EXHIBIT 99.1
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EXECUTION COPY
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$125,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
NBC ACQUISITION CORP.,
NEBRASKA BOOK COMPANY, INC.,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
JPMORGAN CHASE BANK,
AS ADMINISTRATIVE AGENT,
DOCUMENTATION AGENT AND
COLLATERAL AGENT
AND
CITIGROUP GLOBAL MARKETS INC.,
AS SYNDICATION AGENT
DATED AS OF FEBRUARY 13, 1998,
AS AMENDED AND RESTATED AS OF DECEMBER 10, 2003
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▇.▇. ▇▇▇▇▇▇ SECURITIES INC. AND
CITIGROUP GLOBAL MARKETS INC.,
AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS
TABLE OF CONTENTS
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Section 1. DEFINITIONS.......................................................1
1.1 Defined Terms...................................................1
1.2 Other Definitional Provisions..................................33
Section 2. AMOUNT AND TERMS OF COMMITMENTS..................................33
2.1 Term Loan Commitments..........................................33
2.2 Procedure for Term Loan Borrowing..............................34
2.3 Repayment of Term Loans........................................34
2.4 Revolving Credit Commitments...................................35
2.5 Procedure for Revolving Credit Borrowing.......................35
2.6 Swing Line Commitment..........................................36
2.7 Procedure for Swing Line Borrowing; Refunding of
Swing Line Loans...............................................36
2.8 Repayment of Loans; Evidence of Debt...........................38
2.9 Commitment Fees, etc...........................................38
2.10 Termination or Reduction of Revolving Credit Commitments.......39
2.11 Optional Prepayments...........................................39
2.12 Mandatory Prepayments..........................................39
2.13 Conversion and Continuation Options............................41
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches......42
2.15 Interest Rates and Payment Dates...............................42
2.16 Computation of Interest and Fees...............................42
2.17 Inability to Determine Interest Rate...........................43
2.18 Pro Rata Treatment and Payments................................43
2.19 Requirements of Law............................................45
2.20 Taxes..........................................................46
2.21 Indemnity......................................................48
2.22 Illegality.....................................................48
2.23 Change of Lending Office.......................................49
2.24 Replacement of Lenders under Certain Circumstances.............49
Section 3. LETTERS OF CREDIT................................................49
3.1 L/C Commitment.................................................49
3.2 Procedure for Issuance of Letter of Credit.....................50
3.3 Commissions, Fees and Other Charges............................50
3.4 L/C Participations.............................................50
3.5 Reimbursement Obligation of the Borrower.......................51
3.6 Obligations Absolute...........................................52
3.7 Letter of Credit Payments......................................52
3.8 Applications...................................................52
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Section 4. REPRESENTATIONS AND WARRANTIES...................................52
4.1 Financial Condition............................................53
4.2 No Change......................................................55
4.3 Corporate Existence; Compliance with Law.......................55
4.4 Corporate Power; Authorization; Enforceable Obligations........55
4.5 No Legal Bar...................................................56
4.6 No Material Litigation.........................................56
4.7 No Default.....................................................56
4.8 Ownership of Property; Liens...................................56
4.9 Intellectual Property..........................................56
4.10 Taxes..........................................................56
4.11 Federal Regulations............................................57
4.12 Labor Matters..................................................57
4.13 ERISA..........................................................57
4.14 Investment Company Act; Other Regulations......................57
4.15 Subsidiaries...................................................58
4.16 Use of Proceeds................................................58
4.17 Environmental Matters..........................................58
4.18 Accuracy of Information, etc...................................59
4.19 Security Documents.............................................59
4.20 Solvency.......................................................60
4.21 Senior Indebtedness............................................60
4.22 Regulation H...................................................60
Section 5. CONDITIONS PRECEDENT.............................................60
5.1 Conditions to Initial Extension of Credit......................60
5.2 Conditions to Each Extension of Credit.........................63
Section 6. AFFIRMATIVE COVENANTS............................................64
6.1 Financial Statements...........................................64
6.2 Certificates; Other Information................................65
6.3 Payment of Obligations.........................................67
6.4 Conduct of Business and Maintenance of Existence, etc..........67
6.5 Maintenance of Property; Insurance.............................67
6.6 Inspection of Property; Books and Records; Discussions.........67
6.7 Notices........................................................68
6.8 Environmental Laws.............................................69
6.9 Interest Rate Protection.......................................69
6.10 Additional Collateral, etc.....................................70
Section 7. NEGATIVE COVENANTS...............................................71
7.1 Financial Covenants............................................71
7.2 Limitation on Indebtedness.....................................74
7.3 Limitation on Liens............................................75
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7.4 Limitation on Fundamental Changes..............................76
7.5 Limitation on Sale of Assets...................................77
7.6 Limitation on Dividends........................................77
7.7 Limitation on Capital Expenditures.............................78
7.8 Limitation on Investments, Loans and Advances..................79
7.9 Limitation on Optional Payments and Modifications
of Debt Instruments, etc.......................................80
7.10 Limitation on Transactions with Affiliates.....................81
7.11 Limitation on Sales and Leasebacks.............................81
7.12 Limitation on Changes in Fiscal Periods........................81
7.13 Limitation on Negative Pledge Clauses..........................81
7.14 Limitation on Restrictions on Subsidiary Distributions.........82
7.15 Limitation on Lines of Business................................82
7.16 [Intentionally omitted]........................................82
7.17 Limitation on Activities of Holdings...........................82
Section 8. EVENTS OF DEFAULT................................................82
Section 9. THE AGENTS.......................................................86
9.1 Appointment....................................................86
9.2 Delegation of Duties...........................................86
9.3 Exculpatory Provisions.........................................86
9.4 Reliance by Administrative Agent...............................87
9.5 Notice of Default..............................................87
9.6 Non-Reliance on Agents and Other Lenders.......................88
9.7 Indemnification................................................88
9.8 Agent in Its Individual Capacity...............................88
9.9 Successor Administrative Agent.................................89
9.10 Authorization to Release Liens.................................89
9.11 Documentation Agent and Syndication Agent......................89
Section 10. MISCELLANEOUS...................................................89
10.1 Amendments and Waivers.........................................89
10.2 Notices........................................................90
10.3 No Waiver; Cumulative Remedies.................................91
10.4 Survival of Representations and Warranties.....................91
10.5 Payment of Expenses............................................92
10.6 Successors and Assigns; Participations and Assignments.........93
10.7 Adjustments; Set-off...........................................96
10.8 Counterparts...................................................96
10.9 Severability...................................................96
10.10 Integration....................................................97
10.11 GOVERNING LAW..................................................97
10.12 Submission To Jurisdiction; Waivers............................97
10.13 Acknowledgements...............................................97
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10.14 WAIVERS OF JURY TRIAL..........................................98
10.15 Confidentiality................................................98
10.16 Effect of Amendment and Restatement of the Existing
Credit Agreement...............................................98
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ANNEXES:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.9 Intellectual Property
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
7.8 Existing Investments
EXHIBITS:
A Form of Amended and Restated Guarantee and Collateral Agreement
B-1 Form of Borrower Compliance Certificate
B-2 Form of Holdings Compliance Certificate
C-1 Form of Borrower Closing Certificate
C-2 Form of Holdings Closing Certificate
C-3 Form of Subsidiary Closing Certificate
D Form of Mortgage
E Form of Assignment and Assumption
F Form of Legal Opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
J Form of Borrowing Base Certificate
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 13, 1998,
as amended and restated as of December 10, 2003, among NBC Acquisition Corp., a
Delaware corporation ("HOLDINGS"), Nebraska Book Company, Inc., a Kansas
corporation (the "BORROWER"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "LENDERS") and
JPMORGAN CHASE BANK, as administrative agent, documentation agent and collateral
agent (in such capacities, the "ADMINISTRATIVE AGENT", the "DOCUMENTATION
AGENT", respectively) and CITIGROUP GLOBAL MARKETS INC., as syndication agent
(in such capacity, the "SYNDICATION AGENT").
