AMENDED AND RESTATED CREDIT AGREEMENT
(SUPPLEMENTAL CREDIT AGREEMENT)
among
CHATTEM, INC.,
as Borrower,
DOMESTIC SUBSIDIARIES OF BORROWER,
as Guarantors,
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Agent
DATED AS OF DECEMBER 21, 1998
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS................................ 2
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1.1 Definitions....................................................... 2
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1.2 Computation of Time Periods and Other Definitional Provisions..... 6
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1.3 Accounting Terms.................................................. 7
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SECTION 2 CREDIT FACILITIES.............................................. 7
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2.1 Term Loans........................................................ 7
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2.2 Continuations and Conversions..................................... 9
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2.3 Minimum Amounts................................................... 9
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2.4 Notes............................................................. 9
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SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS.......................... 10
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3.1 Interest.......................................................... 10
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3.2 Place and Manner of Payments...................................... 10
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3.3 Prepayments....................................................... 11
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3.4 Fees.............................................................. 12
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3.5 Payment in full at Maturity....................................... 12
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3.7 Pro Rata Treatment................................................ 13
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3.8 Allocation of Payments After Event of Default..................... 14
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3.9 Sharing of Payments............................................... 14
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3.10 Capital Adequacy................................................. 15
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3.11 Inability To Determine Interest Rate............................. 16
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3.12 Illegality....................................................... 16
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3.13 Requirements of Law.............................................. 16
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3.14 Taxes............................................................ 18
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3.15 Indemnity........................................................ 20
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3.16 Replacement of Lenders........................................... 21
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SECTION 4 GUARANTY........................................................ 21
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4.1 Guaranty of Payment............................................... 21
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4.2 Obligations Unconditional......................................... 21
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4.3 Modifications..................................................... 22
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4.4 Waiver of Rights.................................................. 23
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4.5 Reinstatement..................................................... 23
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4.6 Remedies.......................................................... 23
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4.7 Limitation of Guaranty............................................ 24
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4.8 Rights of Contribution............................................ 24
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SECTION 5 CONDITIONS TO EXTENSIONS OF CREDIT.............................. 25
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5.1 Conditions to Extensions of Credit................................ 25
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SECTION 6 REPRESENTATIONS AND WARRANTIES.................................. 25
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6.1 Financial Condition............................................... 25
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6.2 No Material Change................................................ 26
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6.3 Organization and Good Standing.................................... 26
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6.4 Due Authorization................................................. 26
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6.5 No Conflicts...................................................... 26
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6.6 Consents.......................................................... 27
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i
6.7 Enforceable Obligations........................................... 27
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6.8 No Default........................................................ 27
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6.9 Ownership......................................................... 27
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6.10 Indebtedness..................................................... 27
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6.11 Litigation....................................................... 28
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6.12 Taxes............................................................ 28
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6.13 Compliance with Law.............................................. 28
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6.14 ERISA............................................................ 28
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6.15 Subsidiaries..................................................... 29
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6.16 Use of Proceeds; Margin Stock.................................... 30
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6.17 Government Regulation............................................ 30
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6.18 Environmental Matters............................................ 30
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6.19 Intellectual Property............................................ 32
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6.20 Solvency......................................................... 32
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6.21 Investments...................................................... 32
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6.22 No Financing of Corporate Takeovers.............................. 32
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6.23 Location of Collateral........................................... 32
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6.24 Disclosure....................................................... 33
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6.25 Licenses, etc.................................................... 33
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6.26 No Burdensome Restrictions....................................... 33
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6.27 Brokers' Fees.................................................... 33
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6.28 Labor Matters.................................................... 33
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6.29 Collateral Documents............................................. 34
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6.30 Related Transactions............................................. 34
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6.31 Representations and Warranties Incorporated
from Purchase Agreement.......................................... 34
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6.32 Senior Debt...................................................... 34
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6.33 Year 2000 Compliance............................................. 34
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SECTION 7 AFFIRMATIVE COVENANTS........................................... 35
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7.1 Information Covenants............................................. 35
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7.2 Preservation of Existence and Franchises.......................... 39
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7.3 Books and Records................................................. 39
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7.4 Compliance with Law............................................... 39
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7.5 Payment of Taxes and Other Indebtedness........................... 39
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7.6 Insurance......................................................... 40
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7.7 Maintenance of Property........................................... 41
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7.8 Performance of Obligations........................................ 41
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7.9 Collateral........................................................ 41
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7.10 Use of Proceeds.................................................. 41
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7.11 Audits/Inspections............................................... 41
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7.12 Financial Covenants.............................................. 42
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7.13 Additional Credit Parties........................................ 44
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7.14 Ownership of Subsidiaries........................................ 44
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7.15 Appraisal Reports................................................ 44
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7.16 Year 2000 Compatibility.......................................... 45
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7.17 Post-Closing Matters............................................. 45
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SECTION 8 NEGATIVE COVENANTS.............................................. 45
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ii
8.1 Indebtedness...................................................... 45
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8.2 Liens............................................................. 46
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8.3 Nature of Business................................................ 46
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8.4 Consolidation and Merger.......................................... 47
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8.5 Sale or Lease of Assets........................................... 47
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8.6 Advances, Investments and Loans................................... 48
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8.7 Dividends......................................................... 48
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8.8 Transactions with Affiliates...................................... 48
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8.9 Fiscal Year; Organizational Documents............................. 48
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8.10 Prepayments of Indebtedness...................................... 48
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8.11 Subordinated Debt................................................ 49
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8.12 Limitations...................................................... 49
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8.13 Sale Leasebacks.................................................. 49
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8.14 Negative Pledges................................................. 50
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8.15 Capital Expenditures............................................. 50
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8.16 Operating Leases................................................. 50
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8.17 Payment Blockage Notice.......................................... 50
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SECTION 9 EVENTS OF DEFAULT............................................... 51
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9.1 Events of Default................................................. 51
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9.2 Acceleration; Remedies............................................ 54
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SECTION 10 AGENCY PROVISIONS.............................................. 55
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10.1 Appointment...................................................... 55
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10.2 Delegation of Duties............................................. 55
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10.3 Exculpatory Provisions........................................... 56
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10.4 Reliance on Communications....................................... 56
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10.5 Notice of Default................................................ 57
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10.6 Non-Reliance on Agent and Other Lenders.......................... 57
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10.7 Indemnification.................................................. 57
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10.8 Agent in Its Individual Capacity................................. 58
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10.9 Successor Agent.................................................. 58
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SECTION 11 MISCELLANEOUS.................................................. 59
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11.1 Notices.......................................................... 59
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11.2 Right of Set-Off................................................. 59
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11.3 Benefit of Agreement............................................. 59
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11.4 No Waiver; Remedies Cumulative................................... 62
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11.5 Payment of Expenses; Indemnification............................. 63
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11.6 Amendments, Waivers and Consents................................. 63
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11.7 Counterparts..................................................... 65
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11.8 Headings......................................................... 65
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11.9 Defaulting Lender................................................ 65
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11.10 Survival of Indemnification and Representations
and Warranties.................................................. 65
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11.11 Governing Law; Venue............................................ 65
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11.12 Waiver of Jury Trial............................................ 66
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11.13 Time............................................................ 66
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11.14 Severability.................................................... 66
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11.15 Entirety........................................................ 67
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iii
11.16 Binding Effect; Amendment and Restatement of Prior
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Supplemental Credit Agreement; Further Assurances............... 67
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SCHEDULES
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Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Existing Permitted Investments
Schedule 6.10 Indebtedness
Schedule 6.11 Litigation
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.23(a) Real Property Locations
Schedule 6.23(b) Personal Property Locations
Schedule 6.23(c) Chief Executive Offices
Schedule 7.6 Insurance
Schedule 8.2 Liens
Schedule 8.8 Affiliate Transactions
Schedule 11.1 Notices
EXHIBITS
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Exhibit 2.2 Form of Notice of Continuation/Conversion
Exhibit 2.4 Form of Term Loan Note
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
iv
AMENDED AND RESTATED CREDIT AGREEMENT
(SUPPLEMENTAL CREDIT FACILITY)
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Credit Agreement"), is
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entered into as of December 21, 1998 among CHATTEM, INC., a Tennessee
corporation (the "Borrower"), each of the Borrower's Domestic Subsidiaries,
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individually a "Guarantor" and collectively the "Guarantors"), the Supplemental
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Credit Lenders (as defined herein), and NATIONSBANK, N.A., as agent for the
Supplemental Credit Lenders (in such capacity, the "Agent").
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RECITALS
WHEREAS, the Borrower and the Guarantors are party to a Credit Agreement (the
"New Credit Agreement") dated as of the date hereof pursuant to which
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NationsBank, N.A. (successor by merger to NationsBank of Tennessee, N.A.), as
agent, and certain other lenders named therein have agreed to amend and restate
the terms and conditions of that certain Credit Agreement dated as of March 24,
1998 (as amended or modified from time to time, the "Existing New Credit
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Agreement"). The Existing New Credit Agreement replaced and refinanced the
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credit facilities provided by the lenders pursuant to that certain Credit
Agreement dated as of June 26, 1997 (as amended or modified from time to time,
the "1997 New Credit Agreement"). The 1997 New Credit Agreement replaced and
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refinanced the credit facilities provided by the lenders pursuant to that
certain Credit Agreement dated as of April 26, 1996 (as amended or modified from
time to time, the "1996 New Credit Agreement"). The credit facilities provided
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pursuant to the 1996 New Credit Agreement replaced and refinanced the credit
facilities provided to the Borrower by the First National Bank of Chicago, as
agent and certain other lenders under the credit agreements dated as of June 17,
1994;
WHEREAS, that certain Indenture dated as of August 3, 1994 among the Borrower,
as issuer, Signal Investment & Management Co., as guarantor, and SouthTrust Bank
of Alabama, National Association, as trustee (as the same may be modified,
supplemented or amended from time to time, the "Indenture"), permits the
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Borrower to incur additional indebtedness that will be considered Senior Debt
(as defined in the Indenture) upon the satisfaction of a financial test set
forth in the Indenture;
WHEREAS, the Borrower, the Guarantors, the lenders named therein and
NationsBank, N.A., as agent are currently parties to that certain Credit
Agreement dated as of March 24, 1998 (as amended or modified from time to time,
the "Existing Supplemental Credit Agreement");
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WHEREAS, the Borrower and the Guarantors have requested that the Supplemental
Credit Lenders, in addition to amending and restating the Existing New Credit
Agreement pursuant to the terms of the New Credit Agreement, amend and restate
the Existing Supplemental Credit Agreement for the purpose of amending and
restating the existing indebtedness evidenced by the Existing Supplemental
Credit Agreement and increasing the credit facilities evidenced by the Existing
Supplemental Credit Agreement to an aggregate principal amount of $115,000,000;
WHEREAS, the Supplemental Credit Lenders have agreed to amend and restate the
terms and conditions of the Existing Supplemental Credit Agreement on the terms
and conditions hereinafter
set forth, including without limitation evidence that the additional
indebtedness incurred hereunder will constitute Senior Debt (as defined in the
Indenture) upon the incurrence thereof in accordance with the request of the
Borrower and the Guarantors.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
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1.1 DEFINITIONS.
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Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to such terms in the New Credit Agreement. In addition, the
following terms shall have the following meanings:
"Additional Credit Party" means each Person that becomes a Guarantor after
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the Closing Date, as provided in Section 7.13.
"Agent" means NationsBank, N.A. or any successor administrative agent
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appointed pursuant to Section 10.9.
"Applicable Percentage" means for purposes of calculating the applicable
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interest rate for any day for Term Loans, the appropriate applicable
percentages corresponding to the Senior Leverage Ratio in effect as of the
most recent Calculation Date as shown below:
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Applicable
Percentage Applicable
For Percentage For
Pricing Senior Leverage Eurodollar Base Rate
Level Ratio Loans Loans
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I Less than 1.0 to 1.0 2.00% 0.50%
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II Greater than or equal to 1.0 to 1.0 2.25% 0.75%
but less than 1.50 to 1.0
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III Greater than or equal to 1.50 to 1.0 2.50% 1.00%
but less than 2.0 to 1.0
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IV Greater than or equal to 2.0 to 1.0 2.75% 1.25%
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2
The Applicable Percentage for Term Loans shall be determined and adjusted
quarterly on the date (each a "Calculation Date") five Business Days after
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the date by which the Borrower is required to provide the officer's
certificate in accordance with the provisions of Section 7.1(d); provided,
however that (i) until such time as the Borrower provides the officer's
certificate in accordance with Section 7.1(d) following the end of fiscal year
1998, the Applicable Percentage for the Term Loans shall be based on Pricing
Level III (as shown above) and shall remain at Pricing Level III until the
first Calculation Date subsequent to the Closing Date and, thereafter, the
Applicable Percentage for the Term Loans shall be determined by the then
current Senior Leverage Ratio, and (ii) if the Borrower fails to provide the
officer's certificate required by Section 7.1(d) on or before the most recent
Calculation Date or fails to deliver a copy of such officer's certificate to
the Agency Services Address as required by Section 7.1(d), the Applicable
Percentage for Term Loans from such Calculation Date shall be based on Pricing
Level IV until such time that an appropriate officer's certificate is provided
whereupon the Applicable Percentage shall be determined by the then current
Senior Leverage Ratio. Each Applicable Percentage shall be effective from one
Calculation Date until the next Calculation Date. Any adjustment in the
Applicable Percentage shall be applicable to all existing Term Loans as well
as any new Term Loans made or issued.
"Borrower" means the Person identified as such in the heading hereof,
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together with any successors and permitted assigns.
"Calculation Date" has the meaning set forth in the definition of Applicable
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Percentage.
"Closing Date" means the date hereof.
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"Commitments" means the Revolving Committed Amount and the Term Loan
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Committed Amount.
"Credit Documents" means collectively, the Supplemental Credit Documents and
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the New Credit Agreement Documents.
"Credit Party Obligations" means, without duplication, (a) all of the
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obligations of the Credit Parties to the Supplemental Credit Lenders and the
Agent, whenever arising, under this Credit Agreement, the Term Loan Notes, the
Collateral Documents or any of the other Supplemental Credit Documents to
which the Borrower or any other Credit Party is a party (including, but not
limited to, any interest accruing after the occurrence of a Bankruptcy Event
with respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code) and (b) all liabilities and
obligations owing from a Credit Party to any Supplemental Credit Lender, or
any Affiliate of a Supplemental Credit Lender, arising under interest rate
protection agreements, foreign currency exchange agreements, commodity
purchase or option agreements or other interest or exchange rate or commodity
price hedging agreements (collectively, the "Hedging Agreements").
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"Default" means any event, act or condition which with notice or lapse of
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time, or both, would constitute an Event of Default.
3
"Defaulting Lender" means, at any time, any Lender that, at such time (a)
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has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement or the New Credit Agreement,
(b) has failed to pay to the Agent or any Lender an amount owned by such
Lender pursuant to the terms of this Credit Agreement or the New Credit
Agreement or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver or similar official.
"Effective Date" means the date on which the conditions set forth in Section
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5.1 of the New Credit Agreement shall have been fulfilled (or waived in the
sole discretion of the Lenders) and on which the initial Loans shall have been
made.
"Event of Default" has the meaning specified in Section 9.1.
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"Extension of Credit" means, as to any Lender, the making of a Loan by such
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Lender (or a participation therein by a Lender).
"GAAP" means generally accepted accounting principles in the United States
----
applied on a consistent basis and subject to Section 1.3.
"Guarantor" means each of the Domestic Subsidiaries of the Borrower and each
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Additional Credit Party which has executed a Joinder Agreement, together
with their successors and assigns.
"Hedging Agreements" has the meaning set forth in the definition of Credit
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Party Obligations.
"Interest Payment Date" means (a) as to Base Rate Loans, the last Business
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Day of each fiscal quarter of the Borrower and on the Term Loan Maturity Date
and (b) as to Eurodollar Loans, on the last day of each applicable Interest
Period and on the Term Loan Maturity Date and in addition if the Interest
Period for a Eurodollar Loan is more than 3 months, then at 3 month intervals
beginning on the date 3 months from the beginning of the Interest Period.
"Interest Period" means as to Eurodollar Loans, a period of one, two, three,
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six and twelve months' duration, as the Borrower may elect, commencing, in
each case, on the date of the borrowing (including continuations and
conversions thereof); provided, however, (a) if any Interest Period would end
on a day which is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day (except that where the next succeeding
Business Day falls in the next succeeding calendar month, then on the next
preceding Business Day), (b) no Interest Period shall extend beyond the Term
Loan Maturity Date, (c) no Interest Period shall extend beyond any Principal
Amortization Payment Date unless the portion of the Term Loans comprised of
Base Rate Loans together with the portion of the Term Loans comprised of
Eurodollar Loans with Interest Periods expiring prior to such Principal
Amortization Payment Date, is at least equal to the amount of such Principal
Amortization Payment due on such date and (d) where an Interest Period begins
on a day for which there is no numerically
4
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last Business Day of such calendar
month.
