Amount for the previous period (as adjusted in accordance with this proviso)
over the actual amount of Consolidated Capital Expenditures for such previous
period:
Maximum Consolidated
Period Capital Expenditures
----------------- --------------------
Fiscal Year, 1998 $3,500,000
Fiscal Year, 1999 $2,500,000
Fiscal Year, 2000 $2,500,000
Fiscal Year, 2001 $2,500,000
Fiscal Year, 2002 $2,500,000
7.9 Restriction on Leases.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, (i) become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any lease,
whether an Operating Lease or a Capital Lease (other than intercompany leases
between or among Company and its wholly-owned Subsidiaries), or (ii) cause or
permit the liability of such Borrower or Subsidiary under or in respect of such
lease to increase by any material amount, in each case unless, immediately after
giving effect to such incurrence of or increase in liability with respect to
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such lease, the Consolidated Rental Payments at the time in effect during the
then current or any future period of 12 consecutive calendar months shall not
exceed $1,500,000.
7.10 Sales and Lease-Backs.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, become or remain liable as lessee or as a guarantor
or other surety with respect to any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real, personal or mixed), whether now
owned or hereafter acquired, (i) which Company or any of its Subsidiaries has
sold or transferred or is to sell or transfer to any other Person (other than
Company or any of its Subsidiaries) or (ii) which Company or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by Company or any of its
Subsidiaries to any Person (other than Company or any of its Subsidiaries) in
connection with such lease; provided that Company and its Subsidiaries may
become and remain liable as lessee, guarantor or other surety with respect to
any such lease if and to the extent that Company or any of its Subsidiaries
would be permitted to enter into, and remain liable under, such lease under
subsection 7.9.
7.11 Sale or Discount of Receivables.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, sell with recourse, or discount or otherwise sell
for less than the face value thereof, any of its notes or accounts receivable.
7.12 Transactions with Shareholders and Affiliates.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Company and any of its wholly-
owned Subsidiaries or between any of its wholly-owned Subsidiaries, or (ii)
reasonable and customary fees paid to members of the Boards of Directors of
Company and its Subsidiaries.
7.13 Disposal of Subsidiary Stock.
Except pursuant to the Collateral Documents and except for any sale of
100% of the capital stock or other equity Securities of any of its Subsidiaries
in compliance with the provisions of subsection 7.7(iv), each Borrower shall
not:
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(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to qualify
directors if required by applicable law.
7.14 Conduct of Business.
From and after the Closing Date, each Borrower shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by such Borrower and its Subsidiaries on the Closing Date
and similar or related businesses and (ii) such other lines of business as may
be consented to by Requisite Lenders.
7.15 Amendments of Certain Documents.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to agree to any material amendment to, or waive any of its material rights
under, or otherwise change any material terms of any of the Related Agreements
in each case as in effect on the Closing Date without the prior written consent
of Requisite Lenders.
7.16 Fiscal Year.
Each Borrower shall not change its Fiscal Year-end from December 31.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 Failure to Make Payments When Due.
Failure by any Borrower to pay any installment of principal of or
interest on any Loan when due, whether at stated maturity, by acceleration, by
notice of voluntary prepayment, by mandatory prepayment or otherwise; failure by
any Borrower to pay when due any amount payable to an Issuing Lender in
reimbursement of any drawing under a Letter of Credit; or failure by any
Borrower to pay any fee or any other amount due under this Agreement within five
days after the date due; or
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8.2 Default in Other Agreements.