W I T N E S S E T H:
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WHEREAS, the Borrower is a direct wholly-owned subsidiary of Holdings;
WHEREAS, the Borrower, Holdings, the Administrative Agent and certain
of the Lenders are parties to the Credit Agreement, dated as of February 13,
1998, as amended prior to the date hereof (the "EXISTING CREDIT AGREEMENT");
WHEREAS, the Borrower and Holdings intend to enter into a
recapitalization transaction pursuant to which (i) indebtedness of the Borrower
under the Existing Credit Agreement will be refinanced, (ii) the Existing Credit
Agreement and the credit facilities thereunder will be amended and restated
pursuant to this Agreement and (iii) Holdings will purchase a portion of its
common stock (including certain options to purchase common stock) in an
aggregate amount not to exceed $32,500,000 from amounts paid as a dividend or
otherwise advanced by the Borrower to Holdings (the "STOCK Repurchase") (the
foregoing, the "TRANSACTIONS");
WHEREAS, in connection with the Transactions, the Borrower has
requested that the Lenders to provide senior credit facilities aggregating
$125,000,000; and
WHEREAS, the Lenders party hereto, including certain of the Lenders
under the Existing Credit Agreement (the "CONTINUING LENDERS"), are willing to
make such senior credit facilities available upon and subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree that, upon the
effectiveness of this Agreement, the Existing Credit Agreement is hereby amended
and restated in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed
in this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"ACCOUNT": as defined in the Uniform Commercial Code in effect in the
Sate of New York from time to time.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
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"ADMINISTRATIVE AGENT": JPMorgan Chase Bank, in its capacity as
administrative agent.
"AFFILIATE": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"AGENTS": the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.
"AGGREGATE EXPOSURE": with respect to any Lender, an amount equal to
(a) until the Closing Date, the aggregate amount of such Lender's
Commitments and (b) thereafter, the sum of (i) the aggregate unpaid
principal amount of such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Credit Commitment or, if the Revolving Credit
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit.
"AGGREGATE EXPOSURE PERCENTAGE": with respect to any Lender, the ratio
(expressed as a percentage) of such Lender's Aggregate Exposure to the
Aggregate Exposure of all Lenders.
"AGREEMENT": this Amended and Restated Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Eurodollar
Loans Loans
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Revolving Credit Loans 1.75% 2.75%
Swing Line Loans 1.75% N/A
Term Loans 1.75% 2.75%
PROVIDED, that on and after the first Adjustment Date occurring after the
completion of two full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin with respect to Revolving Credit Loans and
Swing Line Loans will be determined pursuant to the Pricing Grid.
"APPLICATION": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"APPROVED FUND": as defined in Section 10.6(b).
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"ARRANGERS": ▇.▇. ▇▇▇▇▇▇ Securities Inc and Citicorp Global Markets
Inc.
"ASSET SALE": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 7.5).
"ASSIGNEE": as defined in Section 10.6(b).
"ASSIGNMENT AND ASSUMPTION": an Assignment and Assumption,
substantially in the form of Exhibit E.
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment OVER (b) such Lender's Revolving
Extensions of Credit; PROVIDED, that in calculating any Lender's Revolving
Extensions of Credit for the purpose of determining such Lender's Available
Revolving Credit Commitment pursuant to Section 2.9(a), the aggregate
principal amount of Swing Line Loans then outstanding shall be deemed to be
zero.
"BASE RATE": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall
mean the rate of interest per annum publicly announced from time to time by
JPMorgan Chase Bank as its prime or base rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the lowest
rate of interest charged by JPMorgan Chase Bank in connection with
extensions of credit to debtors). Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
"BASE RATE LOANS": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BOOKSTORE": any business establishment that has as its primary
business the sale of textbooks.
"BORROWER": as defined in the recitals hereto.
"BORROWER PRO FORMA FINANCIAL STATEMENTS": as defined in Section
4.1(a)(ii).
"BORROWER PROJECTIONS": as defined in Section 6.2(c)(ii).
"BORROWING BASE": at the time of any determination an amount equal to
the sum, without duplication, of (a) the sum of (i) 60% of Eligible
Accounts Receivable in respect of Standard Sales Invoices at such time and
(ii) 85% of Eligible Accounts Receivable in
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respect of Buy-Fund Invoices at such time; (b) 55% of Wholesale Inventory,
Retail Inventory and Information Systems Inventory that, in each case,
constitutes Eligible Inventory at such time (PROVIDED, however, that the
amount in respect of such Information Systems Inventory shall not at any
time exceed $500,000) MINUS the aggregate Rent Reserve at such time; and
(c) the sum of the Over Advance Amount then in effect and if the time of
such determination is (i) during the Peak Period, an amount equal to 55% of
Buy-Funds at such time and (ii) during the Non-Peak Period, the lesser of
(A) $1,000,000 and (B) an amount equal to 55% of Buy-Funds at such time.
The Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate delivered to the Administrative Agent
pursuant to Section 6.2(g), absent any error in such Borrowing Base
Certificate. In the event that at any time after the date hereof (a) the
Borrower materially alters any of its accounting policies or procedures,
(b) there occurs a material change in the Borrower's customer base or (c)
there occurs a material change in the nature of the Borrower's Inventory,
then the Administrative Agent will be entitled in its reasonable discretion
with the consent of the Borrower, which consent shall not be unreasonably
withheld, to adjust the eligibility criteria and reserves in respect of
Eligible Accounts Receivable and Eligible Inventory.
"BORROWING BASE CERTIFICATE": a certificate in substantially the form
of Exhibit J hereto (with such changes thereto from time to time as may
reasonably be required by the Administrative Agent to reflect the
components of and reserves against the Borrowing Base as provided for
herein), executed and certified by a Responsible Officer of the Borrower,
which certificate shall include appropriate exhibits, schedules, supporting
documentation and additional reports (i) as outlined in Schedule 1 to
Exhibit J and (ii) as provided for in Section 6.2(g).
"BORROWING DATE": any Business Day specified by the Borrower as a date
on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"BUSINESS": as defined in Section 4.17.
"BUSINESS DAY": (i) for all purposes other than as covered by clause
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the interbank eurodollar
market.
"BUY-FUNDS": the aggregate amount of cash in the possession of the
Borrower's buyers conducting book-buys during any buy-back period at an
educational institution or commercial Bookstore, less the aggregate amount
represented by outstanding drafts issued by the Borrower in respect of
purchases of used books during such buy-back period.
"BUY-FUND INVOICE": an invoice resulting from the sale or advance by
the Borrower to, or the agreement by the Borrower with, an educational
institution or commercial Bookstore in respect of used books that (a) have
been purchased by the
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Borrower during any buy-back period at such educational institution or
commercial Bookstore and (b) are designated to remain on the campus of such
educational institution or on the premises of such commercial Bookstore, in
each case net of any commission owed by the Borrower to such educational
institution or commercial Bookstore in respect of such sale.
"CAPITAL EXPENDITURES": for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized
repairs and improvements during such period) which should be capitalized
under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and
all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the
foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of six months or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of an issuer rated at least A-1 by Standard & Poor's
Ratings Services ("S&P") or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.
("MOODY'S"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six
months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's; (f)
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securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition.
"CLOSING DATE": December 10, 2003 or such later date not beyond
December 15, 2003 on which the conditions precedent set forth in Section
5.1 shall have been satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all Property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security
Document.
"COMMITMENT": as to any Lender, the sum of the Term Loan Commitment and
the Revolving Credit Commitment of such Lender.
"COMMITMENT FEE RATE": 1/2 of 1% per annum.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit B.
"CONDUIT LENDER": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise
required to be made by such Lender and designated by such Lender in a
written instrument; PROVIDED, that the designation by any Lender of a
Conduit Lender shall not relieve the designating Lender of any of its
obligations to fund a Loan under this Agreement if, for any reason, its
Conduit Lender fails to fund any such Loan, and the designating Lender (and
not the Conduit Lender) shall have the sole right and responsibility to
deliver all consents and waivers required or requested under this Agreement
with respect to its Conduit Lender, and PROVIDED, FURTHER, that no Conduit
Lender shall (a) be entitled to receive any greater amount pursuant to
Section 2.19, 2.20, 2.21 or 10.5 than the designating Lender would have
been entitled to receive in respect of the extensions of credit made by
such Conduit Lender or (b) be deemed to have any Commitment.
"CONFIDENTIAL INFORMATION MEMORANDUM": the Confidential Information
Memorandum dated November 2003 and furnished to the Lenders.
"CONSOLIDATED CURRENT ASSETS": at any date, all amounts (other than
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of Holdings and its Subsidiaries at such date.