"Joinder Agreement" means a Joinder Agreement substantially in the form of
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Exhibit 7.13.
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"Lender" means collectively, the Supplemental Credit Lenders and the New
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Credit Agreement Lenders.
"Loan" or "Loans" means the Revolving Loans, the Swingline Loans and/or the
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Term Loans (or a portion of any Revolving Loan and/or the Term Loans),
individually or collectively, as appropriate.
"New Credit Agreement Documents" means the New Credit Agreement, the Notes
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(other than the Term Loan Notes), the Collateral Documents, the Fee Letter and
all other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.
"New Credit Agreement Lenders" means any of the Persons identified as a "New
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Credit Agreement Lender" on the signature pages to the New Credit Agreement,
and any Person which may become a New Credit Agreement Lender by way of
assignment in accordance with the terms of the New Credit Agreement, together
with their successors and permitted assigns.
"Non-Excluded Taxes" has the meaning set forth in Section 3.14.
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"Note" or "Notes" means the Revolving Loan Notes, the Swingline Note
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and/or the Term Loan Notes, individually or collectively, as appropriate.
"Notice of Continuation/Conversion" means a request by the Borrower to
---------------------------------
continue an existing Eurodollar Loan to a new Interest Period or to convert a
Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan,
in the form of Exhibit 2.2.
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"Participation Interest" means the Extension of Credit by a Lender by way of
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the purchase of a participation in any Loans as provided in Section 3.9.
"Principal Amortization Payment" means a principal payment on the Term Loans
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as set forth in Section 2.1(d).
"Principal Amortization Payment Date" means the date a Principal
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Amortization Payment is due.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
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hereinafter defined) constitutes at least 51% of the Credit Exposure of all
Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
5
Exposure of such Lender at such time. For purposes of the preceding sentence,
the term "Credit Exposure" as applied to each Lender shall mean (a) at any
time prior to the termination of the Commitments, the sum of (i) the Revolving
Loan Commitment Percentage of such Lender multiplied by the Revolving
Committed Amount, plus (ii) the Term Loan Commitment Percentage of such Lender
multiplied by the aggregate principal amount of Term Loans outstanding at such
time and (b) at any time after the termination of the Commitments, the sum of
the principal balance of the outstanding Loans of such Lender.
"Supplemental Credit Documents" means this Credit Agreement, the Term Loan
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Notes, any Joinder Agreement, the Collateral Documents, the Fee Letter and
all other related agreements and documents issued or delivered hereunder or
thereunder.
"Supplemental Credit Lenders" means any of the Persons identified as a
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"Supplemental Credit Lender" on the signature pages hereto, and any Person
which may become a Supplemental Credit Lender by way of assignment in
accordance with the terms hereof, together with their successors and
permitted assigns.
"Term Loan Committed Amount" means ONE HUNDRED FIFTEEN MILLION DOLLARS
--------------------------
($115,000,000).
"Term Loan Commitment Percentage" means for a Supplemental Credit Lender,
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the percentage identified as its Term Loan Commitment Percentage on Schedule
1.1(a) as such percentage may be modified in connection with any assignment
made in accordance with the provisions of Section 11.3.
"Term Loan Maturity Date" means December 21, 2003.
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"Term Loan Note" or "Term Loan Notes" means the promissory notes of the
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Borrower in favor of the Supplemental Credit Lenders having a Term Loan
Commitment Percentage evidencing the Term Loans provided pursuant to Section
2.1, individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced from
time to time in the form of Exhibit 2.4(a).
"Term Loans" means the Term Loans made to the Borrower pursuant to Section
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2.1 hereof.
1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
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For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding." References in this Credit Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.
6
1.3 ACCOUNTING TERMS.
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Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Supplemental
Credit Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All financial statements delivered to the Supplemental Credit
Lenders hereunder shall be accompanied by a statement from the Borrower that
GAAP has not changed since the most recent financial statements delivered by the
Borrower to the Supplemental Credit Lenders or if GAAP has changed describing
such changes in detail and explaining how such changes affect the financial
statements. All calculations made for the purposes of determining compliance
with this Credit Agreement shall (except as otherwise expressly provided herein)
be made by application of GAAP applied on a basis consistent with the most
recent annual or quarterly financial statements delivered pursuant to Section
7.1 (or, prior to the delivery of the first financial statements pursuant to
Section 7.1, consistent with the financial statements described in Section
5.1(c) of the New Credit Agreement); provided, however, if (a) the Borrower
shall object to determining such compliance on such basis at the time of
delivery of such financial statements due to any change in GAAP or the rules
promulgated with respect thereto or (b) either Agent or the Required Lenders
shall so object in writing within 60 days after delivery of such financial
statements (or after the Supplemental Credit Lenders have been informed of the
change in GAAP affecting such financial statements, if later), then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower to the Supplemental Credit Lenders as to
which no such objection shall have been made.
SECTION 2
CREDIT FACILITIES
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2.1 TERM LOANS.
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(a) Term Loans. The Credit Parties acknowledge and agree that
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[$16,189,867.35] of the Term Loans have already been advanced to the Borrower
under the Existing Credit Agreement on March 24, 1998. All such Term Loans
shall be governed by the terms of this Credit Agreement. Subject to the terms
and conditions set forth herein, each Supplemental Credit Lender that has a
Term Loan Commitment Percentage severally agrees, to make a term loan
(collectively, the "Term Loans") to the Borrower, in Dollars, in an amount
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equal to such Supplemental Credit Lender's Term Loan Commitment Percentage
of the Term Loan Committed Amount; provided that the aggregate amount of
such Term Loans made shall not exceed the Term Loan Committed Amount. Once
repaid, Term Loans cannot be reborrowed.
(b) [Reserved]
7
(c) Funding of Term Loans. On the Effective Date, each Supplemental Credit
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Lender holding a Term Loan Commitment Percentage of any unfunded portion of
the Term Loan Committed Amount will make such amount available to the Agent by
deposit, in Dollars and in immediately available funds, at the offices of the
Agent at its principal office in Charlotte, North Carolina or at such other
address as the Agent may designate in writing. The amount of the Term Loans
will then be made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office of the Agent, to the
extent the amount of such Term Loans are made available to the Agent. All Term
Loans funded on the date hereof shall be Base Rate Loans. All or any portion
of the Term Loans may be converted into Eurodollar Loans in accordance with
the terms of Section 2.2. No Supplemental Credit Lender shall be responsible
for the failure or delay by any other Supplemental Credit Lender in its
obligation to make Term Loans hereunder; provided however, that the failure of
any Supplemental Credit Lender to fulfill its obligations hereunder shall not
relieve any other Supplemental Credit Lender of its obligations hereunder.
(d) Amortization. The principal amount of the Term Loans shall be repaid
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in quarterly payments in the amounts and on the dates set forth below:
Principal Term Loan Principal
Amortization Amortization
Payment Dates Payment
March 31, 1999 $ 3,500,000
June 30, 1999 $ 3,500,000
September 30, 1999 $ 3,500,000
December 31, 1999 $ 3,500,000
March 31, 2000 $ 4,500,000
June 30, 2000 $ 4,500,000
September 30, 2000 $ 4,500,000
December 31, 2000 $ 4,500,000
March 31, 2001 $ 5,750,000
June 30, 2001 $ 5,750,000
September 30, 2001 $ 5,750,000
December 31, 2001 $ 5,750,000
March 31, 2002 $ 7,250,000
June 30, 2002 $ 7,250,000
September 30, 2002 $ 7,250,000
December 31, 2002 $ 7,250,000
March 31, 2003 $ 7,750,000
June 30, 2003 $ 7,750,000
September 30, 2003 $ 7,750,000
December 21, 2003 $ 7,750,000
Total $115,000,000
8
2.2 CONTINUATIONS AND CONVERSIONS.
------------------------------
Subject to the terms of Section 5.1, the Borrower shall have the option, on
any Business Day, to continue in existence Eurodollar Loans for a subsequent
Interest Period, to convert Base Rate Loans into Eurodollar Loans or to convert
Eurodollar Loans into Base Rate Loans; provided, however, that (a) each such
continuation or conversion must be requested by the Borrower pursuant to a
written Notice of Continuation/Conversion, in the form of Exhibit 2.2, in
-----------
compliance with the terms set forth below, (b) except as provided in Section
3.12, Eurodollar Loans may only be continued or converted into Base Rate Loans
on the last day of the Interest Period applicable thereto, (c) Eurodollar Loans
may not be continued nor may Base Rate Loans be converted into Eurodollar Loans
during the existence and continuation of a Default or Event of Default and (d)
any request to extend a Eurodollar Loan that fails to comply with the terms
hereof or any failure to request an extension of a Eurodollar Loan at the end of
an Interest Period shall constitute a request for a conversion to a Base Rate
Loan on the last day of the applicable Interest Period. Each continuation or
conversion must be requested by the Borrower no later than 11:00 a.m. (i) one
Business Day prior to the date for a requested conversion of a Eurodollar Loan
to a Base Rate Loan or (ii) three Business Days prior to the date for a
requested extension of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Agent which shall set forth (A) whether
the Borrower wishes to continue or convert such Loans and (B) if the request is
to continue a Eurodollar Loan or convert a Base Rate Loan to a Eurodollar Loan,
the Interest Period applicable thereto.
2.3 MINIMUM AMOUNTS.
---------------
Each request for a conversion or continuation shall be subject to the
requirements that (a) each Eurodollar Loan shall be in a minimum amount of
$1,000,000 and in integral multiples of $500,000 in excess thereof, (b) each
Base Rate Loan shall be in a minimum amount of the lesser of $1,000,000 (and
integral multiples of $500,000 in excess thereof) or the then remaining
principal balance of the Term Loan, if less and (c) no more than ten Eurodollar
Loans shall, in the aggregate, be outstanding under the New Credit Agreement and
hereunder at any one time. For the purposes of this Section, all Eurodollar
Loans with the same Interest Periods shall be considered as one Eurodollar Loan,
but Eurodollar Loans with different Interest Periods, even if they begin on the
same date, shall be considered as separate Eurodollar Loans.
2.4 NOTES.
-----
The Term Loans made by the Supplemental Credit Lenders shall be evidenced by a
duly executed promissory note of the Borrower to each such Supplemental Credit
Lender in the face amount of its Term Loan Commitment Percentage of the Term
Loan Committed Amount in substantially the form of Exhibit 2.4.
-----------
9
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS
--------------------------------------
3.1 INTEREST.
--------
(a) Interest Rate. All Base Rate Loans shall accrue interest at the
-------------
Adjusted Base Rate and all Eurodollar Loans shall accrue interest at the
Adjusted Eurodollar Rate.
(b) Default Rate of Interest. Upon the occurrence, and during the
------------------------
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Term Loans and any other amounts owing
hereunder or under the other Credit Documents (including without limitation
fees and expenses) shall bear interest, payable on demand, at a per annum rate
equal to 4% plus the rate which would otherwise be applicable (or if no rate
is applicable, then the rate for Revolving Loans that are Base Rate Loans plus
four percent (4%) per annum).
(c) Interest Payments. Interest on Term Loans shall be due and payable in
-----------------
arrears on each Interest Payment Date. If an Interest Payment Date falls on a
date which is not a Business Day, such Interest Payment Date shall be deemed
to be the next succeeding Business Day (subject to accrual of interest for the
period of such extension), except that in the case of Eurodollar Loans where
the next succeeding Business Day falls in the next succeeding calendar month,
then on the next preceding day.
3.2 PLACE AND MANNER OF PAYMENTS.
----------------------------
All payments of principal, interest, fees, expenses and other amounts to be
made by a Credit Party under this Credit Agreement shall be received not later
than 2:00 p.m. on the date when due, in Dollars and in immediately available
funds, by the Agent at its offices at NationsBank Plaza, Charlotte, North
Carolina. Payments received after such time shall be deemed to have been
received on the next Business Day. Payments received after such time shall be
deemed to have been received on the next Business Day. The Borrower shall, at
the time it makes any payment under this Credit Agreement, specify to the Agent,
the Term Loans, fees or other amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that it fails to specify, or if
such application would be inconsistent with the terms hereof, the Agent shall,
subject to Section 3.7, distribute such payment to the Supplemental Credit
Lenders in such manner as the Agent may deem appropriate). The Agent will
distribute such payments to the applicable Supplemental Credit Lenders on the
date received if any such payment is received prior to 2:00 p.m.; otherwise the
Agent will distribute such payment to the applicable Supplemental Credit Lenders
on the next succeeding Business Day. Whenever any payment hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to accrual of
interest and fees for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be made on the
next preceding Business Day.
10
3.3 PREPAYMENTS.
-----------
(a) Voluntary Prepayments. The Borrower shall have the right to prepay Term
---------------------
Loans in whole or in part from time to time without premium or penalty;
provided, however, that (i) Eurodollar Loans may only be prepaid on three
Business Days' prior written notice to the Agent and any prepayment of
Eurodollar Loans will be subject to Section 3.15; (ii) Base Rate Loans may
only be prepaid after written notice (confirmed by a telephone call from the
Borrower) to the Agent not later than 11:00 a.m. on the Business Day of the
applicable prepayment; (iii) each such partial prepayment shall be in the
minimum principal amount of $1,000,000 and integral multiples of $1,000,000 in
excess thereof; and (iv) voluntary prepayments with respect to the Term Loans
shall be applied pro rata among the remaining Principal Amortization Payments
in inverse order of maturity thereof.
(b) Mandatory Prepayments.
---------------------
(i) Excess Cash Flow. Within 10 days after the date the audited
----------------
financial statements are required to be delivered pursuant to Section
7.1(a), the Borrower shall make a prepayment of the Loans in an amount equal
to 75% of the Excess Cash Flow earned during such prior fiscal year (to be
applied as set forth in Section 3.3(c) below).
(ii) Asset Dispositions. Immediately upon receipt by the
------------------
Borrower or any of its Subsidiaries of proceeds from any Asset Disposition,
the Borrower shall forward 100% of the Net Cash Proceeds of such Asset
Disposition to the Lenders as a prepayment of the Loans (to be applied as
set forth in Section 3.3(c) below).
(iii) Issuances of Equity. Immediately upon receipt by the Borrower
-------------------
or any of its Subsidiaries of proceeds from any Equity Issuance (other than
the issuance of capital stock of the Borrower in connection with the
Borrower's purchase of the Acquired Assets), the Borrower shall forward 50%
of the Net Cash Proceeds of such Equity Issuance to the Lenders as a
prepayment of the Loans (to be applied as set forth in Section 3.3(c)
below).
(iv) Recovery Event. Subject to the terms and conditions of
--------------
Section 7.6 hereof, immediately upon receipt by the Borrower or any of its
Subsidiaries of proceeds from any Recovery Event, the Borrower shall forward
100% of the Net Cash Proceeds from such Recovery Event to the Lenders as a
prepayment of the Loans (to be applied as set forth in Section 3.3(c)
below).
(v) Debt Issuances. Immediately upon receipt by the Borrower or any
--------------
of its Subsidiaries of proceeds from any Debt Issuance, the Borrower shall
prepay the Loans in an aggregate amount equal to 100% of the Net Cash
Proceeds of such Debt Issuance to the Lenders such prepayment to be applied
as set forth in Section 3.3(c) below.
11
(c) Application of Prepayments. All amounts required to be paid pursuant
--------------------------
to Section 3.3(b)(i), (ii), (iii), (iv) and (v) above shall be applied, first
to the outstanding Term Loans (which amounts shall then be applied to the
remaining Principal Amortization Payments due in inverse order of maturity
thereof), second to the Revolving Loans (with a corresponding permanent
reduction in the Revolving Committed Amount) and third to Swingline Loans
(with a corresponding permanent reduction in the Revolving Committed Amount).
Within the parameters of the application set forth above, prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Loans in direct order
of Interest Period maturities. All prepayments hereunder shall be subject to
Section 3.15.
3.4 FEES.
----
The Borrower agrees to pay to the Agent, for its own account, an annual fee as
agreed to between the Borrower and the Agent in the Fee Letter.
3.5 PAYMENT IN FULL AT MATURITY.
---------------------------
On the Term Loan Maturity Date, the entire outstanding principal balance of
all Term Loans, together with accrued but unpaid interest and all other sums
owing with respect thereto, shall be due and payable in full, unless accelerated
sooner pursuant to Section 9 hereof.
3.6 COMPUTATIONS OF INTEREST AND FEES.
---------------------------------
(a) Except for Base Rate Loans, in which case interest shall be computed on
the basis of a 365 or 366 day year as the case may be (unless the Base Rate is
determined by reference to the Federal Funds Rate), all computations of
interest and fees hereunder shall be made on the basis of the actual number of
days elapsed over a year of 360 days. Interest shall accrue from and include
the date of borrowing (or continuation or conversion) but exclude the date of
payment.