(i) Failure of any Borrower or any of its Subsidiaries to pay when due
any principal of or interest on one or more items of Indebtedness (other
than Indebtedness referred to in subsection 8.1) or Contingent Obligations
in an individual principal amount of $250,000 or more or with an aggregate
principal amount of $500,000 or more, in each case beyond the end of any
grace period provided therefor; or (ii) breach or default by any Borrower or
any of its Subsidiaries with respect to any other material term of (a) one
or more items of Indebtedness or Contingent Obligations in the individual or
aggregate principal amounts referred to in clause (i) above or (b) any loan
agreement, mortgage, indenture or other agreement relating to such item(s)
of Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness
or Contingent Obligation(s) (or a trustee on behalf of such holder or
holders) to cause, that Indebtedness or Contingent Obligation(s) to become
or be declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be (upon the giving
or receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of any Borrower to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other statement made by
any Borrower or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by any Borrower or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
Any Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in this Agreement or any of
the other Loan Documents, other than any such term referred to in any other
subsection of this Section 8, and such default shall not have been remedied or
waived within 15 days after the earlier of (i) an officer of any Borrower
becoming aware of such default or (ii) receipt by any Borrower of notice from
Agent or any Lender of such default; or
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8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of any Borrower or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other Insolvency
Laws which decree or order is not stayed; or any other similar relief shall
be granted under any applicable Insolvency Laws; or (ii) an involuntary case
shall be commenced against any Borrower or any of its Subsidiaries under the
Bankruptcy Code or under any other Insolvency Laws; or a decree or order of
a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over any Borrower or any of its Subsidiaries, or over
all or a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of any Borrower or any of its Subsidiaries for
all or a substantial part of its property; or a warrant of attachment,
execution or similar process shall have been issued against any substantial
part of the property of any Borrower or any of its Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Any Borrower or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other Insolvency Laws, or shall consent to the
entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or Company or
any of its Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) any Borrower or any of its Subsidiaries shall be unable,
or shall fail generally, or shall admit in writing its inability, to pay its
debts as such debts become due; or the Board of Directors of any Borrower or
any of its Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $250,000 or (ii) in
the aggregate at any time an amount in excess of $500,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has acknowledged coverage) shall be entered or filed against any
Borrower or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a
139
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
8.9 Dissolution.
Any order, judgment or decree shall be entered against any Borrower or
any of its Subsidiaries decreeing the dissolution or split up of any Borrower or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
any Borrower or any of its ERISA Affiliates in excess of $100,000 during the
term of this Agreement; or there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), which
exceeds $250,000; or
8.11 Material Adverse Effect.
Any event or change shall occur that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect; or
8.12 Change in Control.
(i) A change shall occur in the Board of Directors of Holdings so that
a majority of the Board of Directors of Holdings ceases to consist of the
individuals who constituted the Board of Directors of Holdings on the
Closing Date (or individuals whose election or nomination for election was
approved by a vote of at least 75% of the directors then in office who
either were directors of Holdings on the Closing Date or whose election or
nomination for election previously was so approved); or
(ii) any Person or Group (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission), other than MDCP and its Affiliates,
shall become or be the owner, directly or indirectly, beneficially or of
record, of shares representing more than 30% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of
Holdings on a fully diluted basis, unless MDCP and its Affiliates shall own
and continue to so own capital stock representing not less than a majority
of such aggregate ordinary voting power; or
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(iii) at any time prior to a Public Offering of Holdings, MDCP shall
cease to own, directly or indirectly, beneficially or of record, at least
51% of each of the Holdings Common Stock and any other class of voting
capital stock of Holdings; or
(iv) Holdings shall cease to beneficially own and control 100% of the
issued and outstanding shares of capital stock of Company or shall cease to
have the ability to elect all of the Board of Directors of Company;
(v) Company shall cease to beneficially own and control, directly or
indirectly, 100% of the issued and outstanding shares of capital stock of
any other Borrower or Company shall cease to have the ability to elect all
of the Board of Directors of any other Borrower; or
(vi) any "Change of Control" (as defined in that certain Indenture
dated as of October 19, 1995 by and among ▇▇▇▇▇ Horticulture, Inc.,
Holdings, Sun Gro Horticulture Inc. and IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company)