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"CONSOLIDATED CURRENT LIABILITIES": at any date, all amounts
which would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
balance sheet of Holdings and its Subsidiaries at such date, but
excluding (a) the current portion of any Funded Debt of Holdings and
its Subsidiaries and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Extensions of Credit to the extent
otherwise included therein.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income
for such period PLUS, without duplication and to the extent reflected
as a charge in the statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited
to, goodwill) and organization costs, (e) any non-cash extraordinary,
unusual or non-recurring expenses or losses (including, whether or not
otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets
outside of the ordinary course of business and excluding any non-cash
expense to the extent that it represents an accrual of or reserve for
cash expenditures in any future period), (f) any other non-cash charges
and (g) any non-recurring stock compensation expenses and other
non-capitalized expenses incurred in connection with the Stock
Repurchase, and MINUS, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (i) interest
income, (ii) any extraordinary, unusual or non-recurring income or
gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets outside of the ordinary course of
business) and (iii) any other non-cash income, all as determined on a
consolidated basis.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period,
the ratio of (a) Consolidated EBITDA for such period less the aggregate
amount actually paid by Holdings and its Subsidiaries in cash during
such period on account of Capital Expenditures to (b) Consolidated
Fixed Charges for such period; PROVIDED that for purposes of
calculating Consolidated EBITDA and Consolidated Fixed Charges of
Holdings and its Subsidiaries for any period, the Consolidated EBITDA
and Consolidated Fixed Charges of any Person or bookstore location
acquired or disposed of by Holdings or its Subsidiaries during such
period shall be included on a PRO FORMA basis, including the effect of
identified business synergies, for such period (assuming the
consummation of each such acquisition and the incurrence or assumption
of any Indebtedness in connection therewith occurred on the first day
of such period) if (other than the pro forma adjustments to
Consolidated EBITDA included in the calculation thereof for the
twelve-month period ended September 30, 2003 for the purposes of
Section 5.1(j)) either (x) the consolidated balance sheet of such
acquired Person and its consolidated Subsidiaries as at the end of the
period preceding the acquisition of such Person and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA and
Consolidated Fixed Charges is to be calculated have been previously
provided to the Administrative Agent and the Lenders and reported on
without a qualification arising out of the scope of the audit by
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independent certified public accountants of nationally recognized
standing or (y) other financial information in respect of such acquired
Person or bookstore location shall have been provided to the
Administrative Agent and the Lenders and shall have been found
reasonably acceptable by the Required Lenders.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
provision for cash income taxes made by Holdings or any of its
Subsidiaries on a consolidated basis in respect of such period and (c)
scheduled payments made during such period on account of principal of
Indebtedness of Holdings or any of its Subsidiaries (including
scheduled principal payments in respect of the Term Loans but excluding
scheduled principal payments under the Existing Credit Agreement).
"CONSOLIDATED INTEREST COVERAGE RATIO": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period; PROVIDED that for purposes of
calculating Consolidated EBITDA and Consolidated Interest Expense of
Holdings and its Subsidiaries for any period, the Consolidated EBITDA
and Consolidated Interest Expense of any Person or bookstore location
acquired or disposed of by Holdings or its Subsidiaries during such
period shall be included on a PRO FORMA basis, including the effect of
identified business synergies, for such period (assuming the
consummation of each such acquisition and the incurrence or assumption
of any Indebtedness in connection therewith occurred on the first day
of such period) if (other than the pro forma adjustments to
Consolidated EBITDA included in the calculation thereof for the
twelve-month period ended September 30, 2003 for the purposes of
Section 5.1(j)) either (x) the consolidated balance sheet of such
acquired Person and its consolidated Subsidiaries as at the end of the
period preceding the acquisition of such Person and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA and
Consolidated Interest Expense is to be calculated have been previously
provided to the Administrative Agent and the Lenders and reported on
without a qualification arising out of the scope of the audit by
independent certified public accountants of nationally recognized
standing or (y) other financial information in respect of such acquired
Person or bookstore location shall have been provided to the
Administrative Agent and the Lenders and shall have been found
reasonably acceptable by the Required Lenders.
"CONSOLIDATED INTEREST EXPENSE": for any period, total cash
interest expense (including that attributable to Capital Lease
Obligations) of Holdings and its Subsidiaries for such period with
respect to all outstanding Indebtedness of Holdings and its
Subsidiaries (including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Interest Rate
Protection Agreements to the extent such net costs are allocable to
such period in accordance with GAAP) net of cash interest income
received during such period.
"CONSOLIDATED LEVERAGE RATIO": as at the last day of any
period of four consecutive fiscal quarters, the ratio of (a)
Consolidated Total Debt on such day to (b)
9
Consolidated EBITDA for such period; PROVIDED that for purposes of
calculating Consolidated EBITDA of Holdings and its Subsidiaries for any
period, the Consolidated EBITDA of any Person or bookstore location
acquired or disposed of by Holdings or its Subsidiaries during such period
shall be included on a PRO FORMA basis, including the effect of identified
business synergies, for such period (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if (other
than the pro forma adjustments to Consolidated EBITDA included in the
calculation thereof for the twelve-month period ended September 30, 2003
for the purposes of Section 5.1(j)) either (x) the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the
end of the period preceding the acquisition of such Person and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA is to be
calculated have been previously provided to the Administrative Agent and
the Lenders and reported on without a qualification arising out of the
scope of the audit by independent certified public accountants of
nationally recognized standing or (y) other financial information in
respect of such acquired Person or bookstore location shall have been
provided to the Administrative Agent and the Lenders and shall have been
found reasonably acceptable by the Required Lenders.
"CONSOLIDATED NET INCOME": for any period, the consolidated net income
(or loss) of Holdings and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded (a)
the income (or deficit) of any Person accrued prior to the date it becomes
a Subsidiary of Holdings or is merged into or consolidated with Holdings or
any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of Holdings) in which Holdings or any of its Subsidiaries
has an ownership interest, except to the extent that any such income is
actually received by Holdings or such Subsidiary in the form of dividends
or similar distributions and (c) the undistributed earnings of any
Subsidiary of Holdings to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any
Loan Document) or Requirement of Law applicable to such Subsidiary.
"CONSOLIDATED SENIOR LEVERAGE RATIO": as at the last day of any period
of four consecutive fiscal quarters, the ratio of (a) Consolidated Total
Debt less the aggregate principal amount of the Senior Subordinated Notes,
the Holdings Discount Debentures and any refinancing Indebtedness permitted
by Section 7.2(g)(ii) and Section 7.2(h)(ii) on such day to (b)
Consolidated EBITDA for such period; PROVIDED that for purposes of
calculating Consolidated EBITDA of Holdings and its Subsidiaries for any
period, the Consolidated EBITDA of any Person or bookstore location
acquired or disposed of by Holdings or its Subsidiaries during such period
shall be included on a PRO FORMA basis, including the effect of identified
business synergies, for such period (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if (other
than the pro forma adjustments to Consolidated EBITDA included in the
calculation thereof for the twelve-month period ended September 30, 2003
for the purposes of Section 5.1(j)) either (x) the consolidated balance
sheet of such acquired Person and its
10
consolidated Subsidiaries as at the end of the period preceding the
acquisition of such Person and the related consolidated statements of
income and stockholders' equity and of cash flows for the period in respect
of which Consolidated EBITDA is to be calculated have been previously
provided to the Administrative Agent and the Lenders and reported on
without a qualification arising out of the scope of the audit by
independent certified public accountants of nationally recognized standing
or (y) other financial information in respect of such acquired Person or
bookstore location shall have been provided to the Administrative Agent and
the Lenders and shall have been found reasonably acceptable by the Required
Lenders.
"CONSOLIDATED TOTAL DEBT": at any date, the aggregate principal amount
of all Indebtedness of Holdings and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP (other than
Revolving Extensions of Credit made under the Borrowing Base).
"CONSOLIDATED WORKING CAPITAL": at any date, the excess of Consolidated
Current Assets on such date over Consolidated Current Liabilities on such
date.
"CONTINUING DIRECTORS": as defined in Section 8(j) hereof.
"CONTINUING LENDERS": as defined in the recitals hereto.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"CONVERTED TERM LOAN": as defined in Section 2.1(b) hereof.
"DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"DEFAULTED ACCOUNT": as defined in the definition of the "Eligible
Accounts Receivable".
"DISPOSITION": with respect to any Property, any sale, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms "DISPOSE" and "DISPOSED OF" shall have correlative meanings.
"DOCUMENTATION AGENT": as defined in the preamble hereto.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States of America.
"EARLY MATURITY DATE": in the event that one or both of (x) the
Holdings Discount Debentures and (y) the Senior Subordinated Notes have not
been refinanced or the maturity thereof extended prior to June 30, 2007 to
a date on or after May 31, 2011, the
11
"Early Maturity Date" shall be June 30, 2007; PROVIDED that, if the
Holdings Discount Debentures and/or the Senior Subordinated Notes, as
applicable, not so refinanced or extended have been refinanced or extended
(if applicable) prior to June 30, 2007 to a date earlier than May 31, 2011
(the earliest of any such earlier dates, the "REFINANCING MATURITY"), the
"Early Maturity Date" shall be the date which is six months prior to the
Refinancing Maturity. In the event that both the Holdings Discount
Debentures and the Senior Subordinated Notes have been refinanced or
extended prior to June 30, 2007 to May 31, 2011 or later, the "Early
Maturity Date" shall not occur.