(b) It is the intent of the Supplemental Credit Lenders and the Credit
Parties to conform to and contract in strict compliance with applicable usury
law from time to time in effect. All agreements between the Supplemental
Credit Lenders and the Borrower are hereby limited by the provisions of this
paragraph which shall override and control all such agreements, whether now
existing or hereafter arising and whether written or oral. In no way, nor in
any event or contingency (including but not limited to prepayment or
acceleration of the maturity of any obligation), shall the interest taken,
reserved, contracted for, charged, or received under this Credit Agreement,
under the Term Loan Notes or otherwise, exceed the maximum nonusurious amount
permissible under applicable law. If, from any possible construction of any of
the Supplemental Credit Documents or any other document, interest would
otherwise be payable in excess of the maximum nonusurious amount, any such
construction shall be subject to the provisions of this paragraph and such
documents shall be automatically reduced to the maximum nonusurious amount
permitted under applicable law, without the necessity of execution of any
amendment or new document. If any Supplemental Credit Lender shall ever
receive anything of value which is characterized as interest on the Term Loans
under applicable law and which would, apart from this provision, be in excess
of
12
the maximum lawful amount, an amount equal to the amount which would have
been excessive interest shall, without penalty, be applied to the reduction of
the principal amount owing on the Term Loans, and not to the payment of
interest, or refunded to the Borrower or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such unpaid
principal amount of the Term Loans. The right to demand payment of the Term
Loans or any other indebtedness evidenced by any of the Supplemental Credit
Documents does not include the right to receive any interest which has not
otherwise accrued on the date of such demand, and the Supplemental Credit
Lenders do not intend to charge or receive any unearned interest in the event
of such demand. All interest paid or agreed to be paid to the Supplemental
Credit Lenders with respect to the Term Loans shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread throughout
the full stated term (including any renewal or extension) of the Term Loans so
that the amount of interest on account of such indebtedness does not exceed
the maximum nonusurious amount permitted by applicable law.
3.7 PRO RATA TREATMENT.
------------------
Except to the extent otherwise provided herein, each Loan borrowing, each
payment or prepayment of principal of any Loan, each payment of fees and the
Administrative Fees retained by the Agent for its own account, each reduction of
the Revolving Committed Amount, and each conversion or continuation of any Loan,
shall be allocated pro rata among the relevant Lenders in accordance with the
respective Revolving Loan Commitment Percentages and Term Loan Commitment
Percentages, as applicable, of such Lenders (or, if the Commitments of such
Lenders have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans and Participation Interests of such
Lenders); provided that, if any Lender shall have failed to pay its applicable
--------
pro rata share of any Loan, then any amount to which such Lender would otherwise
be entitled pursuant to this Section shall instead be payable to the Agent;
provided further, that in the event any amount paid to any Lender pursuant to
-------- -------
this Section is rescinded or must otherwise be returned by the Agent, each
Lender shall, upon the request of the Agent, repay to the Agent the amount so
paid to such Lender, with interest for the period commencing on the date such
payment is returned by the Agent until the date the Agent receives such
repayment at a rate per annum equal to, during the period to but excluding the
date two Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus four percent (4%) per annum.
----
3.8 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
---------------------------------------------
Notwithstanding any other provisions of this Credit Agreement or the New
Credit Agreement, after the occurrence and during the continuance of an Event of
Default, all amounts collected or received by the Agent or any Lender on account
of amounts outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation reasonable attorneys' fees) of the Agent in
connection with enforcing the rights of the Lenders under the Credit Documents
and any protective advances made by the Agent with respect to the Collateral
under or pursuant to the terms of the Collateral Documents;
13
SECOND, to payment of any fees owed to the Agent in its capacity as the
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and expenses,
(including, without limitation, reasonable attorneys' fees) of each of the
Lenders in connection with enforcing its rights under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest payable to the
Lenders hereunder and under the New Credit Agreement;
FIFTH, to the payment of the outstanding principal amount of the Loans, and
to any principal amounts outstanding under Hedging Agreements, pro rata, as
set forth below;
SIXTH, to all other obligations which shall have become due and payable
under the Credit Documents and not repaid pursuant to clauses "FIRST" through
"FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, and
obligations under Hedging Agreements held by such Lender bears to the aggregate
then outstanding Loans, and obligations under Hedging Agreements) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH," "FIFTH," and
"SIXTH" above.
3.9 SHARING OF PAYMENTS.
-------------------
The Supplemental Credit Lenders agree among themselves for the benefit of
themselves and the New Credit Agreement Lenders that, except to the extent
otherwise provided herein, in the event that any Lender shall obtain payment in
respect of any Loan or any other obligation owing to such Lender under this
Credit Agreement or the New Credit Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
in excess of its pro rata share of such payment as provided for in this Credit
Agreement and the New Credit Agreement, such Lender shall promptly purchase from
the other Lenders for cash an interest in such Loans and other obligations in
such amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance with
their respective ratable shares as provided for in this Credit Agreement and the
New Credit Agreement. The Supplemental Credit Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of the
interest theretofore sold, return its share of that benefit (together with its
share of any accrued interest payable with respect thereto) to each Lender whose
payment shall have been rescinded or otherwise restored. The Borrower agrees
that any Lender so purchasing such an interest may, to the fullest extent
permitted by
14
law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such interest as fully as if such Lender were a
holder of such Loan or other obligation in the amount of such interest. Except
as otherwise expressly provided in this Credit Agreement, if any Lender or the
Agent shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to this
Credit Agreement or the New Credit Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.9 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders under
this Section 3.9 to share in the benefits of any recovery on such secured claim.
3.10 CAPITAL ADEQUACY.
----------------
If, after the date hereof, any Supplemental Credit Lender has determined that
the adoption or the becoming effective of, or any change in, or any change by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Supplemental Credit Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Supplemental Credit Lender's capital or
assets as a consequence of its commitments or obligations hereunder to a level
below that which such Supplemental Credit Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Supplemental Credit Lender's policies with respect to capital adequacy),
then, upon notice from such Supplemental Credit Lender to the Borrower, the
Borrower shall be obligated to pay to such Supplemental Credit Lender such
additional amount or amounts as will compensate such Supplemental Credit Lender
for such reduction. Each determination by any such Supplemental Credit Lender
of amounts owing under this Section shall, absent manifest error, be conclusive
and binding on the parties hereto.
3.11 INABILITY TO DETERMINE INTEREST RATE.
------------------------------------
If prior to the first day of any Interest Period, the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall promptly give telecopy or telephonic
notice thereof to the Borrower and the Supplemental Credit Lenders. If such
notice is given (a) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (b) any Term Loans
that were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans and (c) any outstanding Eurodollar Loans shall be converted, on the first
day of such Interest Period, to Base Rate Loans. Until such notice has been
withdrawn by the Agent, no further Eurodollar Loans shall be made or continued
as such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
15
3.12 ILLEGALITY.
----------
Notwithstanding any other provision herein, if the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Supplemental
Credit Lender to make or maintain Eurodollar Loans as contemplated by this
Credit Agreement, (a) such Supplemental Credit Lender shall promptly give
written notice of such circumstances to the Borrower and the Agent (which notice
shall be withdrawn whenever such circumstances no longer exist), (b) the
commitment of such Supplemental Credit Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it shall no
longer be unlawful for such Supplemental Credit Lender to make or maintain
Eurodollar Loans, such Supplemental Credit Lender shall then have a commitment
only to make a Base Rate Loan when a Eurodollar Loan is requested and (c) such
Supplemental Credit Lender's Term Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Base Rate Loans on the respective last
days of the then current Interest Periods with respect to such Term Loans or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such
Supplemental Credit Lender such amounts, if any, as may be required pursuant to
Section 3.15.
3.13 REQUIREMENTS OF LAW.
-------------------
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Supplemental Credit
Lender, or compliance by any Supplemental Credit Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the Closing Date
(or, if later, the date on which such Supplemental Credit Lender becomes a
Supplemental Credit Lender):
(a) shall subject such Supplemental Credit Lender to any tax of any kind
whatsoever with respect to any Eurodollar Loans made by it or its obligation
to make Eurodollar Loans, or change the basis of taxation of payments to such
Supplemental Credit Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 3.14 (including Non-Excluded Taxes imposed solely by reason
of any failure of such Supplemental Credit Lender to comply with its
obligations under Section 3.14(b)) and changes in taxes measured by or imposed
upon the overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Supplemental Credit Lender or its applicable lending
office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Supplemental Credit Lender which is not otherwise included in the
determination of the Eurodollar Rate hereunder; or
(c) shall impose on such Supplemental Credit Lender any other condition
(excluding any tax of any kind whatsoever);
16
and the result of any of the foregoing is to increase the cost to such
Supplemental Credit Lender, by an amount which such Supplemental Credit Lender
reasonably deems to be material, of making, converting into, continuing or
maintaining Eurodollar Loans or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, upon notice to the Borrower from such
Supplemental Credit Lender, through the Agent, in accordance herewith, the
Borrower shall be obligated to promptly pay such Supplemental Credit Lender,
upon its demand, any additional amounts necessary to compensate such
Supplemental Credit Lender for such increased cost or reduced amount receivable,
provided that, in any such case, the Borrower may elect to convert the
--------
Eurodollar Loans made by such Supplemental Credit Lender hereunder to Base Rate
Loans by giving the Agent at least one Business Day's notice of such election,
in which case the Borrower shall promptly pay to such Supplemental Credit
Lender, upon demand, without duplication, such amounts, if any, as may be
required pursuant to Section 3.15. If any Supplemental Credit Lender becomes
entitled to claim any additional amounts pursuant to this Section 3.13, it shall
provide prompt notice thereof to the Borrower, through the Agent, certifying (x)
that one of the events described in this Section 3.13 has occurred and
describing in reasonable detail the nature of such event, (y) as to the
increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Supplemental Credit Lender and a reasonably
detailed explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section 3.13 submitted by such
Supplemental Credit Lender, through the Agent, to the Borrower shall be
conclusive and binding on the parties hereto in the absence of manifest error.
This covenant shall survive the termination of this Credit Agreement and the
payment of the Term Loans and all other amounts payable hereunder.
3.14 TAXES.
-----
(a) Except as provided below in this Section 3.14, all payments made by the
Borrower under this Credit Agreement and any Term Loan Notes shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any court, or governmental body, agency or
other official, excluding taxes measured by or imposed upon the overall net
income of any Supplemental Credit Lender or its applicable lending office, or
any branch or affiliate thereof, and all franchise taxes, branch taxes, taxes
on doing business or taxes on the overall capital or net worth of any
Supplemental Credit Lender or its applicable lending office, or any branch or
affiliate thereof, in each case imposed in lieu of net income taxes: (i) by
the jurisdiction under the laws of which such Supplemental Credit Lender,
applicable lending office, branch or affiliate is organized or is located, or
in which its principal executive office is located, or any nation within which
such jurisdiction is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such tax and such
Supplemental Credit Lender, applicable lending office, branch or affiliate
other than a connection arising solely from such Supplemental Credit Lender
having executed, delivered or performed its obligations, or received payment
under or enforced, this Credit Agreement or any Term Loan Notes. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
------------------
amounts payable to the Agent or any Supplemental Credit Lender hereunder or
under any Term Loan Notes, (A) the amounts so payable to the Agent or such
Supplemental
17
Credit Lender shall be increased to the extent necessary to yield to the Agent
or such Supplemental Credit Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Credit Agreement or any Term Loan Notes, provided,
--------
however, that the Borrower shall be entitled to deduct and withhold any Non-
-------
Excluded Taxes and shall not be required to increase any such amounts payable
to any Supplemental Credit Lender that is not organized under the laws of the
United States of America or a state thereof if such Supplemental Credit Lender
fails to comply with the requirements of paragraph (b) of this Section 3.14
whenever any Non-Excluded Taxes are payable by the Borrower, and (B) as
promptly as possible thereafter the Borrower shall send to the Agent for its
own account or for the account of such Supplemental Credit Lender, as the case
may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-
Excluded Taxes when due to the appropriate taxing authority or fails to remit
to the Agent the required receipts or other required documentary evidence, the
Borrower shall indemnify the Agent and the Supplemental Credit Lenders for any
incremental taxes, interest or penalties that may become payable by the Agent
or any Supplemental Credit Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Credit
Agreement and the payment of the Term Loans and all other amounts payable
hereunder.
(b) Each Supplemental Credit Lender that is not incorporated under the laws
of the United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the Borrower under this
Credit Agreement or Term Loan Notes to such Supplemental Credit Lender,
deliver to the Borrower and the Agent (x) two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement, any Term Loan Notes
without deduction or withholding of any United States federal income
taxes or (y) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(B) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Agent; or
(ii) in the case of any such Supplemental Credit Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (A) represent to the Borrower (for the benefit of the Borrower and
the
18
Agent) that it is not a bank within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code, (B) agree to furnish to the Borrower, on or
before the date of any payment by the Borrower, with a copy to the Agent,
two accurate and complete original signed copies of Internal Revenue
Service Form W-8, or successor applicable form certifying to such
Supplemental Credit Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the provisions
of Section 881(c) of the Internal Revenue Code with respect to payments to
be made under this Credit Agreement and any Term Loan Notes (and to deliver
to the Borrower and the Agent two further copies of such form on or before
the date it expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
Borrower or the Agent for filing and completing such forms), and (C) agree,
to the extent legally entitled to do so, upon reasonable request by the
Borrower, to provide to the Borrower (for the benefit of the Borrower and
the Agent) such other forms as may be reasonably required in order to
establish the legal entitlement of such Supplemental Credit Lender to an
exemption from withholding with respect to payments under this Credit
Agreement and any Term Loan Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Supplemental Credit Lender
hereunder which renders all such forms inapplicable or which would prevent
such Supplemental Credit Lender from duly completing and delivering any such
form with respect to it and such Supplemental Credit Lender so advises the
Borrower and the Agent then such Supplemental Credit Lender shall be exempt
from such requirements. Each Person that shall become a Supplemental Credit
Lender or a participant of a Supplemental Credit Lender pursuant to Section
11.3 shall, upon the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements required pursuant to
this subsection (b); provided that in the case of a participant of a
--------
Supplemental Credit Lender, the obligations of such participant of a
Supplemental Credit Lender pursuant to this subsection (b) shall be determined
as if the participant of a Supplemental Credit Lender were a Supplemental
Credit Lender except that such participant of a Supplemental Credit Lender
shall furnish all such required forms, certifications and statements to the
Supplemental Credit Lender from which the related participation shall have
been purchased.
3.15 INDEMNITY.
---------
The Borrower promises to indemnify each Supplemental Credit Lender and to hold
each Supplemental Credit Lender harmless from any loss or expense which such
Supplemental Credit Lender may sustain or incur (other than through such
Supplemental Credit Lender's gross negligence or willful misconduct) as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of
19
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as reasonably
determined by such Supplemental Credit Lender) which would have accrued to such
Supplemental Credit Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank Eurodollar market. The
agreements in this Section shall survive the termination of this Credit
Agreement, the payment of the Term Loans and the payment of all other amounts
payable hereunder.
3.16 REPLACEMENT OF LENDERS.
----------------------
If any Supplemental Credit Lender delivers a notice to the Borrower pursuant
to Sections 3.10, 3.13 or 3.14, then the Borrower shall have the right, if no
Default or Event of Default then exists, to either (i) replace such Supplemental
Credit Lender (the "Replaced Lender") with one or more additional banks or
---------------
financial institutions (collectively, the "Replacement Lender"), provided that
------------------ --------
(A) at the time of any replacement pursuant to this Section 3.16, the
Replacement Lender shall enter into one or more assignment agreements
substantially in the form of Exhibit 11.3 pursuant to, and in accordance with
------------
the terms of, Section 11.3(b) (and with all fees payable pursuant to said
Section 11.3(b) to be paid by the Replacement Lender) pursuant to which the
Replacement Lender shall acquire all of the rights and obligations of the
Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (a) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (b) all accrued, but theretofore unpaid, fees owing to the Replaced
Lender pursuant to Section 3.4, and (B) all obligations of the Borrower owing to
the Replaced Lender (including all obligations, if any, owing pursuant to
Section 3.10, 3.13 or 3.14, but excluding those obligations specifically
described in clause (A) above in respect of which the assignment purchase price
has been, or is concurrently being paid) shall be paid in full to such Replaced
Lender concurrently with such replacement or (ii) if a Replacement Lender is not
located within 60 days of such notice, terminate the Commitments and repay the
Loans in full within 120 days of receipt of such notice without incurring any
prepayment penalty under Section 3.3(d).
SECTION 4
GUARANTY
--------
4.1 GUARANTY OF PAYMENT.
-------------------
Subject to Section 4.7 below, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Supplemental Credit Lender, each
Affiliate of Supplemental Credit Lender that enters into a Hedging Agreement and
the Agent the prompt payment of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise). The Guarantors additionally, jointly and severally, unconditionally
guarantee to each
20
Supplemental Credit Lender the timely performance of all other obligations under
the Supplemental Credit Documents and Hedging Agreements. This Guaranty is a
guaranty of payment and not of collection and is a continuing guaranty and shall
apply to all Credit Party Obligations whenever arising.