shall occur; or
8.13 Invalidity of Any Guaranty.
Any Guaranty for any reason, other than the satisfaction in full of all
Obligations, ceases to be in full force and effect (other than in accordance
with its terms) or is declared to be null and void, or any Loan Party denies
that it has any further liability, including without limitation with respect to
future advances by Lenders, under any Loan Document to which it is a party, or
gives notice to such effect; or
8.14 Failure of Security.
Any Collateral Document shall, at any time, cease to be in full force
and effect (other than by reason of a release of Collateral in accordance with
the terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Agent shall not
have or cease to have a valid and perfected first priority security interest in
the Collateral; or
8.15 Amendment of Certain Documents of Holdings.
Holdings shall agree to any material amendment to, or waive any of its
material rights under, or otherwise change any material terms of, any of the
Related Agreements, in each case as in effect on the Closing Date, in a manner
adverse to Holdings or any of its Subsidiaries or to Lenders without the prior
written consent of Agent and Requisite Lenders; or
141
8.16 Conduct of Business Relating to Holdings.
Holdings shall engage in any business other than owning the capital
stock of Company, ▇▇▇▇▇ Horticulture, Inc. and their respective Subsidiaries and
entering into and performing its obligations under and in accordance with the
Loan Documents and the Related Agreements to which it is a party; Holdings shall
own any assets other than (a) the capital stock of Company, ▇▇▇▇▇ Horticulture,
Inc. and their respective Subsidiaries and (b) Cash and Cash Equivalents in an
amount not to exceed $100,000 at any one time for the purpose of paying its
general operating expenses. Holdings shall directly engage in any business or
activities other than those activities necessary to discharge its obligations as
a holding company for Company and ▇▇▇▇▇ Horticulture, Inc.;
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by each Borrower, and the obligation of each Lender to make any
Loan, the obligation of Agent to issue any Letter of Credit and the right of any
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Agent shall, upon the written request or with the written consent of
Requisite Lenders, by written notice to each Borrower, declare all or any
portion of the amounts described in clauses (a) through (c) above to be, and the
same shall forthwith become, immediately due and payable, and the obligation of
each Lender to make any Loan, the obligation of Agent to issue any Letter of
Credit and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any way the
obligations of Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by Agent,
shall be held by Agent pursuant to the terms of the Collateral Account Agreement
and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
such paragraph each Borrower shall pay all arrears of interest and all payments
on account of principal which shall have become due otherwise than as a result
of such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection
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10.6, then Requisite Lenders, by written notice to each Borrower, may at their
option rescind and annul such acceleration and its consequences; but such action
shall not affect any subsequent Event of Default or Potential Event of Default
or impair any right consequent thereon. The provisions of this paragraph are
intended merely to bind Lenders to a decision which may be made at the election
of Requisite Lenders and are not intended to benefit any Borrower and do not
grant any Borrower the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
Section 9. AGENT
9.1 Appointment.
BTCC is hereby appointed Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents. Agent
agrees to act upon the express conditions contained in this Agreement and the
other Loan Documents, as applicable. The provisions of this Section 9 are solely
for the benefit of Agent and Lenders and Borrowers shall have no rights as a
third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any Borrower
or any of its Subsidiaries.
9.2 Powers and Duties; General Immunity.
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes Agent to
take such action on such Lender's behalf and to exercise such powers, rights and
remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto. Agent
shall have only those duties and responsibilities that are expressly specified
in this Agreement and the other Loan Documents. Agent may exercise such powers,
rights and remedies and perform such duties by or through its agents or
employees. Agent shall not have, by reason of this Agreement or any of the other
Loan Documents, a fiduciary relationship in respect of any Lender; and nothing
in this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly
set forth herein or therein.
B. No Responsibility for Certain Matters. Agent shall not be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral
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statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by Agent to Lenders or by
or on behalf of any Borrower to Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of any Borrower or any other Person liable for the
payment of any Obligations, nor shall Agent be required to ascertain or inquire
as to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Loan Documents or as to the use
of the proceeds of the Loans or the use of the Letters of Credit or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents except
to the extent caused by Agent's gross negligence or willful misconduct. If Agent
shall request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders. Without prejudice to the generality of the
foregoing, (i) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders. Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or any of the other Loan Documents unless and until it has obtained the
instructions of Requisite Lenders.