"ECF PERCENTAGE": 75%; PROVIDED, that with respect to each fiscal year
of Holdings, the ECF Percentage shall be reduced to 50% if the Consolidated
Leverage Ratio as of the last day of such fiscal year is not greater than
3.5 to 1.0.
"ELIGIBLE ACCOUNTS RECEIVABLE": at the time of any determination, the
gross outstanding balance at such time, determined in accordance with GAAP
and stated on a basis consistent with the historical practices of the
Borrower as of the date hereof, of Accounts of the Borrower and its
Subsidiaries, including the aggregate amount of all Past-due Addbacks less,
as applicable and without duplication, the aggregate amount of (i) all
charge-backs for returns, (ii) all finance agreements, (iii) all trade
discounts, (iv) all finance charges, late fees and other fees that are
unearned, (v) the aggregate amount of all reserves for service fees and
such other fees or commissions or similar amounts that the Borrower or such
Subsidiary has agreed to pay and (vi) at the discretion of the
Administrative Agent, a dilution reserve, reasonably determined by the
Administrative Agent based upon the calculations set forth in the most
recent Borrowing Base Certificate delivered by the Borrower, in an amount
equal to the product of (A) the amount, expressed as a percentage, by which
dilution of Eligible Accounts Receivable in respect of Standard Sales
Invoices exceeds 25% and (B) the amount that would constitute Eligible
Accounts Receivable prior to the implementation of the reserve contemplated
by this clause (vi). Notwithstanding the foregoing, an Account shall not be
included in this definition of Eligible Accounts Receivable if, at the time
of any determination, without duplication:
(a) the Borrower or such Subsidiary has not complied with all
material requirements of applicable Federal, state and local and laws,
rules, regulations and orders (including all laws, rules, regulations
and orders of any governmental or judicial authority relating to truth
in lending, billing practices, fair credit reporting, equal credit
opportunity, debt collection practices and consumer debtor protection)
applicable to such Account (or any related contracts) or affecting the
collectibility of such Account; or
(b) (i) such Account is not assignable or requires consent of
the Account debtor and such a requirement of consent is enforceable law
or (ii) a first priority security interest in such Account in favor of
the Administrative Agent for the ratable benefit of the Lenders has not
been obtained and fully perfected by filing Uniform Commercial Code
financing statements against the Borrower or such Subsidiary; or
12
(c) such Account is subject to any Lien whatsoever, other than
Liens expressly permitted by Section 7.3; or
(d) the Borrower or such Subsidiary, in order to be entitled
to collect such Account, is required to perform any additional service
for, or perform or incur any additional obligation to, the Account
debtor, except the portion of such Account that has arisen in respect
of the sale of any Information Systems Inventory; or
(e) such Account does not constitute a legal, valid and
binding irrevocable payment obligation of the Account debtor to pay the
balance thereof in accordance with its terms or is subject to any
defense, setoff, recoupment or counterclaim; or
(f) the Account debtor is an Affiliate, division or employee
of the Borrower or such Subsidiary; or
(g) (i) if such Account (A) is an account of the United States
Government or any of its agencies or instrumentalities, (B) is subject
to any Lien pursuant to the Federal Assignment of Claims Act and (C)
the Administrative Agent has not received an assignment of claims in
form and substance satisfactory to it within 45 days of the creation of
such Account or (ii) such Account is (A) an account of the government
of any state of the United States or any political subdivision thereof
or any agency or instrumentality of any of the foregoing and (B) a
first priority security interest in such account in favor of the
Administrative Agent for the ratable benefit of the Lenders has not
been obtained and fully perfected by filing Uniform Commercial Code
financing statements against the Borrower or such Subsidiary; or
(h) an estimated or accrual loss has been recognized in
respect of such Account, as determined in accordance with the
Borrower's or such Subsidiary's usual business practice (each such
Account, a "DEFAULTED ACCOUNT"); or
(i) 20% or more of the aggregate outstanding amount of all
Accounts from the Account debtor in respect of such Account and its
Affiliates constitute Defaulted Accounts; or
(j) any representation or warranty contained in this Agreement
or in any other Loan Documents applicable either to Accounts in general
or to any such specific Account shall prove to have been false or
misleading in any material respect when made or deemed made with
respect to such Account; or
(k) 50% or more of the outstanding amount of all Accounts from
the same Account debtor have become, or have been determined by the
Administrative Agent to be, ineligible pursuant to subparagraph (m)
below; or
(l) the Account debtor (i) has filed a petition for relief
under the United States Bankruptcy Code (or similar action under any
successor law or under any comparable law), (ii) has made a general
assignment for the benefit of creditors,
13
(iii) has filed against it any petition or other application for relief
under the United States Bankruptcy Code (or similar action under any
successor law or under any comparable law), (iv) has failed, suspended
business operations, become insolvent, called a meeting of its
creditors for the purpose of obtaining any financial concession or
accommodation or (v) had or suffered a receiver or a trustee to be
appointed for all or a significant portion of its assets or affairs; or
(m) (i) any portion of such Account has remained unpaid 120 or
more days past the original invoice date thereof or (ii) the Borrower
or such Subsidiary has reason to believe that all or a material portion
of such Account is uncollectible (in the reasonable discretion of the
Administrative Agent); or
(n) in respect of Buy-Fund Invoices, any portion of such
Account has remained unpaid 31 or more days past the original invoice
date therefor; or
(o) the sale represented by such Account is to an Account
debtor organized or located outside the states of the United States,
the District of Columbia or Canada unless, in the case of any Account
debtor controlled by an entity organized or located outside one of the
states of the United States or the District of Columbia, the
Administrative Agent has, for the benefit of the Lenders, a valid,
legal and perfected first-priority security interest in such Account;
or
(p) the Account debtor is a supplier or creditor of the
Borrower or such Subsidiary (but only to the extent of the lesser of
(i) the amount owing from such Account debtor to the Borrower or such
Subsidiary pursuant to Accounts that are otherwise eligible and (ii)
the amount owing to such Account debtor by the Borrower or such
Subsidiary); or
(q) such Account is not denominated in dollars or is payable
outside the United States; or
(r) if applicable, the sale represented by such Account is on
a ▇▇▇▇-and-hold, undelivered sale, guaranteed sale, sale-or-return,
consignment or sale-on-approval basis or is subject to any right of
return (other than (i) in the ordinary course of business or (ii) a
standard right of claim for defective goods for which neither the
related Account debtor has made a claim nor the Borrower or such
Subsidiary has any basis to believe that such Account debtor is
entitled to such a claim), charge-back or setoff; or
(s) the Administrative Agent believes, in its reasonable
discretion, that the collection of such Account may not be paid and the
Administrative Agent shall so notify the Borrower; or
(t) the Borrower or such Subsidiary is in default, in any
material respect, in the performance or observance of any of the terms
of any agreement giving rise to such Account; or
14
(u) the Borrower or such Subsidiary does not have good and
marketable title to such Account as sole owner of such Account; or
(v) such Account does not arise from the sale and delivery of
goods or provision of services in the ordinary course of business of
the Borrower or such Subsidiary to the Account debtor; or
(w) such Account is on terms other than those normal or
customary in the business or the Borrower or such Subsidiary; or
(x) any amounts payable under or in connection with such
Account are evidenced by promissory notes, agreements to repay cash
advances or other instruments, unless such promissory notes, agreements
or instruments have been endorsed and delivered to the Administrative
Agent; or
(y) such Account has been paid by a check that has been
returned for insufficient funds; or
(z) the Account debtor is a third party credit card company or
a debit card company; or
(aa) such Account is not subject to the standard credit and
collection policies of the Borrower or such Subsidiary; or
(bb) such Account has been placed with an attorney or other
third party for collection; or
(cc) the aggregate credit balances of the Borrower or such
Subsidiary on an Account debtor by Account debtor basis of all Accounts
have remained unpaid for the past due amounts referenced in
subparagraphs (m) and (n) above; or
(dd) such Account is subject to any adverse security deposit,
retainage or other similar advance made by or for the benefit of the
applicable Account debtor, in each case only to the extent thereof; or
(ee) such Account was invoiced (i) in advance of goods or
services provided, or (ii) twice or more, or (iii) the associated
income has not been earned; or
(ff) the goods giving rise to such Account have not been
shipped and title has not been transferred to the Account debtor, or
the Account represents a progress-billing or otherwise does not
represent a complete sale, except the portion of such Account that has
arisen in respect of the sale of any Information Systems Inventory; for
purposes hereof, "progress-billing" means any invoice for goods sold or
leased or services rendered under a contract or agreement pursuant to
which the Account debtor's obligation to pay such invoice is
conditioned upon
15
the Borrower's or such Subsidiary's completion of any further
performance under the contract or agreement; or
(gg) such Account is created on cash on delivery terms;
PROVIDED THAT, all Accounts of any single Account debtor and its
Affiliates which, in the aggregate exceed (i) 20% in respect of an
Account debtor whose securities are rated Investment Grade, and (ii)
15% in respect of all other Account debtors, of the total amount of all
Accounts at the time of any determination shall be deemed not to be
Eligible Accounts Receivable to the extent of such excess.