4.2 OBLIGATIONS UNCONDITIONAL.
-------------------------
The obligations of the Guarantors hereunder are absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or enforceability
of any of the Supplemental Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced by
the Supplemental Credit Lenders without the necessity at any time of resorting
to or exhausting any other security or collateral and without the necessity at
any time of having recourse to the Term Loan Notes or any other of the
Supplemental Credit Documents or any collateral, if any, hereafter securing the
Credit Party Obligations or otherwise and each Guarantor hereby waives the right
to require the Supplemental Credit Lenders to proceed against the Borrower or
any other Person (including a co-guarantor) or to require the Supplemental
Credit Lenders to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Guaranty until such time as
the Supplemental Credit Lenders (and any Affiliates of Supplemental Credit
Lenders entering into Hedging Agreements) have been paid in full, Term Loan
Committed Amount under the Credit Agreement has been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Supplemental Credit Lenders in connection with
monies received under the Supplemental Credit Documents. Each Guarantor further
agrees that nothing contained herein shall prevent the Supplemental Credit
Lenders from suing on the Term Loan Notes or any of the other Supplemental
Credit Documents or any of the Hedging Agreements or foreclosing its security
interest in or Lien on any collateral, if any, securing the Credit Party
Obligations or from exercising any other rights available to it under this
Credit Agreement, the Term Loan Notes, any other of the Supplemental Credit
Documents, or any other instrument of security, if any, and the exercise of any
of the aforesaid rights and the completion of any foreclosure proceedings shall
not constitute a discharge of any of any Guarantor's obligations hereunder; it
being the purpose and intent of each Guarantor that its Guarantor's obligations
hereunder shall be absolute, independent and unconditional under any and all
circumstances. Neither any Guarantor's obligations under this Guaranty nor any
remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Borrower or by reason of the
bankruptcy or insolvency of the Borrower. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Credit Party
Obligations and notice of or proof of reliance by the Agent or any Supplemental
Credit Lender upon this Guarantee or acceptance of this Guarantee. The Credit
Party Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Guarantee. All dealings between the Borrower and any of the
Guarantors, on the one hand, and the Agent and the Supplemental Credit Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee.
21
4.3 MODIFICATIONS.
-------------
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Supplemental Credit
Lenders shall not have any obligation to protect, perfect, secure or insure any
such security interests, liens or encumbrances now or hereafter held, if any,
for the Credit Party Obligations or the properties subject thereto; (c) the time
or place of payment of the Credit Party Obligations may be changed or extended,
in whole or in part, to a time certain or otherwise, and may be renewed or
accelerated, in whole or in part; (d) the Borrower and any other party liable
for payment under the Supplemental Credit Documents may be granted indulgences
generally; (e) any of the provisions of the Term Loan Notes or any of the other
Supplemental Credit Documents may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Borrower or any other party liable for the payment of the Credit Party
Obligations or liable upon any security therefor may be released, in whole or in
part, at, before or after the stated, extended or accelerated maturity of the
Credit Party Obligations, all without notice to or further assent by the
Guarantor, which shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
4.4 WAIVER OF RIGHTS.
----------------
Each Guarantor expressly waives: (a) notice of acceptance of this Guaranty by
the Supplemental Credit Lenders and of all extensions of credit to the Borrower
by the Supplemental Credit Lenders; (b) presentment and demand for payment or
performance of any of the Credit Party Obligations; (c) protest and notice of
dishonor or of default (except as specifically required in the Credit Agreement)
with respect to the Credit Party Obligations or with respect to any security
therefor; (d) notice of the Supplemental Credit Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or the
Supplemental Credit Lenders' subordinating, compromising, discharging or
releasing such security interests, liens or encumbrances, if any; (e) all other
notices to which the Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 REINSTATEMENT.
-------------
The obligations of the Guarantors under this Section 4 shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the Credit Party Obligations is rescinded or must be
otherwise restored by any holder of any of the Credit Party Obligations, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise, and
each Guarantor agrees that it will indemnify the Agent and each Lender on demand
for all reasonable costs and expenses (including, without limitation, reasonable
fees of counsel) incurred by an Agent or such Supplemental Credit Lender in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
22
4.6 REMEDIES.
--------
The Guarantors agree that, as between the Guarantors, on the one hand, and the
Agent and the Supplemental Credit Lenders, on the other hand, the Credit Party
Obligations may be declared to be forthwith due and payable as provided in
Section 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in accordance
with the terms of the Security Agreements and the other Collateral Documents and
that the Supplemental Credit Lenders may exercise their remedies thereunder in
accordance with their terms.
4.7 LIMITATION OF GUARANTY.
----------------------
Notwithstanding any provision to the contrary contained herein or in any of
the Supplemental Credit Documents, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
4.8 RIGHTS OF CONTRIBUTION.
----------------------
The Guarantors hereby agree, as among themselves, that if any Guarantor shall
become an Excess Funding Guarantor (as defined below), each other Guarantor
shall, on demand of such Excess Funding Guarantor (but subject to the next
sentence hereof), pay to such Excess Funding Guarantor an amount equal to such
Guarantor's Pro Rata Share (as defined below and determined, for this purpose,
without reference to the properties, assets, liabilities and debts of such
Excess Funding Guarantor) of such Excess Payment (as defined below). The
payment obligation of any Guarantor to any Excess Funding Guarantor under this
Section 4.8 shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Guarantor under the other provisions
of this Section 4, and such Excess Funding Guarantor shall not exercise any
right or remedy with respect to such excess until payment and satisfaction in
full of all of such obligations. For purposes hereof, (i) "Excess Funding
--------------
Guarantor" shall mean, in respect of any obligations arising under the other
---------
provisions of this Section 4 (hereafter, the "Guaranteed Obligations"), a
----------------------
Guarantor that has paid an amount in excess of its Pro Rata Share of the
Guaranteed Obligations; (ii) "Excess Payment" shall mean, in respect of any
--------------
Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess
of its Pro Rata Share of such Guaranteed Obligations; and (iii) "Pro Rata
--------
Share", for the purposes of this Section 4.8, shall mean, for any Guarantor, the
-----
ratio (expressed as a percentage) of (a) the amount by which the aggregate
present fair saleable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrower and all of the
23
Guarantors exceeds the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of the Borrower and the Guarantors hereunder) of the Borrower
and all of the Guarantors, all as of the Closing Date (if any Guarantor becomes
a party hereto subsequent to the Closing Date, then for the purposes of this
Section 4.8 such subsequent Guarantor shall be deemed to have been a Guarantor
as of the Closing Date and the information pertaining to, and only pertaining
to, such Guarantor as of the date such Guarantor became a Guarantor shall be
deemed true as of the Closing Date).
SECTION 5
CONDITIONS TO EXTENSIONS OF CREDIT
----------------------------------
5.1 CONDITIONS TO EXTENSIONS OF CREDIT.
----------------------------------
The Supplemental Credit Lenders shall not be obligated to make, continue or
convert Term Loans unless:
(a) Notice: The Borrower shall have delivered in the case of any
------
continuation or conversion of a Term Loan, a duly executed and completed
Notice of Continuation/Conversion by the time specified in Section 2.2;
(b) Representations and Warranties. The representations and
------------------------------
warranties made by the Credit Parties in the Supplemental Credit Documents
are true and correct in all material respects at and as if made as of such
date;
(c) No Default. No Default or Event of Default shall exist or be
----------
continuing either prior to or after giving effect thereto; and
(d) No Material Adverse Effect: There shall not have occurred any
--------------------------
Material Adverse Effect.
The delivery of each Notice of Continuation/Conversion shall constitute a
representation and warranty by the Borrower of the correctness of the matters
specified in subsection (b), (c) and (d) above.
24
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Credit Parties hereby represent to the Agent and each Supplemental Credit
Lender that:
6.1 FINANCIAL CONDITION.
-------------------
The financial statements delivered to the Lenders pursuant to Section
5.1(c)(i) of the New Credit Agreement, (a) have been prepared in accordance with
GAAP and (b) present fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated and consolidating (as applicable)
financial condition, results of operations and cash flows of the Credit Parties
and their Subsidiaries as of such date and for such periods. Since November 30,
1997, there has been no sale, transfer or other disposition by the Borrower or
any of its Subsidiaries of any material part of the business or property of the
Borrower or any of its Subsidiaries and no purchase or other acquisition (other
than the Acquired Assets) by any of them of any business or property (including
any capital stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its Subsidiaries, in each case, which,
is not reflected in the foregoing financial statements or in the notes thereto.
6.2 NO MATERIAL CHANGE.
------------------
Since November 30, 1997, (a) there has been no development or event relating
to or affecting Borrower or any of its Subsidiaries which has had or would be
reasonably expected to have a Material Adverse Effect and (b) no dividends or
other distributions have been declared, paid or made upon the capital stock or
other equity interest in Borrower or any of its Subsidiaries nor, except as
otherwise permitted under this Credit Agreement, has any of the capital stock or
other equity interest in a Credit Party been redeemed, retired, purchased or
otherwise acquired for value.
6.3 ORGANIZATION AND GOOD STANDING.
------------------------------
The Borrower and each of its Subsidiaries (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
(or other jurisdiction) of its incorporation, (b) is duly qualified and in good
standing as a foreign corporation authorized to do business in every
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect and (c) has the requisite corporate power and authority to own its
properties and to carry on its business as now conducted and as proposed to be
conducted.
6.4 DUE AUTHORIZATION.
-----------------
Each Credit Party (a) has the requisite corporate power and authority to
execute, deliver and perform this Credit Agreement and the other Supplemental
Credit Documents to which it is a party and to incur the obligations herein and
therein provided for and (b) is duly authorized to, and has been authorized by
all necessary corporate action, to execute, deliver and perform this Credit
Agreement and the other Supplemental Credit Documents to which it is a party.
25
6.5 NO CONFLICTS.
------------
Neither the execution and delivery of the Supplemental Credit Documents, nor
the consummation of the transactions contemplated therein, nor performance of
and compliance with the terms and provisions thereof by such Credit Party will
(a) violate or conflict with any provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which could
have or might be reasonably expected to have a Material Adverse Effect, or (d)
result in or require the creation of any Lien (other than those contemplated in
or created in connection with the Supplemental Credit Documents) upon or with
respect to its properties.
6.6 CONSENTS.
--------
No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or Governmental Authority or third party in
respect of a Credit Party is required in connection with the execution, delivery
or performance of this Credit Agreement or any of the other Supplemental Credit
Documents by a Credit Party, or if required, such consent, approval and
authorization has been obtained.
6.7 ENFORCEABLE OBLIGATIONS.
-----------------------
This Credit Agreement and the other Supplemental Credit Documents have been
duly executed and delivered and constitute legal, valid and binding obligations
of each Credit Party enforceable against such Credit Party in accordance with
their respective terms, except as may be limited by bankruptcy or insolvency
laws or similar laws affecting creditors' rights generally or by general
equitable principles.
6.8 NO DEFAULT.
----------
Neither the Borrower nor any of its Subsidiaries is in default in any respect
under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default would have or would be reasonably
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred or exists except as previously disclosed to the Supplemental Credit
Lenders.
6.9 OWNERSHIP.
---------
The Borrower and each of its Subsidiaries is the owner of and has good and
marketable title to all of its assets and none of such assets are subject to any
Lien other than Permitted Liens.
26
6.10 INDEBTEDNESS.
------------
The Borrower and its Subsidiaries have no Indebtedness except (a) as disclosed
in the financial statements referenced in Section 6.1, (b) as set forth on
Schedule 6.10 and (c) as otherwise permitted by this Credit Agreement.
-------------
6.11 LITIGATION.
----------
There are no actions, suits or legal, equitable, arbitration or administrative
proceedings, pending or, to the knowledge of any Credit Party, threatened
against the Borrower or any of its Subsidiaries which, if adversely determined,
would have or would be reasonably expected to have a Material Adverse Effect.
6.12 TAXES.
-----
Each of the Borrower and its Subsidiaries has filed, or caused to be filed,
all tax returns (federal, state, local and foreign) required to be filed and
paid (a) all amounts of taxes shown thereon to be due (including interest and
penalties) and (b) all other taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Credit Party is aware of any proposed tax assessments
against it, any of its Subsidiaries or any other Credit Party.
6.13 COMPLIANCE WITH LAW.
-------------------
Each of the Borrower and its Subsidiaries is in compliance with all
Requirements of Law and all other laws, rules, regulations, orders and decrees
(including without limitation Environmental Laws) applicable to it, or to its
properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect. No Requirement of Law
would be reasonably expected to cause a Material Adverse Effect.
6.14 ERISA.
-----
Except as would not result in a Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412
of the Code, whether or not waived, has occurred with respect to any Plan;
(iii) each Plan has been maintained, operated, and funded in compliance with
its own terms and in material compliance with the provisions of ERISA, the
Code, and any other applicable federal or state laws; and (iv) no lien in
favor or the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
27
(b) The actuarial present value of all "benefit liabilities" under each
Single Employer Plan (determined within the meaning of Section 401(a)(2) of
the Code, utilizing the actuarial assumptions used to fund such Plans),
whether or not vested, did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
current value of the assets of such Plan allocable to such accrued
liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any ERISA
Affiliate has incurred, or, to the best knowledge of the Credit Parties, are
reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, nor any of
its Subsidiaries nor any ERISA Affiliate has received any notification that
any Multiemployer Plan is in reorganization (within the meaning of Section
4241 of ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or
has been terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit Parties, reasonably
expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject the
Borrower or any of its Subsidiaries or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Borrower or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other assumptions
which are reasonable with respect to the benefits provided and the employees
participating) of the liability of the Borrower and its Subsidiaries and each
ERISA Affiliate for post-retirement welfare benefits to be provided to their
current and former employees under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA), net of all assets under all such Plans
allocable to such benefits, are reflected on the Financial Statements in
accordance with FAS 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply
has been administered in compliance in all material respects with such
sections.
6.15 SUBSIDIARIES.
------------
Set forth on Schedule 6.15 is a complete and accurate list of all Subsidiaries
-------------
of each Credit Party. Information on Schedule 6.15 includes jurisdiction of
-------------
incorporation, the number of shares of each class of capital stock or other
equity interests outstanding, the number and percentage of outstanding shares of
each class owned (directly or indirectly) by such Credit Party; and the number
and effect, if exercised, of all outstanding options, warrants, rights of
conversion or purchase and all other similar rights with respect thereto. The
outstanding capital stock and other equity interests of all such Subsidiaries is
validly issued, fully paid and non-assessable and is owned by each such Credit
28
Party, directly or indirectly, free and clear of all Liens (other than those
arising under or contemplated in connection with the Supplemental Credit
Documents). Other than as set forth in Schedule 6.15, neither any Credit Party
-------------
nor any Subsidiary thereof has outstanding any securities convertible into or
exchangeable for its capital stock nor does any such Person have outstanding any
rights to subscribe for or to purchase or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to its capital stock.
6.16 USE OF PROCEEDS; MARGIN STOCK.
-----------------------------
The proceeds of the Term Loans hereunder will be used solely for the purposes
specified in Section 7.10. None of the proceeds of the Term Loans will be used
for the purpose of purchasing or carrying any "margin stock" as defined in
Regulation U or Regulation X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry "margin stock"
or any "margin security" or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of Regulation U or Regulation
X or Regulation T. None of the Credit Parties owns any "margin stock".
6.17 GOVERNMENT REGULATION.
---------------------
No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940
or the Interstate Commerce Act, each as amended. In addition, no Credit Party
is an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or controlled by such a company, or
a "holding company," or a "Subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "Subsidiary" or a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended. No director, executive officer or principal shareholder of the
Borrower or any of its Subsidiaries is a director, executive officer or
principal shareholder of any Lender. For the purposes hereof the terms
"director", "executive officer" and "principal shareholder" (when used with
reference to any Lender) have the respective meanings assigned thereto in
Regulation O issued by the Board of Governors of the Federal Reserve System.
6.18 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as set forth on Schedule 6.18:
-------------
(i) each of the Real Properties and all operations at the Real
Properties are in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Law with respect to the Real
Properties or the businesses operated by the Borrower or any of its
Subsidiaries (the "Businesses"), and there are no conditions relating
----------
to the Businesses or Real Properties that could give rise to liability
under any applicable Environmental Laws.
(ii) None of the Real Properties contains, or has previously contained,
any Hazardous Materials at, on or under the Real Properties in amounts or
concentrations
29
that, if released, constitute or constituted a violation of, or could give
rise to liability under, Environmental Laws.
(iii) Neither the Borrower nor any of its Subsidiaries has received any
written or oral notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding Hazardous Materials or compliance with
Environmental Laws with regard to any of the Real Properties, Leasehold
Properties or the Businesses, nor does the Borrower or any of its
Subsidiaries have knowledge or reason to believe that any such notice is
being threatened.