D. Agent Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans and the Letters of Credit, Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder, and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with any Borrower or any of its Affiliates as if it were not performing
the duties specified herein, and may
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accept fees and other consideration from any Borrower for services in connection
with this Agreement and otherwise without having to account for the same to
Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of Credit
worthiness.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of each
Borrower and its Subsidiaries in connection with the making of the Loans and the
issuance of Letters of Credit hereunder and that it has made and shall continue
to make its own appraisal of the creditworthiness of each Borrower and its
Subsidiaries. Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Agent shall not have
any responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agent, to the extent that Agent shall not have been reimbursed by
Borrowers, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Agent in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent for any purpose shall,
in the opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
9.5 Successor Agent.
Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and each Borrower, and Agent may be removed at any time with
or without cause by an instrument or concurrent instruments in writing delivered
to each Borrower and Agent and signed by Requisite Lenders. Upon any such notice
of resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to each Borrower, to appoint a successor Agent. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with
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all the rights, powers, privileges and duties of the retiring or removed Agent
and the retiring or removed Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
9.6 Collateral Documents and Guaranties.
Each Lender hereby further authorizes Agent to enter into each
Collateral Document as secured party on behalf of and for the benefit of Lenders
and agrees to be bound by the terms of each Collateral Document; provided that,
subject to any provision of subsection 10.6 requiring the consent of any
additional Lenders, Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or any Guaranty without the prior consent of Requisite Lenders, but
Agent may (i) release any Lien covering any items of Collateral that are the
subject of a sale or other disposition of assets permitted by this Agreement or
to which Requisite Lenders have consented and (ii) release any Guarantor (other
than any Borrower or Holdings) from its Guaranty if all of the capital stock of
such Guarantor is sold to a Person that is not any Affiliate of Company pursuant
to a sale or other disposition permitted hereunder or to which Requisite Lenders
have consented. Anything contained in any of the Loan Documents to the contrary
notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce any of the Guaranties, it being understood and agreed that all
rights and remedies under the Collateral Documents and the Guaranties may be
exercised solely by Agent for the benefit of Lenders in accordance with the
terms thereof.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit.
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or participations therein or
any other interest herein or in any other Obligations owed to it; provided that
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Agent and recorded in the
Register as provided in subsection 10.1B(ii); provided, further that no such
sale, assignment, transfer or participation of any Letter of Credit or any
participation therein
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may be made separately from a sale, assignment, transfer or participation of a
corresponding interest in the Working Capital Revolving Loan Commitment and the
Working Capital Revolving Loans of the Lender effecting such sale, assignment,
transfer or participation; and provided, further that no such sale, assignment,
transfer or participation may be made by a Lender to an Eligible Assignee
without a concurrent sale, assignment, transfer or participation to such
Eligible Assignee of the assigning Lender's proportionate share of the
commitments under the ▇▇▇▇▇ I Credit Agreement. Except as otherwise provided in
this subsection 10.1, no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale, assignment
or transfer of, or any granting of participations in, all or any part of its
Commitments or the Loans, the Letters of Credit or participations therein, or
the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of
Credit or participation therein, or other Obligation may (a) be assigned in
any amount to another Lender, or to an Affiliate of the assigning Lender or
another Lender, with the giving of notice to Company and Agent or (b) be
assigned in an aggregate amount of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments, Loans,
Letters of Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of Company
and Agent (which consent of Company and Agent shall not be unreasonably
withheld); provided that any such assignment by a Domestic Lender in
accordance with either clause (a) or (b) above shall effect a pro rata
assignment (based on the respective principal amounts thereof then
outstanding or in effect) of both the Acquisition Term Loan Commitment or
the Acquisition Term Loan of the assigning Domestic Lender, on the one hand,
and the Revolving Loan Commitment and the Revolving Loans of the assigning