"ELIGIBLE INVENTORY": at any date of determination thereof, the value
(determined at the lowest of cost or market or the written-down value in
accordance with the Borrower's historical practice in accordance with GAAP)
at such date of all inventories ("INVENTORY") of the Borrower and its
Subsidiaries owned by the Borrower and its Subsidiaries and in the
possession of the Borrower and its Subsidiaries or any warehouseman,
bailee, agent or processor of the Borrower and its Subsidiaries, including
any educational institution or commercial Bookstore, net of (i) any
interdivisional profit, (ii) any amounts payable by the Borrower and its
Subsidiaries in respect of commissions, processing fees or other charges,
(iii) any advance payments and unliquidated progress ▇▇▇▇▇▇▇▇ in respect of
such Inventory, (iv) the Obsolescence Reserve and (v) the RTV Reserve.
Notwithstanding the foregoing, Inventory shall not constitute Eligible
Inventory if, without duplication:
(a) such item of Inventory is not assignable or a first
priority security interest in such item of Inventory in favor of the
Administrative Agent for the ratable benefit of the Lenders has not
been obtained and fully perfected by filing Uniform Commercial Code
financing statements against the Borrower or such Subsidiary; or
(b) such item of Inventory is subject to any Lien whatsoever,
other than Liens expressly permitted by Section 7.3 of this Agreement;
or
(c) there shall have occurred any event that, or any condition
with respect to such item of Inventory, would substantially impede the
ability of the Borrower or such Subsidiary to continue to use or sell
such item of Inventory in the normal course of business; or
(d) any claim disputing the title of the Borrower or such
Subsidiary to, or right to possession of or dominion over, such item of
Inventory shall have been asserted; or
(e) any representation or warranty contained in this Agreement
or in any other Loan Document applicable to either Inventory in general
or to such specific item of Inventory has been breached with respect to
such item of Inventory; or
(f) the Borrower or such Subsidiary does not have good and
marketable title to such item of Inventory as sole owner of such item
of Inventory; or
16
(g) such item of Inventory is located outside of the United
States; or
(h) such item of Inventory is evidenced by an Account; or
(i) such item of Inventory consists of packing, packaging
and/or shipping supplies or materials; or
(j) such item of Inventory has been shipped to a customer,
even if on a consignment or "sale or return" basis; or
(k) such item of Inventory consists of obsolete Information
Systems Inventory or Retail Inventory, including books and related
materials with titles classified as slow-moving; or
(l) such item of Inventory consists of any unsaleable
Inventory; or
(m) such item of Inventory is located on a leasehold, or is in
the possession or control of any lessor, warehouseman, bailee, agent or
processor, unless (i) a Rent Reserve has been established for Inventory
at that location, or (ii) the applicable lessor, warehouseman, bailee,
agent or processor (including any educational institution or commercial
Bookstore), has been notified of the Lien granted under the Security
Documents and has entered into a Landlord Waiver, or (iii) (A) the
Administrative Agent shall have received an opinion, in form and
substance acceptable to and from local counsel approved by the
Administrative Agent, and addressed to the Administrative Agent, the
Issuing Bank and the Lenders, to the effect that there is no law in the
jurisdiction where such Inventory is located that would allow Inventory
located on such leasehold, or in the possession or control of such
warehouseman, bailee, agent or processor, to be subjected to any Lien
in favor of the applicable lessor, warehouseman, bailee, agent or
processor arising by operation of law and (B) the Administrative Agent
shall have received a certificate of a Responsible Officer of the
Borrower or such Subsidiary certifying that there is no term or
condition of any agreement or other document governing the relationship
between the Borrower or such Subsidiary and the applicable lessor,
warehouseman, bailee, agent or processor that provides for any such
Lien; or
(n) such item of Inventory consists of food, beverages or
sundries; or
(o) such item of Inventory consists of cigarettes; or
(p) such item of Inventory is to be sold by the Borrower or
such Subsidiary from a vending machine; or
(q) such item of Inventory has been determined by the
Administrative Agent, exercising its reasonable discretion, to be
unacceptable because (i) the Administrative Agent believes that such
item of
17
Inventory is not readily saleable under the customary terms on which it
is usually sold or (ii) such item of Inventory (other than Information
Systems Inventory) is not of a type typically sold by campus
Bookstores; or
(r) such item of Inventory is goods returned or rejected by
the Borrower's or such Subsidiary's customers due to quality issues or
is goods in transit to a third party; or
(s) such item of Inventory is a reserve computed by the
Borrower or such Subsidiary to accrue for future adjustments to
Inventory relating to inaccuracies arising from the utilization of the
gross profit method of accounting for Retail Inventory; or
(t) such item of Inventory is an accrual computed by the
Borrower or such Subsidiary to accrue for anticipated returns of sold
Inventory.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board) maintained by a member bank of
the Federal Reserve System.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
screen (or otherwise on such service), the "EURODOLLAR BASE RATE" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where its
18
eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both,
has been satisfied.
"EXCESS CASH FLOW": for any fiscal year of Holdings, the excess, if
any, of (a) the sum, without duplication, of (i) Consolidated Net Income
for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges (including depreciation and amortization) deducted in arriving at
such Consolidated Net Income, (iii) an amount equal to the aggregate net
non-cash loss on the Disposition of Property by Holdings and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income, (iv) the net increase during such fiscal year (if
any) in deferred tax accounts of Holdings and its Subsidiaries and (v)
decreases in Consolidated Working Capital for such fiscal year OVER (b) the
sum, without duplication, of (i) an amount equal to the amount of all
non-cash credits included in arriving at such Consolidated Net Income, (ii)
the aggregate amount actually paid by Holdings and its Subsidiaries in cash
during such fiscal year on account of Capital Expenditures, (iii) the
aggregate amount actually paid by Holdings and its Subsidiaries in cash
during such fiscal year on account of acquisitions (net of any debt
incurred in such fiscal year in connection with such acquisition and
without duplication of any amounts included in clause (b)(ix) below), (iv)
the aggregate amount of all prepayments of Revolving Credit Loans and Swing
Line Loans during such fiscal year to the extent accompanying permanent
optional reductions of the Revolving Credit Commitments, (v) the aggregate
amount of all optional prepayments of the Term Loans during such fiscal
year, (vi) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation, the Term Loans) of
Holdings and its Subsidiaries made during such fiscal year (other than in
respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), (vii) an amount
equal to the aggregate net non-cash gain on the Disposition of Property by
Holdings and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in
19
arriving at such Consolidated Net Income, (viii) the net decrease during
such fiscal year (if any) in deferred tax accounts of Holdings and its
Subsidiaries, (ix) increases in Consolidated Working Capital for such
fiscal year (without duplication of any amounts included in clause (b)(iii)
above) and (x) the aggregate amount actually paid by the Borrower to
Holdings during such fiscal year pursuant to Section 7.6(b).
"EXCESS CASH FLOW APPLICATION DATE": as defined in Section 2.12(c).
"EXCLUDED FOREIGN SUBSIDIARIES": any Foreign Subsidiary in respect of
which either (i) the pledge of all of the Capital Stock of such Subsidiary
as Collateral or (ii) the guaranteeing by such Subsidiary of the
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.
"EXISTING CREDIT AGREEMENT": as defined in the recitals hereto.
"EXITING LENDER": each Lender (as defined in the Existing Credit
Agreement) that is not a Continuing Lender.
"FACILITY": each of (a) the Term Loan Commitments and the Term Loans
made thereunder (the "TERM LOAN FACILITY") and (b) the Revolving Credit
Commitments and the extensions of credit made thereunder (the "REVOLVING
CREDIT FACILITY").