(iv) Hazardous Materials have not been transported or disposed of from
the Real Properties, or generated, treated, stored or disposed of at, on
or under any of the Real Properties or any other location, in each case
by, or on behalf or with the permission of, the Borrower or any of its
Subsidiaries in a manner that would reasonably be expected to give rise to
liability under any applicable Environmental Law.
(v) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened, under any Environmental Law to which the Borrower or any of
its Subsidiaries is or will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Borrower or any of its
Subsidiaries, the Real Properties or the Businesses.
(vi) There has been no release or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower
or any of its Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses.
(vii) Neither the Borrower nor any of its Subsidiaries has assumed any
liability of any Person (other than another Credit Party) under any
Environmental Law.
(b) The Borrower has adopted procedures that are designed to (i) ensure
that each Credit Party and their Subsidiaries, any of their operations and
each of the properties owned or leased by each Credit Party and their
Subsidiaries remains in compliance with applicable Environmental Laws and
(ii) minimize any liabilities or potential liabilities that each Credit Party
and their Subsidiaries, any of their operations and each of the properties
owned or leased by each Credit Party and their Subsidiaries may have under
applicable Environmental Laws.
6.19 INTELLECTUAL PROPERTY.
---------------------
The Borrower and each of its Subsidiaries owns, or has the legal right to use,
all trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
---------------------
currently conducted except for those the failure to own or
30
have such legal right to use would not have or be reasonably expected to have a
Material Adverse Effect. Set forth on Schedule 6.19 is a list of all
-------------
Intellectual Property owned by the Borrower and its Subsidiaries or that the
Borrower or one of its Subsidiaries has the right to use (which list shall
identify the Person that owns or has the right to use each such item of
Intellectual Property). Except as provided on Schedule 6.19, no claim has been
-------------
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and to
the Credit Parties' knowledge the use of such Intellectual Property by the
Borrower or any of its Subsidiaries does not infringe on the rights of any
Person, except for such claims and infringements that in the aggregate, would
not have or be reasonably expected to have a Material Adverse Effect.
6.20 SOLVENCY.
--------
Each Credit Party is and, after consummation of the transactions contemplated
by this Credit Agreement and the New Credit Agreement, will be Solvent.
6.21 INVESTMENTS.
-----------
All Investments of the Borrower and each of its Subsidiaries are either
Permitted Investments or otherwise permitted by the terms of this Credit
Agreement.
6.22 NO FINANCING OF CORPORATE TAKEOVERS.
-----------------------------------
No proceeds of the Loans hereunder have been or will be used to acquire,
directly or indirectly, any security in any transaction which is subject to
Sections 13 or 14 of the Securities Exchange Act of 1934, as amended (including,
without limitation, Sections 13(d) and 14(d) thereof) or to refinance any
Indebtedness used to acquire any such securities.
6.23 LOCATION OF COLLATERAL.
----------------------
Set forth on Schedule 6.23(a) is a list of all Real Properties and Leasehold
----------------
Properties with street address, county and state where located. Set forth on
Schedule 6.23(b) is a list of all locations where any personal property of a
----------------
Credit Party is located, including county and state where located. Set forth on
Schedule 6.23(c) is the chief executive office and principal place of business
----------------
of each Credit Party.
6.24 DISCLOSURE.
----------
Neither this Credit Agreement nor any financial statements delivered to the
Supplemental Credit Lenders nor any other document, certificate or statement
furnished to the Supplemental Credit Lenders by or on behalf of any Credit Party
in connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein or herein not misleading.
31
6.25 LICENSES, ETC.
--------------
The Borrower and each of its Subsidiaries has obtained and holds in full force
and effect, all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of their respective
businesses as presently conducted.
6.26 NO BURDENSOME RESTRICTIONS.
--------------------------
Neither the Borrower nor any Subsidiary of the Borrower is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, would have or be reasonably expected to
have a Material Adverse Effect.
6.27 BROKERS' FEES.
-------------
No Credit Party has any obligation to any Person in respect of any finder's,
broker's, investment banking or other similar fee in connection with any of the
transactions contemplated under the Supplemental Credit Documents.
6.28 LABOR MATTERS.
-------------
There are no collective bargaining agreements or Multiemployer Plans covering
the employees of the Borrower or any Subsidiary of the Borrower and none of such
Persons has suffered any strikes, walkouts, work stoppages or other material
labor difficulty within the last five years.
6.29 COLLATERAL DOCUMENTS.
--------------------
The Collateral Documents create valid security interests in, and first Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens are and will remain perfected security interests and Liens, prior to all
other Liens other than Permitted Liens. Each of the representations and
warranties made by the Borrower and its Subsidiaries in the Collateral Documents
is true and correct.
6.30 RELATED TRANSACTIONS.
--------------------
The closing of the acquisition of the Acquired Assets will occur
simultaneously with the making of the initial Loans hereunder and under the New
Credit Agreement, and no party waived, without the consent of the Required
Lenders, any condition precedent to their obligations to close as set forth in
the Purchase Agreement. True and complete copies of the Purchase Agreement have
been delivered to each of the Supplemental Credit Lenders, together with a true
and complete copy of each document to be delivered at the closing of the
acquisition of the Acquired Assets.
32
6.31 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM PURCHASE AGREEMENT.
-------------------------------------------------------------------
As of the Closing Date, each of the representations and warranties made in the
Purchase Agreement by each of the parties thereto is true and correct in all
material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein, as qualified therein.
6.32 SENIOR DEBT.
-----------
The Term Loans are Senior Debt (as defined in the Indenture) under Article
10.02 of the Indenture, meaning the Supplemental Credit Lenders shall have all
of the rights and privileges of a holder of Senior Debt (as defined in the
Indenture) under the Indenture including, but not limited to, the rights set
forth in Article 10 of the Indenture. The Term Loans are Senior Indebtedness
(as defined in the Second Indenture) under the Second Indenture, meaning the
Supplemental Credit Lenders shall have all of the rights and privileges of a
holder of Senior Indebtedness (as defined in the Second Indenture) under the
Second Indenture.
6.33 YEAR 2000 COMPLIANCE.
--------------------
Each Credit Party has (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by such Credit Party or any of its Subsidiaries may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with the timetable. Based on the
foregoing, each Credit Party believes that all computer applications that are
material to its and any of its Subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (that is, be
"Year 2000 compliant"), except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder have been paid in full and the Commitments hereunder
shall have terminated:
7.1 INFORMATION COVENANTS.
---------------------
The Borrower will furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and in any event
within 120 days after the close of each fiscal year of the Borrower, a
consolidated and consolidating
33
balance sheet and income statement of the Borrower and its Subsidiaries, as of
the end of such fiscal year, together with related consolidated and
consolidating statements of operations and retained earnings and of cash flows
for such fiscal year, setting forth in comparative form consolidated figures
for the preceding fiscal year, all such financial information described above
to be in reasonable form and detail and audited by independent certified
public accountants of recognized national standing reasonably acceptable to
the Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the scope of the
audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and in any event
------------------------------
within 45 days after the close of each fiscal quarter of the Borrower
(other than the fourth fiscal quarter, in which case 120 days after the end
thereof) a consolidated balance sheet and income statement of the Borrower
and its Subsidiaries, as of the end of such fiscal quarter, together with
related consolidated statements of operations and retained earnings and of
cash flows for such fiscal quarter in each case setting forth in
comparative form consolidated figures for the corresponding period of the
preceding fiscal year, all such financial information described above to be
in reasonable form and detail and reasonably acceptable to the Agent, and
accompanied by a certificate of the chief financial officer of the Borrower
to the effect that such quarterly financial statements fairly present in
all material respects the financial condition of the Borrower and its
Subsidiaries and have been prepared in accordance with GAAP, subject to
changes resulting from audit and normal year-end audit adjustments.
(c) Monthly Financial Statements. As soon as available and in any event
----------------------------
within 20 days after the end of each month of the Borrower (other than the
last month of the first three fiscal quarters in which case 45 days after the
end thereof), a consolidated balance sheet and income statement of the
Borrower and its Subsidiaries as at the end of such month together with (i)
related consolidated statements of operations and retained earnings for such
month in each case setting forth in comparative form consolidated figures for
the corresponding period of the preceding fiscal year and (ii) a separate
income statement for each Foreign Subsidiary (and such other financial
information as reasonably requested by the Agent or the Required Lenders), all
such financial information described above to be in reasonable form and detail
and reasonably acceptable to the Agent, and accompanied by a certificate of
the chief financial officer of the Borrower to the effect that such monthly
financial statements fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries and have been prepared in
accordance with GAAP, subject to changes resulting from audit and normal year-
end audit adjustments. Notwithstanding the foregoing, for the calendar months
ending December 31, 1998 and January 31, 1999, the Borrower shall furnish the
items identified in this Section 7.1(c) within 30 days after the end of each
such calendar month.
(d) Officer's Certificate. At the time of delivery of the financial
---------------------
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate of
the chief operating or accounting officer of the Borrower substantially in the
form of Exhibit 7.1(d), (i) demonstrating compliance with the financial
covenants contained in Section 7.12 by calculation thereof as of the end of
each such fiscal period and (ii) stating that no Default or Event of Default
exists, or if any Default or Event of Default does exist, specifying the
nature and extent thereof and what
34
action the Borrower proposes to take with respect thereto. The Borrower shall
also deliver a copy of such certificate to the Agency Services Address.
(e) Annual Business Plan and Budgets. Not later than 70 days after the end
--------------------------------
of each fiscal year of the Borrower, beginning with the fiscal year ending
November 30, 1998, an annual business plan and budget of the Borrower and its
Subsidiaries containing, among other things, pro forma financial statements
for the next fiscal year.
(f) Compliance With Certain Provisions of the Credit Agreement. Within 120
----------------------------------------------------------
days after the end of each fiscal year of the Borrower, the Borrower shall
deliver a certificate, containing information regarding (i) the calculation
of Excess Cash Flow and (ii) the amount of any Asset Dispositions, Debt
Issuances, Equity Issuances and Recovery Events that were made during the
prior fiscal year.
(g) Accountant's Certificate. Within the period for delivery of the annual
------------------------
financial statements provided in Section 7.1(a), a certificate of the
accountants conducting the annual audit stating that they have reviewed
this Credit Agreement and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default and, if
any such Default or Event of Default exists, specifying the nature and
extent thereof.
(h) Auditor's Reports. Promptly upon receipt thereof, a copy of any
-----------------
"management letter" submitted by independent accountants to the Borrower or
any of its Subsidiaries in connection with any annual, interim or special
audit of the books of the Borrower or any of its Subsidiaries.
(i) Reports. Promptly upon transmission or receipt thereof, (a) copies of
any filings and registrations with, and reports to or from, the Securities and
Exchange Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as the Borrower or any of
its Subsidiaries shall send to its shareholders generally or to a holder of
any Indebtedness owed by the Borrower or any of its Subsidiaries in its
capacity as such a holder and (b) upon the written request of the Agent, all
reports and written information to and from the United States Environmental
Protection Agency, or any state or local agency responsible for environmental
matters, the United States Occupational Health and Safety Administration, or
any state or local agency responsible for health and safety matters, or any
successor agencies or authorities concerning environmental, health or safety
matters.
(j) Notices. Upon a Credit Party obtaining knowledge thereof, such Credit
-------
Party will give written notice to the Agent immediately of (a) the
occurrence of an event or condition consisting of a Default or Event of
Default, specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the occurrence of
any of the following with respect to the Borrower or any of its
Subsidiaries (i) the pendency or commencement of any litigation, arbitral
or governmental proceeding against the Borrower or any of its Subsidiaries
which if adversely determined would have or would be reasonably expected to
have a Material Adverse Effect, or (ii) the institution of any proceedings
against the Borrower or any of its Subsidiaries with respect to, or the
receipt of notice by such Person of potential liability or responsibility
for violation, or alleged violation of any federal, state or
35
local law, rule or regulation, including but not limited to, Environmental
Laws, the violation of which would have or would be reasonably expected to
have a Material Adverse Effect.
(k) ERISA. Upon any of the Credit Parties or any ERISA Affiliate obtaining
-----
knowledge thereof, Borrower will give written notice to the Agent and each of
the Supplemental Credit Lenders promptly (and in any event within five
Business Days) of: (i) any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or might reasonably lead to, a
Termination Event; (ii) with respect to any Multiemployer Plan, the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal liability
assessed against the Borrower or any of its ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (iii) the failure to make full
payment on or before the due date (including extensions) thereof of all
amounts which the Borrower or any of its Subsidiaries or ERISA Affiliate is
required to contribute to each Plan pursuant to its terms and as required to
meet the minimum funding standard set forth in ERISA and the Code with respect
thereto; or (iv) any change in the funding status of any Plan that could have
a Material Adverse Effect; together, with a description of any such event or
condition or a copy of any such notice and a statement by the principal
financial officer of the Borrower briefly setting forth the details regarding
such event, condition, or notice, and the action, if any, which has been or is
being taken or is proposed to be taken by the Credit Parties with respect
thereto. Promptly upon request, the Borrower shall furnish the Agent and each
of the Lenders with such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and attachments
thereto required to filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA and the Code, respectively, for each "plan
year" (within the meaning of Section 3(39) of ERISA).
(l) Environmental.
-------------
(i) Upon the reasonable written request of the Agent, the Borrower will
furnish or cause to be furnished to the Agent, at the Borrower's expense, an
environmental assessment of reasonable scope, form and depth, (including,
where appropriate, invasive soil or groundwater sampling) by a consultant
reasonably acceptable to the Agent as to the nature and extent of the
presence of any Hazardous Materials on any property owned, leased or
operated by the Borrower or any of its Subsidiaries and as to the compliance
by the Borrower and each of its Subsidiaries with Environmental Laws. If the
Borrower fails to deliver such an environmental report within seventy-five
(75) days after receipt of such written request then the Agent may arrange
for same, and the Borrower hereby grants to the Agent and its
representatives access to the Real Properties and a license to undertake
such an assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment arranged for by
the Agent pursuant to this provision will be payable by the Borrower on
demand and added to the obligations secured by the Collateral Documents.
36
(ii) The Borrower and each of its Subsidiaries will conduct and complete
all investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Hazardous Materials on,
from, or affecting any real property owned or leased by the Borrower or its
Subsidiaries to the extent necessary to be in compliance with all
Environmental Laws and all other applicable federal, state, and local laws,
regulations, rules and policies and with the orders and directives of all
Governmental Authorities exercising jurisdiction over such real property to
the extent any failure would have or be reasonably expected to have a
Material Adverse Effect.
(m) Star Report. At the time of delivery of the financial statements
-----------
provided for in Section 7.1(b) above, a company-prepared report containing
information as to brand sales and advertising cost analysis for the fiscal
quarter of the Borrower most recently ending.
(n) Other Information. With reasonable promptness upon any such request,
-----------------
such other information regarding the business, properties or financial
condition of the Borrower and its Subsidiaries as the Agent or the Required
Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
----------------------------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries to,
do all things necessary to preserve and keep in full force and effect in all
material respects its existence, rights, franchises and authority.
7.3 BOOKS AND RECORDS.
-----------------
Each of the Credit Parties will, and will cause each of its Subsidiaries to,
keep complete and accurate books and records of its transactions in accordance
with good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
-------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
property (including, without limitation, Environmental Laws) if noncompliance
with any such law, rule, regulation, order or restriction would have or
reasonably be expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
---------------------------------------
Each of the Credit Parties will, and will cause its Subsidiaries to, pay and
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that a Credit Party or
its Subsidiary shall not be required to pay any such tax, assessment, charge,
levy, claim or Indebtedness which is being contested in good faith by
appropriate
37
proceedings and as to which adequate reserves therefor have been established in
accordance with GAAP, unless the failure to make any such payment (i) would give
rise to an immediate right to foreclose on a Lien securing such amounts or
(ii) would have a Material Adverse Effect.