Domestic Lender, on the other hand. To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender shall
be relieved of its obligations with respect to its Commitments, Loans,
Letters of Credit or participations therein, or other Obligations or the
portion thereof so assigned. The parties to each such assignment shall
execute and deliver to Agent, for its acceptance and recording in the
Register, an Assignment Agreement, together with a processing and
recordation fee of $3,500 and such forms, certificates or other evidence, if
any, with respect to United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in
such Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment Agreement, shall have the rights
and obligations of a Lender hereunder and (z) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to
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such Assignment Agreement, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto; provided that, anything contained in any of the Loan Documents
to the contrary notwithstanding, if such Lender is the Issuing Lender with
respect to any outstanding Letters of Credit such Lender shall continue to
have all rights and obligations of an Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters of
Credit and the reimbursement of any amounts drawn thereunder). The
Commitments hereunder shall be modified to reflect the Commitment of such
assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to Agent
for cancellation, and thereupon new Notes shall be issued to the assignee
and/or to the assigning Lender, substantially in the form of Exhibit IV,
Exhibit V-A, Exhibit V-B or Exhibit VI annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans, as the case may be, of the assignee and/or the
assigning Lender.
(ii) Acceptance by Agent; Recordation in Register. Upon its receipt of
an Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing
and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal income
tax withholding matters that such assignee may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a), Agent shall, if Agent and Company
have consented to the assignment evidenced thereby (in each case to the
extent such consent is required pursuant to subsection 10.1B(i)), (a) accept
such Assignment Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of Agent to
such assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Agent shall
maintain a copy of each Assignment Agreement delivered to and accepted by it
as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation, (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
(iii) the release of all or substantially all Collateral or (iv) the assignment
of the Credit Agreement by Holdings, and all amounts payable by Borrowers
hereunder (including without limitation amounts payable to such Lender pursuant
to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender had not
sold such participation. Each Borrower and each Lender hereby acknowledges and
agrees that, solely for purposes of subsections
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10.4 and 10.5, (a) any participation will give rise to a direct obligation of
such Borrower to the participant and (b) the participant shall be considered to
be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between any Borrower and such
Lender, be relieved of any of its obligations hereunder as a result of any such
assignment and pledge and (ii) in no event shall such Federal Reserve Bank be
considered to be a "Lender" or be entitled to require the assigning Lender to
take or omit to take any action hereunder.
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be
consummated, each Borrower agrees to jointly and severally pay promptly (i) all
the actual and reasonable costs and expenses of preparation of the Loan
Documents and any consents, amendments, waivers or other modifications thereto;
(ii) all the costs of furnishing all opinions by counsel for any Borrower
(including without limitation any opinions requested by Lenders as to any legal
matters arising hereunder) and of any Borrower's performance of and compliance
with all agreements and conditions on its part to be performed or complied with
under this Agreement and the other Loan Documents including, without limitation,
with respect to confirming compliance with environmental and insurance
requirements; (iii) the reasonable fees, expenses and disbursements of counsel
to Agent (including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by any Borrower; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Agent on behalf
of Lenders pursuant to the Loan Documents, including without limitation costs of
conducting record searches, examining Collateral, opening bank accounts,
depositing checks, receiving and transferring funds (including charges for
checks for which there are insufficient funds), costs of title insurance
premiums, real estate survey costs, and fees and taxes in connection with the
filing of financing statements, costs of preparing and recording Loan Documents,
fees and expenses of counsel for providing such opinions as Agent or Requisite
Lenders may reasonably request, and fees and expenses of legal counsel to Agent;
(v) all the actual costs and reasonable expenses of obtaining and reviewing any
appraisals provided for under this Agreement and any environmental audits or
reports provided for under this Agreement; (vi)
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all other actual and reasonable costs and expenses incurred by Agent in
connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated
thereby; and (vii) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Loan Documents by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated, each