"FEDERAL FUNDS EFFECTIVE RATE"; for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders
to extend credit during a period of more than one year from such date,
including, without limitation, all current maturities and current sinking
fund payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans.
"FUNDING OFFICE": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and
the Lenders pursuant to Section 10.2.
20
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time, except that for purposes of
Section 7.1, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered pursuant to
Section 4.1(b). In the event that any "Accounting Change" (as defined
below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement,
then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed
and delivered by the Borrower, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement
shall continue to be calculated or construed as if such Accounting Changes
had not occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, the National
Association of Insurance Commissioners).
"GUARANTEE AND COLLATERAL AGREEMENT": the Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by
Holdings, the Borrower and each Subsidiary Guarantor, substantially in the
form of Exhibit A, as the same may be amended, supplemented or otherwise
modified from time to time.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "PRIMARY OBLIGATIONS") of any other third Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any Property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the
21
ordinary course of business. The amount of any Guarantee Obligation of
any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"GUARANTORS": the collective reference to Holdings and the Subsidiary
Guarantors.
"HOLDINGS": as defined in the preamble hereto.
"HOLDINGS DISCOUNT DEBENTURES": the 10 3/4% Senior Discount Debentures
of Holdings due 2009 and issued pursuant to the Holdings Discount
Debentures Indenture.
"HOLDINGS DISCOUNT DEBENTURES INDENTURE": the Indenture dated as of
February 13, 1998 entered into by Holdings in connection with the issuance
of the Holdings Discount Debentures, together with all instruments and
other agreements entered into by Holdings in connection therewith, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with Section 7.9.
"HOLDINGS PRO FORMA FINANCIAL STATEMENTS": as defined in Section
4.1(a)(i).
"HOLDINGS PROJECTIONS": as defined in Section 6.2(c)(i).
"HWH CAPITAL PARTNERS": HWH Capital Partners, L.P., a Delaware limited
partnership.
"INDEBTEDNESS": of any Person at any date, without duplication (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of Property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such Property), (e) all
Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party under acceptance,
letter of credit or similar facilities, (g) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire
for value any Capital Stock (other than common stock) of such Person, (h)
all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above; (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for
which the holder of such obligation has an existing right, contingent or
22
otherwise, to be secured by) any Lien on Property (including, without
limitation, accounts and contract rights) owned by such Person, whether or
not such Person has assumed or become liable for the payment of such
obligation, (j) for the purposes of Section 8(e) only, all obligations of
such Person in respect of Interest Rate Protection Agreements and (k) the
liquidation value of any mandatorily redeemable preferred Capital Stock of
such Person or its Subsidiaries held by any Person other than such Person
and its Wholly Owned Subsidiaries.
"INFORMATION SYSTEMS INVENTORY": all Inventory located at the
Borrower's warehouses consisting of computer hardware and software,
including IBM point-of-sale register systems and related software.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to ▇▇▇ at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the last day of
each January, April, July and October to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other than
any Revolving Credit Loan that is a Base Rate Loan and any Swing Line
Loan), the date of any repayment or prepayment made in respect thereof.
"INTEREST PERIOD": as to any Eurodollar Loan (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three Business
Days prior to the last day of the then current Interest Period with respect
thereto; PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
23
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Revolving Credit Termination Date or beyond the date final payment
is due on the Term Loans shall end on the Revolving Credit Termination
Date or such due date, as applicable;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"INTEREST RATE PROTECTION AGREEMENT": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Holdings or any of its Subsidiaries is a party or a beneficiary on the date
hereof or becomes a party or a beneficiary after the date hereof.
"INVENTORY": as defined in the definition of "Eligible Inventory".
"INVESTMENT GRADE": having a rating established by a third party rating
agency, equivalent to a Standard & Poor's Ratings Group BBB- or a ▇▇▇▇▇'▇
Investor's Services, Inc. Baa3 or better.
"ISSUING LENDER": JPMorgan Chase Bank, in its capacity as issuer of any
Letter of Credit.
"LANDLORD WAIVER": a written agreement satisfactory in form and
substance to the Administrative Agent (i) acknowledging that Inventory
located on a leasehold or in possession or control of any warehouseman,
bailee, agent or processor is subject to the Lien granted under the
Security Documents, (ii) waiving and releasing any applicable Lien held by
such lessor, warehouseman, bailee, agent or processor with respect to such
item of Inventory (whether arising by operation of law or otherwise) and
(iii) providing the Administrative Agent with the right to receive notice
of default, the right to repossess such item of Inventory at any time upon
the occurrence or during the continuance of a Default or Event of Default
and such other rights as may be reasonably required by the Administrative
Agent.
"L/C COMMITMENT": $10,000,000.
24
"L/C FEE PAYMENT DATE": the last day of each March, June, September and
December and the last day of the Revolving Credit Commitment Period.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 3.5.
"L/C PARTICIPANTS": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"LENDERS": as defined in the preamble hereto; PROVIDED, that unless the
context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"LETTERS OF CREDIT": as defined in Section 3.1(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any
of the foregoing).
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Security Documents and the Notes
as the same may be amended, supplemented or otherwise modified from time to
time.
"LOAN PARTIES": Holdings, the Borrower and each Subsidiary of Holdings
which is a party to a Loan Document.
"MAJORITY FACILITY LENDERS": with respect to any Facility, the holders
of more than 50% of the aggregate unpaid principal amount of the Term Loans
or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit Commitments, the
holders of more than 50% of the Total Revolving Credit Commitments).
"MAJORITY REVOLVING CREDIT FACILITY LENDERS": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
Transactions, (b) the business, operations, property, condition (financial
or otherwise) of the Borrower and its Subsidiaries taken as a whole, or (c)
the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Administrative Agent or the
Lenders hereunder or thereunder.
25
"MATERIAL ENVIRONMENTAL AMOUNT": an amount payable by Holdings and/or
its Subsidiaries in excess of $1,000,000 for remedial costs, compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MORTGAGED PROPERTIES": the owned real properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders
has been or shall be granted a Lien pursuant to the Mortgages.
"MORTGAGES": each mortgage referred to in Section 5.1(a) and each of
the mortgages and deeds of trust made by any Loan Party in favor of, or for
the benefit of, the Administrative Agent for the benefit of the Lenders,
substantially in the form of Exhibit D (with such changes thereto as shall
be advisable under the law of the jurisdiction in which such mortgage or
deed of trust is to be recorded), as the same may be amended, supplemented
or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document), insurance
proceeds applied to pay costs incurred in connection with the repair or
restoration of any Property that is real property in the event of damage by
casualty and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to be
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (b) in
connection with any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the cash proceeds
received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"NON-EXCLUDED TAXES": as defined in Section 2.20(a).
26
"NON-PEAK PERIOD": the collective reference to (i) the period from and
including January 16 of any year to and including April 30 of the same year
and (ii) the period from and including September 16 of any year to and
including November 30 of the same year.
"NON-U.S. LENDER": as defined in Section 2.20(d).
"NOTES": the collective reference to any promissory note evidencing
Loans.
"OBLIGATIONS": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender (or, in the case of
Interest Rate Protection Agreements, any affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of
Credit, any Interest Rate Protection Agreement entered into with any Lender
or any affiliate of any Lender or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to
be paid by the Borrower pursuant hereto) or otherwise.
"OBSOLESCENCE RESERVE": an amount equal to 50% of the excess of (a)
total Wholesale Inventory held by the Borrower over (b) the Inventory
listed in the Borrower's buyers' guide; PROVIDED that during the Peak
Period such percentage shall be reduced to 25% so long as the Borrower
provides the supporting documentation and additional reports described in
Schedule I to Exhibit J with respect to such Wholesale Inventory.
"OPTIONAL PAYMENT AMOUNT": $15,000,000 plus the amount of any Term Loan
Prepayment Amount not accepted by the Accepting Lenders pursuant to Section
2.18(d).
"OTHER TAXES": any and all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
"OVER ADVANCE AMOUNT": (i) for the period from and including January 16
of any year to and including April 30 of the same year, $0, (ii) for the
period from and including May 1 of any year to and including June 30 of the
same year, $10,000,000, (iii) for the period from and including July 1 of
any year to and including August 9 of the same year, $5,000,000, (iv) for
the period from and including August 10 of any year to and including
September 15 of the same year, $10,000,000, (v) for the period from and
including September 16 of any year to and including November 30 of the same
year, $0, and (vi)
27
for the period from and including December 1 of any year to and
including January 15 of next succeeding year, $10,000,000.