7.6 INSURANCE.
---------
Each of the Credit Parties will, and will cause each of its Subsidiaries to,
at all times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are in accordance with
normal industry practice. All liability policies shall have each Supplemental
Credit Lender as an additional insured and all casualty policies shall have the
Agent, on behalf of the Supplemental Credit Lenders, as loss payee.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Agent generally describing the
nature and extent of such damage or destruction. Subsequent to any loss, damage
to or destruction of the Collateral of any Credit Party or any part thereof,
such Credit Party, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that purpose, at
such Credit Party's cost and expense, will promptly repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed; provided,
however, that such Credit Party shall not be obligated to repair or replace any
Collateral so lost, damaged or destroyed to the extent the failure to make such
repair or replacement (a) is desirable to the proper conduct of the business of
such Credit Party in the ordinary course and otherwise is in the best interest
of such Credit Party and (b) would not materially impair the rights and benefits
of the Agent or the Supplemental Credit Lenders under this Credit Agreement or
any other Supplemental Credit Documents. In the event a Credit Party shall
receive any insurance proceeds, as a result of any loss, damage or destruction,
in a net amount in excess of $100,000, such Credit Party will immediately pay
over such proceeds to the Agent as cash collateral for the Credit Party
Obligations. The Agent agrees to release such insurance proceeds to such Credit
Party for replacement or restoration of the portion of the Collateral of such
Credit Party lost, damaged or destroyed if, (A) within 120 days from the date
the Agent receives such insurance proceeds, the Agent has received written
application for such release from such Credit Party together with evidence
reasonably satisfactory to it that the Collateral lost, damaged or destroyed has
been or will be replaced or restored to its condition (or by Collateral having a
value at least equal to the condition of the asset subject to the loss, damage
or destruction) immediately prior to the loss, destruction or other event giving
rise to the payment of such insurance proceeds and (B) on the date of such
release no Default or Event of Default exists. If the conditions in the
preceding sentence are not met, the Agent shall, on the first Business Day
subsequent to the date 120 days after it received such insurance proceeds, apply
such insurance proceeds as a mandatory prepayment of the Credit Party
Obligations for application in accordance with the terms of Section 3.3(b)(v)
and Section 3.3(c). All insurance proceeds shall be subject to the security
interest of the Supplemental Credit Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is outlined
as to carrier, policy number, expiration date, type and amount on Schedule 7.6,
------------
as Schedule 7.6 may be amended from time to time by written notice to the Agent.
------------
38
7.7 MAINTENANCE OF PROPERTY.
-----------------------
Each of the Credit Parties will, and will cause its Subsidiaries to, maintain
and preserve its properties and equipment in good repair, working order and
condition, normal wear and tear excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
--------------------------
Each of the Credit Parties will, and will cause its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
7.9 COLLATERAL.
----------
If, subsequent to the Closing Date, a Credit Party shall (a) acquire or lease
any real property or (b) acquire any intellectual property, securities
instruments, chattel paper or other personal property required to be delivered
to the Agent as Collateral hereunder or under any of the Collateral Documents,
the Borrower shall immediately notify the Agent of same. Each Credit Party
shall take such action (including, but not limited to, the actions set forth in
Sections 5.1(f) and (g) of the New Credit Agreement), as requested by the Agent
and at its own expense, to ensure that the Lenders have a first priority
perfected Lien in all owned real property (and in such leased real property as
requested by the Agent or the Required Lenders) and all personal property of the
Credit Parties (whether now owned or hereafter acquired), subject only to
Permitted Liens. Each Credit Party shall adhere to the covenants regarding the
location of personal property as set forth in the Security Agreements.
7.10 USE OF PROCEEDS.
---------------
The Credit Parties will use proceeds of the Loans solely (a) to refinance the
existing Indebtedness of the Borrower, (b) to finance the acquisition of the
Acquired Assets and (c) to pay related fees and expenses in connection with the
foregoing.
7.11 AUDITS/INSPECTIONS.
------------------
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause its Subsidiaries to, permit representatives appointed by
the Agent or any Lender, including, without limitation, independent accountants,
agents, attorneys and appraisers to visit and inspect such Credit Party's (or
its Subsidiary's) property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees and
representatives of the Credit Parties and their Subsidiaries. The Credit
Parties agree that the Agent, and its representatives, may conduct an annual
audit of the Collateral, at the expense of the Borrower.
39
7.12 FINANCIAL COVENANTS.
-------------------
(a) Interest Coverage Ratio. The Interest Coverage Ratio, as of the end of
-----------------------
each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including November 29, 1999,
1.70 to 1.0;
(ii) From November 30, 1999 to and including November 29, 2000,
1.85 to 1.0; and
(iii) From November 30, 2000 and thereafter, 2.0 to 1.0.
(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of the
---------------------------
end of each fiscal quarter, shall be greater than or equal to:
(i) From the Effective Date to and including November 29, 1999,
1.10 to 1.0; and
(ii) From November 30, 1999 and thereafter, 1.25 to 1.0.
(c) Leverage Ratio. The Leverage Ratio, as of the end of each fiscal
--------------
quarter, shall be less than or equal to:
(i) From the Effective Date to and including November 29, 1999,
5.25 to 1.0;
(ii) From November 30, 1999 to and including November 29, 2000,
4.5 to 1.0;
(iii) From November 30, 2000 to and including November 29, 2001,
4.0 to 1.0; and
(iv) From November 30, 2001 and thereafter, 3.75 to 1.0.
(d) Senior Leverage Ratio. The Senior Leverage Ratio, as of the end of
---------------------
each fiscal quarter, shall be less than or equal to:
(i) From the Effective Date to and including November 29, 1999,
2.50 to 1.0; and
(ii) From November 30, 1999 and thereafter, 2.0 to 1.0.
(e) Net Worth. At all times Net Worth shall be no less than $17,600,000
---------
increased on a cumulative basis, commencing with the fiscal quarter ending
November 29, 1998, by an amount equal to, (i) as of the last day of each
fiscal quarter, 50% of Net Income for the fiscal
40
quarter then ended (without deductions for any losses) plus (ii) 100% of the
Net Cash Proceeds from any Equity Issuance subsequent to the Closing Date.
(f) Appraised Brand Value. As of the end of each fiscal quarter of the
---------------------
Borrower, with respect to the Borrower and its Subsidiaries on a consolidated
basis, the most recent appraised value of all brands or product lines of the
Borrower and its Subsidiaries on a consolidated basis on such date shall be
greater than or equal to $455 million.
(g) Calculation Method. Notwithstanding any provision to the contrary
------------------
contained herein, (i) for purposes of calculating the Leverage Ratio and
Senior Leverage Ratio for the Borrower's fiscal quarter ending February 28,
1999, EBITDA attributable to the Acquired Assets for the twelve month period
for which EBITDA is being calculated shall be deemed to be the result obtained
by multiplying the actual EBITDA attributable to the Acquired Assets for the
two month period ending on February 28, 1999 by 6, (ii) for purposes of
calculating the Leverage Ratio and Senior Leverage Ratio for the Borrower's
fiscal quarter ending May 31, 1999, EBITDA attributable to the Acquired Assets
for the twelve month period for which EBITDA is being calculated shall be
deemed to be the result obtained by multiplying the actual EBITDA attributable
to the Acquired Assets for the five month period ending on May 31, 1999 by 2.4
and (iii) for purposes of calculating the Leverage Ratio and Senior Leverage
Ratio for the Borrower's fiscal quarter ending August 31, 1999, EBITDA
attributable to the Acquired Assets for the twelve month period for which
EBITDA is being calculated shall be deemed to be the result obtained by
multiplying the actual EBITDA attributable to the Acquired Assets for the
eight month period ending on August 31, 1999 by 1.5. Furthermore, for purposes
of calculating the Leverage Ratio and Senior Leverage Ratio at any time during
the twelve month period following a Permitted Acquisition, EBITDA attributable
to the business or assets acquired pursuant to such Permitted Acquisition
shall be deemed to be the result obtained by annualizing the components of the
actual EBITDA attributable to such assets or business during such period.
7.13 ADDITIONAL CREDIT PARTIES.
-------------------------
At the time any Person becomes a Subsidiary of a Credit Party, the Borrower
shall so notify the Agent and promptly thereafter (but in any event within 30
days after the date thereof) shall cause such Person to (a) if it is a Domestic
Subsidiary, execute a Joinder Agreement in substantially the same form as
Exhibit 7.13, (b) cause all of the capital stock of such Person (if such Person
------------
is a Domestic Subsidiary) or 65% of the capital stock of such Person (if such
Person is a Foreign Subsidiary) to be delivered to the Agent (together with
undated stock powers signed in blank) and pledged to the Agent pursuant to an
appropriate pledge agreement in substantially the form of the Pledge Agreement
and otherwise in a form acceptable to the Agent, (c) if such Person is a
Domestic Subsidiary, pledge all of its assets to the Lenders pursuant to a
security agreement in substantially the form of the Security Agreements and
otherwise in a form acceptable to the Agent (d) if such Person has any
Subsidiaries, (i) deliver all of the capital stock of such Domestic Subsidiaries
and 65% of the capital stock of such Foreign Subsidiaries (together with undated
stock powers signed in blank) to the Agent and (ii) execute a pledge agreement
in substantially the form of the Pledge Agreement and otherwise in a form
acceptable to the Agent (e) if such Person owns or leases any real property in
the United States of America, execute any and all necessary mortgages, deeds of
trust, deeds to secure debt, leasehold
41
mortgages, collateral assignments of leaseholds or other appropriate real estate
collateral documentation in a form acceptable to the Agent and (f) deliver such
other documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord waivers, certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form, content and
scope reasonably satisfactory to the Agent.
7.14 OWNERSHIP OF SUBSIDIARIES.
-------------------------
The Borrower shall at all times own 100% of the capital stock of its
Subsidiaries (other than to the extent necessary for Chattem (U.K.) Limited and
HBA Insurance Ltd. to qualify for incorporation in their respective countries of
incorporation, any nominal qualifying shares owned by any necessary governmental
authorities) and may not sell, transfer or otherwise dispose of any shares of
capital stock of any of its Subsidiaries.
7.15 APPRAISAL REPORTS.
-----------------
The Borrower and its Subsidiaries shall provide the Agent, upon the request of
the Agent and at the expense of the Borrower, with asset appraisal reports with
respect to the real and personal property of the Borrower and its Subsidiaries
including, without limitation, appraisals of brand values (provided, however,
the Borrower hereby agrees that at such time as any appraisal with respect to a
particular brand contributing at least $5,000,000 of EBITDA for the prior fiscal
year is three years old, the Borrower shall provide the Agent with a new brand
appraisal with respect to such brand). Furthermore, the Credit Parties hereby
agree that if at the end of any fiscal year of the Borrower, EBITDA for such
fiscal year is ten percent (10%) less than EBITDA for the prior fiscal year, the
Borrower shall provide the Lenders, upon the request of the Lenders and at the
expense of the Borrower, with asset appraisal reports with respect to those
brands contributing at least $5,000,000 of EBITDA for such fiscal year;
provided, however, if such ten percent (10%) reduction in EBITDA is the direct
result of an asset disposition permitted by Section 8.5(d), the Borrower shall
not be required to provide asset appraisal reports with respect to such brands.
7.16 YEAR 2000 COMPATIBILITY.
-----------------------
Each Credit Party will promptly notify the Agent in the event such Credit
Party discovers or determines that any computer application (including those of
its suppliers, vendors and customers) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 compliant, except to
the extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
7.17 POST-CLOSING MATTERS.
--------------------
(a) Within one hundred twenty (120) days following the Closing Date, the
Borrower shall furnish to the Agent Phase I environmental reports in form
and substance
42
satisfactory to the Agent with respect to each of the Mortgaged Properties set
forth on Schedule 6.23(a) (other than the Double Cola Property).
----------------
(b) Within one hundred twenty (120) days following the Closing Date, the
Borrower shall cause a field examination with respect to its accounts
receivable and inventory to be conducted by an independent appraiser
reasonably acceptable to the Agent and shall deliver the report of such field
examination to the Agent.
SECTION 8
NEGATIVE COVENANTS
------------------
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments
hereunder shall have terminated:
8.1 INDEBTEDNESS.
------------
No Credit Party will, nor will it permit any of its Subsidiaries to, contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement, the other
Supplemental Credit Documents and the New Credit Agreement Documents;
(b) the Subordinated Debt;
(c) Indebtedness existing as of the Closing Date as referenced in Section
6.10 (and renewals, refinancings or extensions thereof on terms and conditions
no more favorable, in the aggregate, to such Person than such existing
Indebtedness and in a principal amount not in excess of that outstanding as of
the date of such renewal, refinancing or extension);
(d) Indebtedness owing by one Credit Party to another Credit Party;
(e) purchase money Indebtedness (including Capital Leases) incurred by the
Borrower or any of its Subsidiaries to finance the purchase of fixed assets;
provided that (i) the total of all such Indebtedness for all such
--------
Persons taken together shall not exceed an aggregate principal amount of
$2,000,000.00 at any one time outstanding (including any such Indebtedness
referred to in subsection (c) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s) financed; and (iii) no
such Indebtedness shall be refinanced for a principal amount in excess of the
principal balance outstanding thereon at the time of such refinancing;
(f) obligations of the Credit Parties in respect of Hedging Agreements
entered into in the ordinary course of business to manage existing or
anticipated risks and not for speculative purposes;
43
(g) Indebtedness incurred by Foreign Subsidiaries not to exceed $500,000.00,
in the aggregate, at any one time outstanding (including any such Indebtedness
referred to in subsection (c) above); and
(h) the Additional Subordinated Debt.
8.2 LIENS.
-----
No Credit Party will, nor will it permit its Subsidiaries to contract, create,
incur, assume or permit to exist any Lien with respect to any of its property or
assets of any kind (whether real or personal, tangible or intangible), whether
now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
------------------
No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Closing Date or engage
in any business other than the business conducted as of the Closing Date, which
with respect to Signal shall be limited to the ownership of trademarks and
tradenames for the purpose of licensing such trademarks and tradenames to the
Borrower.
8.4 CONSOLIDATION AND MERGER.
------------------------
No Credit Party will, nor will it permit its Subsidiaries to, enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution); provided that notwithstanding the
foregoing provisions of this Section 8.4, the following actions may be taken if
(a) the Agent is given prior written notice of such action, and the Credit
Parties execute and deliver such documents, instruments and certificates as the
Agent may request in order to maintain the perfection and priority of the Liens
on the assets of the Credit Parties and (b) after giving effect thereto no
Default or Event of Default exists:
(i) any Credit Party may be merged or consolidated with or into the
Borrower or any Credit Party (other than the Borrower) may be merged or
consolidated with or into any other Credit Party; provided that if such
transaction shall be between the Borrower and another Credit Party, the
Borrower shall be the continuing or surviving corporation; and
(ii) any Foreign Subsidiary may merge or consolidate with any other Foreign
Subsidiary.
8.5 SALE OR LEASE OF ASSETS.
-----------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory, receivables, real
property, leasehold interests, equipment and securities other than (a) any
inventory or other assets sold, leased or disposed of (or simultaneously
replaced with like goods) in the ordinary course of business, (b) obsolete, idle
or worn-out assets no longer used or useful in its business, (c) the sale, lease
44
or transfer or other disposal by a Credit Party other than the Borrower of any
or all of its assets to the Borrower or to any other Credit Party, or (d) sales
of product lines (or the right to produce a consumer product or products)
provided that (i) the dispositions permitted under this subparagraph (d) shall
not exceed $10,000,000 during any fiscal year, (ii) the dispositions permitted
under this subparagraph (d) during any fiscal year shall be limited to product
lines (or the right to produce a consumer product or products) having aggregate
sales for the twelve-month period ending on the fiscal quarter ending
immediately preceding the sale in an amount not exceeding ten percent (10%) of
EBITDA for such twelve month period and (iii) after giving effect to any such
disposition on a pro forma basis, as if such disposition had occurred on the
first day of the twelve month period ending on the last day of the Borrower's
most recently completed fiscal quarter, the Credit Parties and their
Subsidiaries would have been in compliance with all the financial covenants set
forth in Section 7.12.
8.6 ADVANCES, INVESTMENTS AND LOANS.
-------------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, make any
Investments except for Permitted Investments.
8.7 DIVIDENDS.
---------
No Credit Party will, nor will it permit any of its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividends (whether cash or otherwise) or
make any other distribution upon any shares of its capital stock of any class
other than the payment of dividends by the Subsidiaries of the Borrower to the
Borrower or (b) other than Permitted Investments purchase, redeem or otherwise
acquire or retire or make any provisions for redemption, acquisition or
retirement of any shares of its capital stock of any class or any warrants or
options to purchase any such shares.
8.8 TRANSACTIONS WITH AFFILIATES.
----------------------------
Except as set forth on Schedule 8.8, no Credit Party will, nor will it permit
------------
its Subsidiaries to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder, Subsidiary or Affiliate other than on terms and conditions
substantially as favorable as would be obtainable in a comparable arm's-length
transaction with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate.
8.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
-------------------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, change
its fiscal year or materially change its charter documents or its bylaws without
the prior written consent of the Required Lenders.
8.10 PREPAYMENTS OF INDEBTEDNESS.
---------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, (a) amend
or modify (or permit the amendment or modification of) any of the terms of any
Indebtedness if such amendment or modification would add or change any terms in
a manner adverse to the Supplemental Credit Lenders, including but not limited
to, shortening final maturity or average life to maturity of such Indebtedness
45
or requiring any payment to be made sooner than originally scheduled or
increasing the interest rate applicable thereto or change any subordination
provision thereof, (b) during the existence of a Default or Event of Default, or
if a Default or Event of Default would be caused as a result thereof make (or
give any notice with respect thereto) any voluntary or optional payment or
prepayment or redemption or acquisition for value of (including, without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness.