Borrower agrees to defend, indemnify, pay and hold harmless Agent and Lenders,
and the officers, directors, employees, agents and affiliates of Agent and
Lenders (collectively called the "Indemnitees") from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto), whether direct, indirect or consequential and whether based on
any federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of this Agreement
or the other Loan Documents or the Related Agreements or the transactions
contemplated hereby or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of the proceeds of any of
the Loans or the issuance of Letters of Credit hereunder or the use or intended
use of any of the Letters of Credit) or the statements contained in the
commitment letter delivered by any Lender to any Borrower with respect thereto
(collectively called the "Indemnified Liabilities"); provided that Borrower
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
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Without limiting the generality of the foregoing, each Borrower further
agrees to fully and promptly pay, perform, discharge, defend (subject to
Indemnitee's selection of counsel), indemnify and hold harmless each Indemnitee
from and against any Indemnified Environmental Liabilities; provided that
Borrowers shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Environmental Liabilities to the extent such Indemnified
Environmental Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction. To the extent that the undertaking to defend, indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, each Borrower shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Environmental
Liabilities incurred by the Indemnitees or any of them. As used herein,
"Indemnified Environmental Liabilities" means any liabilities, obligations,
losses, damages (including, without limitation, natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs (including, without limitation, the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation, or other response
action necessary to remove, remediate, clean up, or ▇▇▇▇▇ any Hazardous
Materials or any activity relating to Hazardous Materials that is in violation
of any Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim), expenses and disbursements of any kind or nature
whatsoever, whether direct, indirect or consequential and whether based on any
federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of: (i) any
Release, threatened Release or disposal of any Hazardous Materials at any of the
Facilities; (ii) the Release, threatened Release, or disposal at any location of
any Hazardous Materials generated at or originating from any of the Facilities
by or at the direction of Company or any of its Subsidiaries; (iii) any
Environmental Claim in connection with any of the Facilities; or (iv) the
operation of or violation of any Environmental Law at any of the Facilities.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default and consultation with Agent each Lender is hereby authorized by
each Borrower at any time or from time to time, without notice to any Borrower
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits (general or special,
including, but not limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust accounts) and any
other Indebtedness at any time held or owing by that Lender to or for the credit
or the account of such Borrower against and on account of the obligations and
liabilities of such Borrower to that Lender under this Agreement, the Letters of
Credit and participations therein and the
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other Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Each Borrower hereby further grants
to Agent and each Lender a security interest in all deposits and accounts
maintained with Agent or such Lender as security for the Obligations.
10.5 Ratable Sharing.
A. Amounts Owed by Company. Domestic Lenders hereby agree among
themselves that if any of them shall, whether by voluntary payment, by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code or under any other
Insolvency Laws, receive payment or reduction of a proportion of the aggregate
amount of principal, interest, amounts payable in respect of Letters of Credit,
fees and other amounts then due and owing to that Domestic Lender from Company
(and not from Lakeland Canada) hereunder or under the other Loan Documents
(collectively, the "Aggregate Amounts Due From Company" to such Lender) which is
greater than the proportion received by any other Domestic Lender in respect of
the Aggregate Amounts Due From Company to such other Domestic Lender, then the
Domestic Lender receiving such proportionately greater payment shall (i) notify
Agent and each other Domestic Lender of the receipt of such payment and (ii)
apply a portion of such payment to purchase participations (which it shall be
deemed to have purchased from each seller of a participation simultaneously upon
the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due From Company to the other Domestic Lenders so that all such
recoveries of Aggregate Amounts Due From Company shall be shared by all Domestic
Lenders in proportion to the Aggregate Amounts Due From Company to them;
provided that if all or part of such proportionately greater payment received by
such purchasing Domestic Lender is thereafter recovered from such Domestic
Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Domestic Lender ratably to
the extent of such recovery, but without interest. Company expressly consents to
the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Company to that holder
with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.