"PARTICIPANT": as defined in Section 10.6(c).
"PAST-DUE ADDBACKS": the aggregate amount of past due credit balances
aged over 120 days from the original invoice date.
"PAYMENT OFFICE": the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and
the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"PEAK PERIOD": the collective reference to (i) the period from and
including May 1 of any year to and including September 15 of the same year
and (ii) the period from and including December 1 of any year to and
including January 15 of next succeeding year. "PERSON": an individual,
partnership, corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PRICING GRID": the pricing grid attached hereto as Annex A.
"PRIMARY INVESTORS": the collective reference to the Sponsor and its
Related Parties, HWH Capital Partners and any additional investment fund
for which the Sponsor is the sole advisor or which is effectively
controlled by the Sponsor.
"PRO FORMA FINANCIAL STATEMENTS": the collective reference to the
Borrower Pro Forma Financial Statements and the Holdings Pro Forma
Financial Statements.
"PROPERTIES": as defined in Section 4.17.
"PROPERTY": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"RECOVERY EVENT": any settlement of or payment in respect of any
property, title or casualty insurance claim or any condemnation proceeding
relating to any asset of Holdings, the Borrower or any of their respective
Subsidiaries.
"REFERENCE LENDER": the Administrative Agent.
28
"REFUNDED SWING LINE LOANS": as defined in Section 2.7.
"REFUNDING DATE": as defined in Section 2.7.
"REGISTER": as defined in Section 10.6(b).
"REGULATION U": Regulation U of the Board as in effect from time to
time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to reimburse
the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters
of Credit.
"REINVESTMENT DEFERRED AMOUNT": with respect to any Reinvestment Event,
the aggregate Net Cash Proceeds received by Holdings, the Borrower or any
of their respective Subsidiaries in connection therewith which are not
applied to prepay the Term Loans or reduce the Revolving Credit Commitments
pursuant to Section 2.12(b) as a result of the delivery of a Reinvestment
Notice.
"REINVESTMENT EVENT": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"REINVESTMENT NOTICE": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire assets useful in its business.
"REINVESTMENT PREPAYMENT AMOUNT": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.
"REINVESTMENT PREPAYMENT DATE": with respect to any Reinvestment Event,
the earlier of (a) the date occurring one year after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to,
or shall have otherwise ceased to, acquire assets useful in the Borrower's
business with all or any portion of the relevant Reinvestment Deferred
Amount.
"RELATED PARTY": with respect to the Sponsor (A) any controlling
stockholder or partner, a direct or indirect 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an
individual) of the Sponsor, (B) any trust, corporation, partnership or
other entity, the controlling beneficiaries, stockholders, partners or
owners of which, directly or indirectly, consist of the Sponsor and/or such
other Persons referred to in the immediately preceding clause (A) and/or in
the succeeding clause (D), (C) any partner or stockholder of the Sponsor as
of the Closing Date who acquires any assets or voting stock of the Borrower
or Holdings pursuant to a general distribution by the Sponsor to each of
its partners or stockholders or (D) any officer or director of the Sponsor.
29
"RENT RESERVE": on any date, with respect to any retail store,
distribution center, warehouse, or other location where any Eligible
Inventory subject to a Lien arising by operation of contract and/or law is
located and with respect to which no Landlord Waiver is in effect, a
reserve equal to three months' rent at such retail store, distribution
center, warehouse, or other location.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of
ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC ▇▇▇.▇▇.
2615.
"REQUIRED LENDERS": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the Total
Revolving Credit Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"REQUIRED PREPAYMENT LENDERS": the Majority Facility Lenders in respect
of the Term Loan Facility.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president or chief
financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer, vice president - finance or
controller of the Borrower.
"RETAIL INVENTORY": all Inventory located at a Bookstore consisting of:
new and used textbooks, including any related study aids; general subject
books; medical, technical and reference books; periodicals and magazines;
clothing, including school insignia items; electronics; gifts; stationery
and cards; school and office supplies and art; food, beverages and
sundries; and all other items held for resale in the ordinary course of
business.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Revolving Credit Loans and participate in Swing
Line Loans and Letters of Credit, in an aggregate principal and/or face
amount not to exceed the amount set forth under the heading "Revolving
Credit Commitment" opposite such Lender's name on Schedule 1.1A or in the
Assignment and Assumption pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Credit Commitments is
$50,000,000.
30
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and including the
Closing Date to the Revolving Credit Termination Date.
"REVOLVING CREDIT LENDER": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"REVOLVING CREDIT LOANS": as defined in Section 2.4.
"REVOLVING CREDIT PERCENTAGE": as to any Revolving Credit Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the Total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Extensions of Credit then outstanding constitutes of the
aggregate principal amount of the Total Revolving Extensions of Credit then
outstanding).
"REVOLVING CREDIT TERMINATION DATE": the earlier of December 31, 2008
and the Early Maturity Date.
"REVOLVING EXTENSIONS OF CREDIT": as to any Revolving Credit Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount
of all Revolving Credit Loans made by such Lender then outstanding, (b)
such Lender's Revolving Credit Percentage of the L/C Obligations then
outstanding and (c) such Lender's Revolving Credit Percentage of the
aggregate principal amount of Swing Line Loans then outstanding.
"RTV RESERVE": at any time, an amount equal to the amount of Inventory
that is identified as to be returned to vendor.
"SECURITIES ACT": as defined in Section 4.1(a)(i) hereof.
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.
"SENIOR SUBORDINATED NOTE INDENTURE": the Indenture dated as of
February 13, 1998 entered into by the Borrower in connection with the
issuance of the Senior Subordinated Notes, together with all instruments
and other agreements entered into by the Borrower in connection therewith,
as the same may be amended, supplemented or otherwise modified from time to
time in accordance with Section 7.9.
"SENIOR SUBORDINATED NOTES": the 8 3/4% Senior Subordinated Notes of
the Borrower due 2008 and issued pursuant to the Senior Subordinated Note
Indenture.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
31
"SOLVENT": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date,
as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b)
the present fair saleable value of the assets of such Person will, as of
such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means
any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right
to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SPONSOR": ▇▇▇▇ Wheat & Partners Incorporated, a Delaware corporation.
"STANDARD SALES INVOICES": the collective reference to (i) invoices
resulting from sales by the Borrower to educational institutions or
commercial Bookstores of new or used books and other instructional
educational materials and (ii) invoices resulting from sales by the
Borrower to educational institutions or commercial Bookstores of
Information Systems Inventory or other Inventory in an aggregate amount at
any time of up to 10% of the gross Accounts with respect to all invoices to
educational institutions or commercial Bookstores, excluding Buy-Fund
Invoices, PROVIDED that the percentage of the gross Accounts with respect
to invoices to educational institutions or commercial Bookstores which may
result from sales of Information Systems Inventory or other Inventory shall
be subject to revision by the Administrative Agent in its reasonable
discretion with the consent of the Borrower, which consent shall not be
unreasonably withheld.
"STOCK REPURCHASE": as defined in the recitals hereto.
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.
32
"SWING LINE COMMITMENT": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $5,000,000.
"SWING LINE LENDER": JPMorgan Chase Bank, in its capacity as the lender
of Swing Line Loans.
"SWING LINE LOANS": as defined in Section 2.6.
"SWING LINE PARTICIPATION AMOUNT": as defined in Section 2.7.
"SYNDICATION AGENT": as defined in the preamble hereto.
"TERM LOAN COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Term
Loan Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Term Loan Commitments is $75,000,000.
"TERM LOAN LENDERS": the collective reference to each Lender which has
a Term Loan Commitment or which has made a Term Loan.
"TERM LOAN PERCENTAGE": as to any Term Loan Lender at any time, the
percentage which such Lender's Term Loan Commitment then constitutes of the
aggregate Term Loan Commitments (or, at any time after the Closing Date,
the percentage which the aggregate principal amount of such Lender's Term
Loans then outstanding constitutes of the aggregate principal amount of the
Term Loans then outstanding).
"TERM LOANS": as defined in Section 2.1.
"TOTAL REVOLVING CREDIT COMMITMENTS": at any time, the aggregate amount
of the Revolving Credit Commitments at such time.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
"TRANSACTIONS": as defined in the recitals hereto.
"TRANSFEREE": as defined in Section 10.15.
"TYPE": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"WAREHOUSE": any warehouses being used by the Borrower or its
Subsidiaries.