8.11 SUBORDINATED DEBT.
-----------------
(a) No Credit Party will (i) make or offer to make any principal payments
with respect to the Subordinated Debt, (ii) redeem or offer to redeem any
of the Subordinated Debt, or (iii) deposit any funds intended to discharge
or defease any or all of the Subordinated Debt; provided, however, the
-------- -------
Borrower may redeem or repurchase the Subordinated Debt in an aggregate
amount not to exceed $15,000,000 (such amount to include any accrued
interest, premiums or penalties associated therewith) during any fiscal
year provided that after giving effect to such repurchase or redemption on
--------
a pro forma basis, as if such repurchase or redemption had occurred on the first
day of the twelve month period ending on the last day of the Borrower's most
recently completed fiscal quarter, the Credit Parties and their Subsidiaries
would have been in compliance with all the financial covenants set forth in
Section 7.12. The Subordinated Debt may not be amended or modified in any
material manner without the prior written consent of the Required Lenders, it
being specifically understood and agreed that no amendment to Article 4 or
Article 10 of the Indenture shall be made without the prior written consent of
the Required Lenders.
(b) No Credit Party will (i) make or offer to make any principal payments with
respect to the Additional Subordinated Debt, (ii) redeem or offer to redeem any
of the Additional Subordinated Debt, or (iii) deposit any funds intended to
discharge or defease any or all of the Additional Subordinated Debt. The
Additional Subordinated Debt or the Second Indenture may not be amended or
modified in any material manner without the prior written consent of the
Required Lenders, it being specifically understood and agreed that no amendment
to Article 4 or Article 10 of the Second Indenture shall be made without the
prior written consent of the Required Lenders.
8.12 LIMITATIONS.
-----------
No Credit Party will, nor will it permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person's capital stock, (b) pay any Indebtedness
owed to the Borrower or any other Credit Party, (c) make loans or advances to
any other Credit Party or (d) transfer any of its property to any other Credit
Party, except for encumbrances or restrictions existing under or by reason of
(i) customary non-assignment provisions in any lease governing a leasehold
interest, (ii) this Credit Agreement, the other Supplemental Credit Documents
and the New Credit Agreement Documents and (iii) the Indenture.
46
8.13 SALE LEASEBACKS.
---------------
No Credit Party will, nor will it permit any of its Subsidiaries to, directly
or indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party or
Subsidiary has sold or transferred or is to sell or transfer to any other Person
other than a Credit Party or (b) which such Credit Party or Subsidiary intends
to use for substantially the same purpose as any other property which has been
sold or is to be sold or transferred by such Credit Party or Subsidiary to any
Person in connection with such lease.
8.14 NEGATIVE PLEDGES.
----------------
Other than as set forth in Section 4.12 of the Indenture, none of the Credit
Parties will, nor will it permit any of its Subsidiaries to, enter into, assume
or become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
8.15 CAPITAL EXPENDITURES.
--------------------
The Credit Parties and their Subsidiaries will not make Capital Expenditures,
in any fiscal year, that would exceed $7,500,000.00 in the aggregate.
8.16 OPERATING LEASES.
----------------
Neither the Borrower nor any of its Subsidiaries shall create, incur, assume
or permit to exist obligations under Operating Leases which require aggregate
annual payments in excess of $1,500,000.00.
8.17 PAYMENT BLOCKAGE NOTICE.
------------------------
(a) The Borrower (i) covenants and agrees that it will not give the Payment
Blockage Notice (as defined in the Indenture) without the consent of the
Required Lenders and (ii) hereby designates and appoints the Agent, as attorney-
in-fact of the Borrower, irrevocably and with full power of substitution, to
deliver any Payment Blockage Notice that the Borrower has the right to deliver
pursuant to the terms of the Indenture; provided that the foregoing appointment
shall terminate at such time as the Loans, together with interest, fees and
other obligations hereunder, have been paid in full and the Commitments
hereunder shall have terminated.
(b) The Borrower (i) covenants and agrees that it will not give the Payment
Blockage Notice (as defined in the Second Indenture) without the consent of the
Required Lenders and (ii) hereby designates and appoints the Agent, as attorney-
in-fact of the Borrower, irrevocably and with full power of substitution, to
deliver any Payment Blockage Notice (as defined in the Second Indenture) that
the Borrower has the right to deliver pursuant to the terms of the Second
Indenture; provided that the foregoing appointment shall terminate at such time
as the Loans,
47
together with interest, fees and other obligations hereunder, have
been paid in full and the Commitments hereunder shall have terminated.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 EVENTS OF DEFAULT.
-----------------
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
----------------
(a) Payment. Any Credit Party shall:
-------
(i) default in the payment when due of any principal of any of the
Term Loans; or
(ii) default, and such default shall continue for three or more days,
in the payment when due of any interest on the Term Loans, or of any fees
or other amounts owing hereunder, under any of the other Supplemental
Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement made or
---------------
deemed to be made by any Credit Party herein, in any of the other Supplemental
Credit Documents, or in any statement or certificate delivered or required to
be delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
---------
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.4, 7.5, 7.6, 7.9, 7.10,
7.12, 7.13, 7.14, 7.15, 7.16, 7.17 or 8.1 through 8.17 inclusive; or
(ii) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 7.1 and such default shall
continue unremedied for a period of five Business Days after the earlier of
an officer of a Credit Party becoming aware of such default or notice
thereof given by the Agent; or
(iii) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in subsections (a), (b)
or (c)(i) or (ii) of this Section 9.1) contained in this Credit Agreement
and such default shall continue unremedied for a period of at least 30 days
after the earlier of an officer of a Credit Party becoming aware of such
default or notice thereof given by the Agent.
48
(d) Other Credit Documents. (i) Any Credit Party shall default in the due
----------------------
performance or observance of any term, covenant or agreement in any of the
other Supplemental Credit Documents and such default shall continue unremedied
for a period of at least 30 days after the earlier of an officer of a Credit
Party becoming aware of such default or notice thereof given by the Agent, or
(ii) any Supplemental Credit Documents shall fail to be in full force and
effect or to give the Agent and/or the Supplemental Credit Lenders the
security interests, liens, rights, powers and privileges purported to be
created thereby.
(e) Guaranties. The guaranty given by the Credit Parties hereunder or by
----------
any Additional Credit Party hereafter or any provision thereof shall cease to
be in full force and effect, or any guarantor thereunder or any Person acting
by or on behalf of such guarantor shall deny or disaffirm such Guarantor's
obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following with respect to
---------------
the Borrower or any of its Subsidiaries (i) a court or governmental agency
having jurisdiction in the premises shall enter a decree or order for relief
in respect of the Borrower or any of its Subsidiaries in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of any of the Borrower or any of its
Subsidiaries or for any substantial part of its property or ordering the
winding up or liquidation of its affairs; or (ii) an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect is commenced against the Borrower or any of its Subsidiaries and such
petition remains unstayed and in effect for a period of 60 consecutive days;
or (iii) the Borrower or any of its Subsidiaries shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any substantial part of its
property or make any general assignment for the benefit of creditors; or (iv)
the Borrower or any of its Subsidiaries shall admit in writing its inability
to pay its debts generally as they become due or any action shall be taken by
such Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements. With respect to any Indebtedness
-------------------------------
(other than Indebtedness outstanding under this Credit Agreement) of the
Borrower or any of its Subsidiaries in a principal amount in excess of
$500,000.00, including, without limitation, the Subordinated Debt, the
Additional Subordinated Debt and any indebtedness under the New Credit
Agreement (i) a Credit Party shall (A) default in any payment (beyond the
applicable grace period with respect thereto, if any) with respect to any such
Indebtedness, or (B) default (after giving effect to any applicable grace
period) in the observance or performance of any term, covenant or agreement
relating to such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event or condition
shall occur or condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such Indebtedness
(or trustee or agent on behalf of such holders) to cause (determined without
regard to whether any notice or lapse of time is required) any such
Indebtedness to become due prior to its stated maturity; or (ii) any such
Indebtedness shall be
49
declared due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof.
(h) Judgments. One or more judgments, orders, or decrees shall be entered
---------
against any one or more of the Borrower or any of its Subsidiaries involving a
liability of $500,000.00 or more, in the aggregate, (to the extent not paid or
covered by insurance provided by a carrier who has acknowledged coverage) and
such judgments, orders or decrees shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (i) the last day on
which such judgment, order or decree becomes final and unappealable or (ii) 30
days.
(i) ERISA. Any of the following events or conditions: (A) any "accumulated
-----
funding deficiency," as such term is defined in Section 302 of ERISA and
Section 412 of the Code, whether or not waived, shall exist with respect to
any Plan, or any lien shall arise on the assets of the Borrower or any of
their Subsidiaries or any ERISA Affiliate in favor of the PBGC or a Plan; (B)
a Termination Event shall occur with respect to a Single Employer Plan, which
is, in the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (C) a Termination
Event shall occur with respect to a Multiemployer Plan or Multiple Employer
Plan, which is, in the reasonable opinion of the Agent, likely to result in
(i) the termination of such Plan for purposes of Title IV of ERISA, or (ii)
the Borrower or any of its Subsidiaries or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the meaning of
Section 4245 of ERISA) such Plan; or (D) any prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject the Borrower or any of
its Subsidiaries or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower or any of its
Subsidiaries or any ERISA Affiliate has agreed or is required to indemnify any
person against any such liability;
(j) Ownership. There shall occur a Change of Control;
---------
(k) Subordinated Debt. (i) Any holder of the Subordinated Debt alleges (or
-----------------
any Governmental Authority with applicable jurisdiction determines) that the
Supplemental Credit Lenders or New Credit Agreement Lenders are not holders of
Senior Debt (as defined in the Indenture) or (ii) the subordination provisions
in the Indenture shall, in whole or in part, terminate, cease to be effective
or cease to be legally valid, binding and enforceable against any holder of
the Subordinated Debt;
(l) Additional Subordinated Debt. (i) Any holder of the Additional
----------------------------
Subordinated Debt alleges (or any Governmental Authority with applicable
jurisdiction determines) that the Supplemental Credit Lenders or New Credit
Agreement Lenders are not holders of Senior Indebtedness (as defined in the
Second Indenture) or (ii) the subordination provisions in the Second Indenture
shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable against any holder of the Additional
Subordinated Debt.
50
(m) Business. The Borrower commences to engage in any material respect in
--------
a line of business or activity other than the business of manufacturing and
marketing of brand name over-the-counter pharmaceuticals, dietary supplements,
functional toiletries and cosmetics; or
(n) Indenture/Change of Control. There shall occur (i) a Change of
---------------------------
Control (as defined in the Indenture) under the Indenture, (ii) a Change of
Control Triggering Event (as defined in the Indenture) under the Indenture or
(iii) a Change of Control (as defined in the Second Indenture) under the
Second Indenture.
9.2 ACCELERATION; REMEDIES.
----------------------
Upon the occurrence of an Event of Default, and at any time thereafter unless
and until such Event of Default has been waived in writing by the Required
Lenders (or the Lenders as may be required hereunder), the Agent shall, upon the
request and direction of the Required Lenders, by written notice to the
Borrower, take any of the following actions:
(a) Acceleration of Loans. Declare the unpaid principal of and any
---------------------
accrued interest in respect of all Term Loans, and any and all other
indebtedness or obligations of any and every kind owing by a Credit Party to
any of the Supplemental Credit Lenders hereunder to be due whereupon the same
shall be immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Credit
Parties.
(b) Enforcement of Rights. Enforce any and all rights and interests
---------------------
created and existing under the Supplemental Credit Documents, including,
without limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of set-
off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then all Term Loans, all accrued interest in respect
thereof, all accrued and unpaid fees and other indebtedness or obligations owing
to the Lenders hereunder shall immediately become due and payable without the
giving of any notice or other action by the Agent or the Lenders, which notice
or other action is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Supplemental Credit Lender has a separate right of payment and shall
be considered a separate "creditor" holding a separate "claim" within the
meaning of Section 101(5) of the Bankruptcy Code or any other insolvency
statute.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 APPOINTMENT.
-----------
51
Each Supplemental Credit Lender hereby designates and appoints NationsBank,
N.A. as Agent of such Supplemental Credit Lender to act as specified herein and
the other Supplemental Credit Documents, and each such Supplemental Credit
Lender hereby authorizes the Agent, as the agent for such Supplemental Credit
Lender, to take such action on its behalf under the provisions of this Credit
Agreement and the other Supplemental Credit Documents and to exercise such
powers and perform such duties as are expressly delegated by the terms hereof
and of the other Supplemental Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Supplemental Credit Documents, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Supplemental
Credit Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Credit Agreement or any of
the other Supplemental Credit Documents, or shall otherwise exist against the
Agent. The provisions of this Section are solely for the benefit of the Agent
and the Supplemental Credit Lenders and none of the Credit Parties shall have
any rights as a third party beneficiary of the provisions hereof. In performing
its functions and duties under this Credit Agreement and the other Supplemental
Credit Documents, the Agent shall act solely as the agent of the Supplemental
Credit Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for any Credit Party.
10.2 DELEGATION OF DUTIES.
--------------------
The Agent may execute any of its duties hereunder or under the other
Supplemental Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
----------------------
Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Supplemental Credit Documents
(except for its or such Person's own gross negligence or willful misconduct) or
(b) responsible in any manner to any of the Supplemental Credit Lenders for any
recitals, statements, representations or warranties made by any of the Credit
Parties contained herein or in any of the other Supplemental Credit Documents or
in any certificate, report, document, financial statement or other written or
oral statement referred to or provided for in, or received by the Agent under or
in connection herewith or in connection with the other Supplemental Credit
Documents, or enforceability or sufficiency therefor of any of the other
Supplemental Credit Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be responsible to any
Supplemental Credit Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Credit Agreement, or any
of the other Supplemental Credit Documents or for any representations,
warranties, recitals or statements made herein or therein or made by the
Borrower or any Credit Party in any written or oral statement or in any
financial or other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the Agent to
the Supplemental Credit Lenders or by or on behalf of the Credit Parties to the
Agent or any Supplemental Credit Lender or be required to ascertain or inquire
as to the performance or
52
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Term Loans
or of the existence or possible existence of any Default or Event of Default or
to inspect the properties, books or records of the Credit Parties. The Agent is
not a trustee for the Supplemental Credit Lenders and owes no fiduciary duty to
the Supplemental Credit Lenders.
10.4 RELIANCE ON COMMUNICATIONS.
--------------------------
The Agent shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to any of the Credit Parties, independent accountants and other experts selected
by the Agent with reasonable care). The Agent may deem and treat the
Supplemental Credit Lenders as the owner of its interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent in accordance with Section 11.3(b). The
Agent shall be fully justified in failing or refusing to take any action under
this Credit Agreement or under any of the other Supplemental Credit Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder or under any of the other Supplemental Credit Documents in accordance
with a request of the Required Lenders (or to the extent specifically provided
in Section 11.6, all the Lenders) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders (including
their successors and assigns).
10.5 NOTICE OF DEFAULT.
-----------------
The Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder unless the Agent has received notice
from a Supplemental Credit Lender or a Credit Party referring to the
Supplemental Credit Documents, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
---------------------------------------
Each Supplemental Credit Lender expressly acknowledges that neither the Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
the Agent or any affiliate thereof hereinafter taken, including any review of
the affairs of any Credit Party, shall be deemed to constitute any
representation or warranty by the Agent to any Supplemental Credit Lender.
Each Supplemental Credit Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Supplemental
Credit Lender, and based on such documents and information as it has deemed
appropriate, made its own
53
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Credit
Parties and made its own decision to make its Term Loans hereunder and enter
into this Credit Agreement. Each Supplemental Credit Lender also represents that
it will, independently and without reliance upon the Agent or any other
Supplemental Credit Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary to inform itself
as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Supplemental Credit Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Supplemental Credit Lender with any credit
or other information concerning the business, operations, assets, property,
financial or other conditions, prospects or creditworthiness of the Credit
Parties which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
---------------
The Supplemental Credit Lenders agree to indemnify the Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
percentage of the Term Loan Committed Amount (or if the Term Loan Committed
Amount has expired or been terminated, in accordance with the respective
aggregate principal amounts of outstanding Term Loans and Participation Interest
of the Supplemental Credit Lenders), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following payment in full of the
Credit Party Obligations) be imposed on, incurred by or asserted against the
Agent in its capacity as such in any way relating to or arising out of this
Credit Agreement or the other Supplemental Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Supplemental Credit
--------
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the opinion of the Agent, be insufficient or become impaired,
the Agent may call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other
Supplemental Credit Documents.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
--------------------------------
The Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any other Credit
Party as though the Agent were not the Agent hereunder. With respect to the
Term Loans made and all obligations owing to it, the Agent shall have the same
rights and powers under this Credit Agreement as any Supplemental Credit Lender
and may exercise the same as though it were not the Agent, and the terms
"Lender", "Lenders",
54
"Supplemental Credit Lender" and "Supplemental Credit Lenders" shall include the
Agent in its individual capacity.