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B. Amounts Owed By Lakeland Canada. Canadian Lenders hereby agree
among themselves that if any of them shall, whether by voluntary payment, by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under any applicable Insolvency Laws, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, fees and other amounts then due and owing to that Lender hereunder or
under the other Loan Documents from Lakeland Canada (collectively, the
"Aggregate Amounts Due From Lakeland Canada" to such Lender) which is greater
than the proportion received by any other Canadian Lender in respect of the
Aggregate Amounts Due From Lakeland Canada to such other Canadian Lender, then
the Canadian Lender receiving such proportionately greater payment shall (i)
notify Agent and each other Canadian Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due From Lakeland Canada to the other Lenders so that all such
recoveries of Aggregate Amounts Due From Lakeland Canada shall be shared by all
Canadian Lenders in proportion to the Aggregate Amounts Due From Lakeland Canada
to them (as calculated prior to such recovery); provided that if all or part of
such proportionately greater payment received by such purchasing Lender is
thereafter recovered from such Canadian Lender upon the bankruptcy or
reorganization of Lakeland Canada or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations shall be returned
to such purchasing Lender ratably to the extent of such recovery, but without
interest. Lakeland Canada expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Lakeland Canada to that holder with respect thereto as fully as
if that holder were owed the amount of the participation held by that holder.
10.6 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by any Borrower
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders"; changes
in any manner the provisions contained in the second paragraph of subsection
2.1C(ii); changes in any manner any provision of this Agreement which, by its
terms, expressly requires the approval or concurrence of all Lenders; postpones
the scheduled final maturity date (but not the date of any scheduled installment
of principal) of any of the Loans; postpones the date on which any interest or
any fees are payable; decreases the interest rate borne by any of the Loans
(other than any waiver of any increase
153
in the interest rate applicable to any of the Loans pursuant to subsection 2.2E)
or the amount of any fees payable hereunder; increases the maximum duration of
Interest Periods permitted hereunder; releases all or substantially all of the
Collateral other than in accordance with the terms of the Loan Documents;
reduces the amount or postpones the due date of any amount payable in respect
of, or extends the required expiration date of, any Letter of Credit; changes in
any manner the obligations of Lenders relating to the purchase of participations
in Letters of Credit; increases the advance rates provided for in the definition
of "Borrowing Base" to any level above the advance rates in effect as of the
Closing Date; or changes in any manner the provisions contained in subsection
8.1 or this subsection 10.6 shall be effective only if evidenced by a writing
signed by or on behalf of all Lenders. In addition, (i) any amendment,
modification, termination or waiver of any of the provisions contained in
Section 4 shall be effective only if evidenced by a writing signed by or on
behalf of Agent and Requisite Lenders, (ii) no amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the Lender which is the holder of that Note, (iii) no
amendment, modification, termination or waiver of any provision of Section 9 or
of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of Agent shall be effective without the written
concurrence of Agent, and (iv) no amendment, modification, termination or waiver
of any provision of subsection 2.4 which has the effect of changing any interim
scheduled payments, voluntary or mandatory prepayments, or Commitment reductions
applicable to either Class (the "Affected Class") in a manner that
disproportionately disadvantages such Class relative to the other Class shall be
effective without the written concurrence of Requisite Class Lenders of the
Affected Class (it being understood and agreed that any amendment, modification,
termination or waiver of any such provision which only postpones or reduces any
interim scheduled payment, voluntary or mandatory prepayment, or Commitment
reduction from those set forth in subsection 2.4 with respect to one Class but
not the other Class shall be deemed to disproportionately disadvantage such one
Class but not to disproportionately disadvantage such other Class for purposes
of this clause (iv)). Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on any Borrower in any case shall entitle such Borrower to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by any Borrower, on such
Borrower.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another
154
covenant shall not avoid the occurrence of an Event of Default or Potential
Event of Default if such action is taken or condition exists.