10.9 SUCCESSOR AGENT.
---------------
The Agent may, at any time, resign upon 20 days written notice to the
Supplemental Credit Lenders. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 45 days after the notice of resignation, then the retiring
Agent shall select a successor Agent provided such successor is a Supplemental
Credit Lender hereunder or a commercial bank organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $400,000,000. Upon the acceptance of any appointment as the
Agent hereunder by a successor, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations as an Agent, as appropriate, under this Credit Agreement and the
other Supplemental Credit Documents and the provisions of this Section 10.9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
-------------
11.1 NOTICES.
-------
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
--------
11.1, or at such other address as such party may specify by written notice to
----
the other parties hereto.
11.2 RIGHT OF SET-OFF.
----------------
In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default and the commencement of remedies described in Section
9.2, each Supplemental Credit Lender is authorized at any time and from time to
time, without presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by such Supplemental Credit Lender (including, without
limitation branches, agencies or Affiliates of such Supplemental Credit Lender
wherever located) to or for the credit or the account of any Credit Party
against obligations and liabilities of such Credit Party to the Supplemental
Credit Lenders hereunder, under the Term Loan Notes, the other
55
Supplemental Credit Documents or otherwise, irrespective of whether the Agent or
the Supplemental Credit Lenders shall have made any demand hereunder and
although such obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such charge
is made or entered on the books of such Lender subsequent thereto. The Credit
Parties hereby agree that any Person purchasing a participation in the Term
Loans and the Term Loan Committed Amount hereunder pursuant to Section 11.3(c)
or 3.9 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Supplemental Credit Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
--------------------
(a) Generally. This Credit Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns
of the parties hereto; provided that none of the Credit Parties may assign
--------
and transfer any of its interests without the prior written consent
of the Lenders; and provided further that the rights of each Supplemental
-------- -------
Credit Lender to transfer, assign or grant participations in
its rights and/or obligations hereunder shall be limited as set forth in
this Section 11.3. Notwithstanding the above, nothing herein shall
restrict, prevent or prohibit any Supplemental Credit Lender from (i)
pledging its Term Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Supplemental Credit Lender from such Federal
Reserve Bank, or (ii) granting assignments or participation in such
Supplemental Credit Lender's Term Loans and/or Term Committed Amount
hereunder to its parent company and/or to any Affiliate of such
Supplemental Credit Lender or to any existing Lender or Affiliate thereof.
(b) Assignments. Each Supplemental Credit Lender may, with the prior
-----------
written consent of the Borrower and the Agent (provided that no consent of
the Borrower shall be required during the existence and continuation of an
Event of Default), which consent shall not be unreasonably withheld or
delayed, assign all or a portion of its rights and obligations hereunder
pursuant to an assignment agreement substantially in the form of Exhibit
-------
11.3 to one or more Eligible Assignees; provided that (i) any such
---- --------
assignment shall be in a minimum aggregate amount of $5,000,000 of (A) the
Revolving Loans and Term Loans or (B) the Revolving Committed Amount and
Term Loan Committed Amount, and in integral multiples of $1,000,000 above
such amount (or the remaining amount of (C) (I) the Revolving Loans and
Term Loans or (II) the Revolving Committed Amount and Term Loan Committed
Amount held by such Supplemental Credit Lender), (ii) each such assignment
shall be of a constant, not varying, percentage of all of the assigning
Supplemental Credit Lender's rights and obligations under the Term Loans
being assigned and (iii) unless otherwise agreed to by the Borrower and the
Agent, such Supplemental Credit Lender proposing to assign all or a portion
of the Term Loan Committed Amount shall be required to assign to such
Eligible Assignee or Assignees (to the extent held by such Supplemental
Credit Lender) an identical percentage of Revolving Committed Amount of
such Supplemental Credit Lender. Any assignment hereunder shall be
effective upon (i) satisfaction of the conditions set forth above, (ii)
delivery to the Agent of a duly executed assignment agreement together with
a transfer fee of $3,500 payable to the Agent for its own account and (iii)
the recordation of an appropriate entry with respect to such assignment in
the Register pursuant to this Section 11.3. Upon the
56
effectiveness of any such assignment, the assignee shall become a
"Supplemental Credit Lender" for all purposes of this Credit Agreement and
the other Supplemental Credit Documents and, to the extent of such
assignment, the assigning Supplemental Credit Lender shall be relieved of
its obligations hereunder to the extent of the Term Loans and Term Loan
Committed Amount components being assigned. Along such lines the Borrower
agrees that upon notice of any such assignment and surrender of the
appropriate Term Loan Note or Term Loan Notes, it will promptly provide to
the assigning Supplemental Credit Lender and to the assignee separate
promissory notes in the amount of their respective interests substantially
in the form of the original Term Loan Note or Term Loan Notes (but with
notation thereon that it is given in substitution for and replacement of
the original Term Loan Note or Term Notes or any replacement notes
thereof).
By executing and delivering an assignment agreement in accordance with this
Section 11.3(b), the assigning Supplemental Credit Lender thereunder and
the assignee thereunder shall be deemed to confirm to and agree with each
other and the other parties hereto as follows: (i) such assigning
Supplemental Credit Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse
claim; (ii) except as set forth in clause (i) above, such assigning
Supplemental Credit Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, any of
the other Supplemental Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement,
any of the other Supplemental Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of
any Credit Party or the performance or observance by any Credit Party of
any of its obligations under this Credit Agreement, any of the other
Supplemental Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and warrants
that it is legally authorized to enter into such assignment agreement; (iv)
such assignee confirms that it has received a copy of this Credit
Agreement, the other Supplemental Credit Documents and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such assignment agreement; (v) such
assignee will independently and without reliance upon the Agent, such
assigning Supplemental Credit Lender or any other Supplemental Credit
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Supplemental Credit Documents; (vi) such assignee appoints and authorizes
the Agent to take such action on its behalf and to exercise such powers
under this Credit Agreement or any other Supplemental Credit Documents as
are delegated to the Agent by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Credit Agreement and the other
Supplemental Credit Documents are required to be performed by it as a
Supplemental Credit Lender.
(c) Participations. Each Supplemental Credit Lender may sell, transfer,
--------------
grant or assign participations in all or any part of such Supplemental
Credit Lender's rights, obligations or rights and obligations hereunder;
provided that (i) such selling Supplemental Credit Lender
--------
57
shall remain a "Supplemental Credit Lender" for all purposes under this
Credit Agreement (such selling Supplemental Credit Lender's obligations
under the Credit Documents remaining unchanged) and the participant shall
not constitute a Supplemental Credit Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement, or the other Supplemental Credit
Documents except to the extent any such amendment or waiver would (A)
reduce the principal of or rate of interest on or fees in respect of any
Term Loans in which the participant is participating, (B) postpone the date
fixed for any payment of principal (including extension of the Term Loan
Maturity Date or the date of any mandatory prepayment), interest or fees in
which the participant is participating, or (C) release all or substantially
all of the collateral or guaranties (except as expressly provided in the
Supplemental Credit Documents) supporting any of the Term Loans or Term
Loan Committed Amount in which the participant is participating, (iii) sub-
participations by the participant (except to an Affiliate, parent company
or Affiliate of a parent company of the participant) shall be prohibited,
(iv) any such participations shall be in a minimum aggregate amount of
$5,000,000 of the (A) Revolving Loans and Term Loans or (B) the Revolving
Committed Amount and Term Loan Committed Amount, as applicable, and in
integral multiples of $1,000,000 in excess thereof and (v) unless otherwise
agreed to by the Borrower and the Agent, such selling Supplemental Credit
Lender proposing to grant or assign a participation in Term Loans shall be
required to grant or assign a participation to such participant, in like
percentage, of Revolving Loan Committed Amount of such Supplemental Credit
Lender. In the case of any such participation, the participant shall not
have any rights under this Credit Agreement or the other Supplemental
Credit Documents (the participant's rights against the selling Supplemental
Credit Lender in respect of such participation to be those set forth in the
participation agreement with such Supplemental Credit Lender creating such
participation) and all amounts payable by the Borrower hereunder shall be
determined as if such Supplemental Credit Lender had not sold such
participation; provided, however, that such participant shall be entitled
--------
to receive additional amounts under Section 3.15 to the same extent that
the Supplemental Credit Lender from which such participant acquired its
participation would be entitled to the benefit of such cost protection
provisions.
(d) Registration. The Agent, acting for this purpose solely on behalf of
------------
the Borrower, shall maintain a register (the "Register") for the
recordation of the names and addresses of the Supplemental Credit Lenders
and the principal amount of the Term Loans owing to each Supplemental
Credit Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent
and the Supplemental Credit Lenders shall treat each Person whose name is
recorded in the Register as the owner of a Term Loan or other obligation
hereunder for all purposes of this Credit Agreement and the other
Supplemental Credit Documents, notwithstanding notice to the contrary. Any
assignment of any Term Loan or other obligation hereunder shall be
effective only upon appropriate entries with respect thereto being made in
the Register. The Register shall be available for inspection by the
Borrower or any Supplemental Credit Lender at any reasonable time and from
time to time upon reasonable prior notice.
58
11.4 NO WAIVER; REMEDIES CUMULATIVE.
------------------------------
No failure or delay on the part of the Agent or any Supplemental Credit Lender
in exercising any right, power or privilege hereunder or under any other
Supplemental Credit Documents and no course of dealing between the Borrower or
any Credit Party and the Agent or any Supplemental Credit Lender shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Supplemental Credit Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Supplemental Credit Lender would otherwise have. No notice to
or demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Supplemental Credit
Lenders to any other or further action in any circumstances without notice or
demand.
11.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
------------------------------------
The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs and
expenses of (i) the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Supplemental Credit Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and expenses of
▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, special counsel to the Agent and the fees and expenses of
counsel for the Agent in connection with collateral or foreign issues), and any
amendment, waiver or consent relating hereto and thereto including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Credit Parties under this Credit Agreement and (ii) the Agent and the
Supplemental Credit Lenders in connection with enforcement of the Supplemental
Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agent and each of the
Supplemental Credit Lenders) and (b) indemnify each Supplemental Credit Lender,
its officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, any investigation, litigation or other
proceeding (whether or not any Supplemental Credit Lender is a party thereto)
related to (i) the entering into and/or performance of any Supplemental Credit
Documents or the use of proceeds of any Term Loans (including other extensions
of credit) hereunder or the consummation of any other transactions contemplated
in any Supplemental Credit Documents, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of gross negligence or willful misconduct on the part of the Person to be
indemnified), (ii) any Environmental Claim and (iii) any claims for Non-Excluded
Taxes.
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
--------------------------------
Neither this Credit Agreement, nor any other Credit Document, nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change,
59
waiver, discharge or termination is in writing and signed by the Required
Lenders and the Credit Parties; provided that no such amendment, change, waiver,
--------
discharge or termination shall
(a) without the consent of each Lender affected thereby:
(i) extend the final maturity of any Term Loan, or any
portion thereof,
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder,
(iii) reduce or waive the principal amount of any Term
Loan,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of any
Default or Event of Default or mandatory reduction in the Commitments
shall not constitute a change in the terms of any Commitment of any
Lender),
(v) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Agent may, without consent from any other Lender, release any
Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5),
(vi) release the Borrower or substantially all of the other
Credit Parties from its obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section
or Section 3.7, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a), 11.2,
11.3 or 11.5,
(viii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower
(or another Credit Party) of any of its rights and obligations under
(or in respect of) the Credit Documents except as permitted thereby;
and
(b) without the consent of Lenders holding in the aggregate more than
50% of the Term Loans, extend the time for or the amount or the manner of
application of proceeds of any mandatory prepayment required by Section
3.3(b)(i), (ii), (iii), (iv) or (v) hereof. No provision of Section 11 may
be amended without the consent of the Agent.
(c) Notwithstanding the above, the right to deliver a Payment Blockage
Notice (as defined in the Indenture) and the Payment Blockage Notice (as
defined in the Second Indenture) shall reside solely with the Agent, and
the Agent shall deliver a Payment Blockage
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Notice (as defined in the Indenture) and a Payment Blockage Notice (as
defined in the Second Indenture) only upon the direction of the Required
Lenders.
(d) Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization
plan that affects the Term Loans and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (y) the Required Lenders
may consent to allow a Credit Party to use cash collateral in the context
of a bankruptcy or insolvency proceeding.
11.7 COUNTERPARTS.
------------
This Credit Agreement may be executed in any number of counterparts, each of
which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 HEADINGS.
--------
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 DEFAULTING LENDER.
-----------------
Each Supplemental Credit Lender understands and agrees that if such
Supplemental Credit Lender is a Defaulting Lender then it shall not be entitled
to vote on any matter requiring the consent of the Required Lenders or to object
to any matter requiring the consent of all the Lenders; provided, however, that
all other benefits and obligations under the Supplemental Credit Documents shall
apply to such Defaulting Lender.
11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.
--------------------------------------------------------------
All indemnities set forth herein and all representations and warranties made
herein shall survive the execution and delivery of this Credit Agreement, the
making of the Term Loans, the repayment of the Term Loans and other obligations
and the termination of the Term Loan Committed Amount hereunder.
11.11 GOVERNING LAW; VENUE.
--------------------
(a) THIS CREDIT AGREEMENT AND THE OTHER SUPPLEMENTAL CREDIT DOCUMENTS
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TENNESSEE. Any legal action or proceeding with respect
to this Credit Agreement or any other Credit
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Document may be brought in the courts of the State of North Carolina or the
State of Tennessee or of the United States for the Western District of
North Carolina or the Eastern District of Tennessee, and, by execution and
delivery of this Credit Agreement, each Credit Party hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit Party further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at
the address for notices pursuant to Section 11.1, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right
of a Lender to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against a Credit Party
in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Credit
Agreement or any other Supplemental Credit Documents brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient
forum.
11.12 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER SUPPLEMENTAL CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 TIME.
----
All references to time herein shall be references to Eastern Standard Time or
Eastern Daylight Time, as the case may be, unless specified otherwise.
11.14 SEVERABILITY.
------------
If any provision of any of the Supplemental Credit Documents is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 ENTIRETY.
--------
This Credit Agreement together with the other Supplemental Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and
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understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Supplemental Credit Documents or the transactions
contemplated herein and therein.
11.16 BINDING EFFECT; AMENDMENT AND RESTATEMENT OF PRIOR SUPPLEMENTAL CREDIT
----------------------------------------------------------------------
AGREEMENT; FURTHER ASSURANCES.
-----------------------------
This Credit Agreement shall become effective at such time when all of the
conditions set forth in Section 5.1 of the New Credit Agreement have been
satisfied or waived by the Lenders and it shall have been executed by the
Borrower, the Guarantors and the Agent, and the Agent shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the signatures
of each Supplemental Credit Lender, and thereafter this Credit Agreement shall
be binding upon and inure to the benefit of the Borrower, the Guarantors, the
Agent and each Supplemental Credit Lender and their respective successors and
assigns. The Credit Parties and the Supplemental Credit Lenders each hereby
agrees that, at such time as this Credit Agreement shall have become effective
pursuant to the terms of the immediately preceding sentence, (a) the Existing
Supplemental Credit Agreement automatically shall be deemed amended and restated
in its entirety by this Credit Agreement, and all obligations and
indemnifications outstanding under the Existing Supplemental Credit Agreement
shall be governed by the terms of this Credit Agreement (as such obligations or
commitments may be modified or amended hereunder), and (b) all of the promissory
notes executed by the Borrower in connection with the Existing Supplemental
Credit Agreement automatically shall be substituted and replaced by the amended
and restated promissory notes executed in connection with this Credit Agreement.
The Borrower further agrees, upon the request of the Agent and/or the Required
Lenders, to promptly take such actions, as reasonably requested, as are
appropriate to carry out the intent of this Credit Agreement and the other
Credit Documents, including, but not limited to, such actions as are reasonably
necessary to ensure that the Agent, for the benefit of the Lenders, has a
perfected security interest in all Collateral securing the Credit Party
Obligations, subject to no Liens other than Permitted Liens.
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Each of the parties hereto has caused a counterpart of this Credit Agreement
to be duly executed and delivered as of the date first above written.
BORROWER:
--------
CHATTEM, INC.,
a Tennessee corporation
By: /s/ A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
--------------------------
Name: A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
------------------------
Title: President
------------------------
GUARANTOR: SIGNAL INVESTMENT & MANAGEMENT CO.,
--------- a Delaware corporation
By: /s/ A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
--------------------------
Name: A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
------------------------
Title: President
------------------------
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SUPPLEMENTAL CREDIT
-------------------
LENDERS:
-------
NATIONSBANK, N.A.,
individually in its capacity as a
Supplemental Credit Lender and
in its capacity as Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Title: Senior Vice President
-----------------------
[signatures of other lenders]
S-2