10.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States or
Canadian mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States or
Canadian mail with postage prepaid and properly addressed; provided that notices
to Agent shall not be effective until received. For the purposes hereof, the
address of each party hereto shall be as set forth under such party's name on
the signature pages hereof or (i) as to Borrowers and Agent, such other address
as shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrowers set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of any Borrower or any other party or against or in payment
of any or all of
155
the Obligations. To the extent that any Borrower makes a payment or payments to
Agent or Lenders (or to Agent for the benefit of Lenders), or Agent or Lenders
enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, any other state or federal law, common law or any
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
156
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). None of any
Borrower's rights or obligations hereunder nor any interest therein may be
assigned or delegated by any Borrower without the prior written consent of all
Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH
OBLIGATION. Each Borrower hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to such Borrower at its address provided in subsection 10.8,
such service being hereby acknowledged by such Borrower to be sufficient for
personal jurisdiction in any action against such Borrower in any such court and
to be otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of any Lender to bring proceedings against any Borrower
in the courts of any other jurisdiction.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement
157
to enter into a business relationship, that each has already relied on this
waiver in entering into this Agreement, and that each will continue to rely on
this waiver in their related future dealings. Each party hereto further warrants
and represents that it has reviewed this waiver with its legal counsel and that
it knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
any Borrower in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by each Borrower that in any
event a Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 Judgment Currency.
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in any currency (the "Original
Currency") into another currency (the "Other Currency"), the parties hereto
agree, to the fullest extent permitted by law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the Agent
could purchase the Original Currency with the Other Currency on the Business Day
immediately preceding the day on which any such judgment, or any relevant part
thereof, is paid or otherwise satisfied.
158
(b) The obligations of each Borrower in respect of any sum due from it
to the Lenders hereunder shall, notwithstanding any judgment in such Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Agent of any sum adjudged to be so due in the Other Currency the
Agent may in accordance with normal banking procedures purchase the Original
Currency with the Other Currency; if the Original Currency so purchased is less
than the sum originally due to the Lenders in the Original Currency, such
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Lenders against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to the Lenders in the
Original Currency, the Lenders shall remit such excess to such Borrower.
10.21 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by each Borrower
and Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
159
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
BORROWER:
▇▇▇▇▇ II, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
Title: C.F.O.
---------------------------------------
Notice Address:
S-1
LENDERS:
BT COMMERCIAL CORPORATION,
as a Domestic Lender and as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
Title: Associate
---------------------------------------
Notice:
BT Commercial Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Domestic Lending Office:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Eurodollar Lending Office:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
S-2
BT BANK OF CANADA,
as a Canadian Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Title: Vice President
-------------------------------------
By: /s/ ▇. ▇. ▇▇▇▇▇
----------------------------------------
Title: Managing Director
-------------------------------------
Notice Address:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Royal Bank Plaza, North Tower
Toronto, Ontario M5J 2J2
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.:
S-3
BANKERS TRUST COMPANY,
as an Issuing Lender
By: signature illegible
----------------------------------------
Title: Principal
-------------------------------------
Notice Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10005
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
S-4
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as a Domestic Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
-------------------------------------
S-5
FLEET NATIONAL BANK,
as a Domestic Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Title: Assistant Vice President
-------------------------------------
S-6
LASALLE NATIONAL BANK,
as a Domestic Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Title: Senior Vice President
-------------------------------------
S-7
NATIONSBANK OF TEXAS, N.A.,
as a Domestic Lender and Canadian Lender
By: signature illegible
----------------------------------------
Title: Vice President
-------------------------------------
S-8
UNION BANK OF CALIFORNIA, N.A.,
as a Domestic Lender and Canadian Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
-------------------------------------
S-9
BANK OF MONTREAL,
as a Canadian Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Title: Senior Account Manager
-------------------------------------
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION,
as a Domestic Lender and Canadian Lender
By: signature illegible
----------------------------------------
Title: Vice President
-------------------------------------