33
"WHOLESALE INVENTORY": at any time, Inventory that is located at a
Warehouse at such time and consists of textbooks.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Subsidiary Guarantor that is a
Wholly Owned Subsidiary of the Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and their respective
Subsidiaries not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 TERM LOAN COMMITMENTS. (a) Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make a term loan (or, in the
case of a Continuing Lender, pursuant to clause (b), elect to convert all or a
portion of such Continuing Lender's loans under the Existing Credit Agreement)
(a "TERM LOAN") to the Borrower on the Closing Date in an amount not to exceed
the amount of the Term Loan Commitment of such Lender. The Term Loans may from
time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.2 and 2.13.
(b) In connection with the making of the Term Loans pursuant to
clause (a) above, by delivering written notice to the Administrative Agent on or
prior to the Closing Date, any Continuing Lender may elect to make all or any
portion of such Lender's Term Loan requested by the Borrower to be made on the
Closing Date by converting all or a portion of the outstanding principal amount
of the loans held by such Lender under the Existing Credit Agreement into Term
Loans in a principal amount equal to the amount of the loans so converted (each,
a "CONVERTED TERM LOAN"). On the Closing Date, the Converted Term Loans shall be
converted for all purposes of this Agreement into Term Loans, and the
Administrative Agent shall record in the Register the aggregate amounts of
Converted Term Loans converted into Term Loans. Any written notice to the
Administrative Agent delivered by an applicable Lender
34
pursuant to this Section shall specify the amount of such Lender's Term Loan
Commitment and the principal amount of the loans under the Existing Credit
Agreement held by such Lender that are to be converted into Term Loans.
2.2 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to the anticipated Closing Date) requesting that the Term Loan Lenders
make or convert the Term Loans on the Closing Date and specifying the amount to
be borrowed. The Term Loans made on the Closing Date shall initially be Base
Rate Loans. Upon receipt of such notice the Administrative Agent shall promptly
notify each Term Loan Lender thereof. Not later than 12:00 Noon, New York City
time, on the Closing Date each Term Loan Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Term Loan or Term Loans to be made by such Lender. The
Administrative Agent shall make available to the Borrower the aggregate of the
amounts made available to the Administrative Agent by the Term Loan Lenders in
immediately available funds.
2.3 REPAYMENT OF TERM LOANS. The Term Loan of each Term Loan
Lender shall mature in 28 consecutive quarterly installments, commencing on
March 31, 2004 and ending on December 31, 2010, each of which shall be in an
amount equal to such Lender's Term Loan Percentage multiplied by the amount set
forth below opposite such installment:
INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
March 31, 2004 $187,500
June 30, 2004 $187,500
September 30, 2004 $187,500
December 31, 2004 $187,500
March 31, 2005 $187,500
June 30, 2005 $187,500
September 30, 2005 $187,500
December 31, 2005 $187,500
March 31, 2006 $187,500
June 30, 2006 $187,500
September 30, 2006 $187,500
December 31, 2006 $187,500
March 31, 2007 $187,500
June 30, 2007 $187,500
September 30, 2007 $187,500
December 31, 2007 $187,500
March 31, 2008 $187,500
June 30, 2008 $187,500
September 30, 2008 $187,500
December 31, 2008 $187,500
March 31, 2009 $187,500
June 30, 2009 $187,500
September 30, 2009 $187,500
35
INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
December 31, 2009 $187,500
March 31, 2010 $17,625,000
June 30, 2010 $17,625,000
September 30, 2010 $17,625,000
December 31, 2010 $17,625,000
; PROVIDED that, if the Early Maturity Date shall occur, all outstanding Term
Loans shall mature and be due and payable on the Early Maturity Date.
2.4 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("REVOLVING CREDIT LOANS") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the sum of (i) the L/C Obligations then outstanding and
(ii) the aggregate principal amount of the Swing Line Loans then outstanding,
does not exceed the amount of such Lender's Revolving Credit Commitment;
PROVIDED that no Revolving Credit Loans shall be made if, after giving effect to
the making of such Revolving Credit Loans, the Total Revolving Extensions of
Credit would exceed the lesser of (A) the Borrowing Base then in effect and (B)
the Total Revolving Credit Commitments. During the Revolving Credit Commitment
Period the Borrower may use the Revolving Credit Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof. The Revolving Credit Loans
may from time to time be Eurodollar Loans or Base Rate Loans, as determined by
the Borrower and notified to the Administrative Agent in accordance with
Sections 2.5 and 2.13, PROVIDED that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.
2.5 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, PROVIDED that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or
(b) one Business Day prior to the requested Borrowing Date, in the case of Base
Rate Loans), specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar
Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Period therefor. Any Revolving Credit Loans made
on the Closing Date shall initially be Base Rate Loans. Each borrowing under the
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving Credit Commitments are less than $1,000,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $2,500,000 or a whole
multiple of $500,000 in excess thereof; PROVIDED, that the Swing Line Lender may
request, on behalf of the Borrower,
36
borrowings under the Revolving Credit Commitments which are Base Rate Loans in
other amounts pursuant to Section 2.7. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving Credit
Lender thereof. Each Revolving Credit Lender will make the amount of its PRO
RATA share of each borrowing available to the Administrative Agent for the
account of the Borrower at the Funding Office prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent in like funds as received
by the Administrative Agent.
2.6 SWING LINE COMMITMENT. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make available a portion of the credit
otherwise available to the Borrower under the Revolving Credit Commitments from
time to time during the Revolving Credit Commitment Period by making swing line
loans ("SWING LINE LOANS") to the Borrower; PROVIDED that (i) the aggregate
principal amount of Swing Line Loans outstanding at any time shall not exceed
the Swing Line Commitment then in effect (notwithstanding that the Swing Line
Loans outstanding at any time, when aggregated with the Swing Line Lender's
other outstanding Revolving Credit Loans hereunder, may exceed the Swing Line
Commitment then in effect) and (ii) the Borrower shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to
the making of such Swing Line Loan, the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swing Line Loans shall be Base Rate Loans only.
(b) The Borrower shall repay all outstanding Swing Line Loans on
the Revolving Credit Termination Date.
2.7 PROCEDURE FOR SWING LINE BORROWING; REFUNDING OF SWING LINE
LOANS. (a) Whenever the Borrower desires that the Swing Line Lender make Swing
Line Loans it shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Credit
Commitment Period). Each borrowing under the Swing Line Commitment shall be in
an amount equal to $1,000,000 or a whole multiple of $100,000 in excess thereof.
Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in
a notice in respect of Swing Line Loans, the Swing Line Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the amount of the Swing Line Loan to be
made by the Swing Line Lender. The Administrative Agent shall make the proceeds
of such Swing Line Loan available to the Borrower on such Borrowing Date in
immediately available funds.
(b) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one Business
Day's notice given by the Swing Line Lender no later than 12:00 Noon, New York
City time, request each Revolving Credit Lender to make,
37
and each Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan,
in an amount equal to such Revolving Credit Lender's Revolving Credit Percentage
of the aggregate amount of the Swing Line Loans (the "REFUNDED SWING LINE
LOANS") outstanding on the date of such notice, to repay the Swing Line Lender.
Each Revolving Credit Lender shall make the amount of such Revolving Credit Loan
available to the Administrative Agent at the Funding Office in immediately
available funds, not later than 10:00 A.M., New York City time, one Business Day
after the date of such notice. The proceeds of such Revolving Credit Loans shall
be immediately applied by the Swing Line Lender to repay the Refunded Swing Line
Loans. The Borrower irrevocably authorizes the Swing Line Lender to charge the
Borrower's accounts with the Administrative Agent (up to the amount available in
each such account) in order to immediately pay the amount of such Refunded Swing
Line Loans to the extent amounts received from the Revolving Credit Lenders are
not sufficient to repay in full such Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "REFUNDING DATE"), purchase for cash an undivided participating interest in
an amount equal to (i) its Revolving Credit Percentage TIMES (ii) the aggregate
principal amount of Swing Line Loans then outstanding which were to have been
repaid with such Revolving Credit Loans (the "SWING LINE PARTICIPATION AMOUNT").
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's PRO RATA portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); PROVIDED, HOWEVER, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
38
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
2.8 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender or Term Loan Lender or the Swing Line
Lender, as the case may be, (i) the then unpaid principal amount of each
Revolving Credit Loan of such Revolving Credit Lender on the Revolving Credit
Termination Date (or such earlier date on which the Loans become due and payable
pursuant to Section 8), (ii) the then unpaid principal amount of each Swing Line
Loan of the Swing Line Lender on the Revolving Credit Termination Date (or such
earlier date on which the Loans become due and payable pursuant to Section 8)
and (iii) the principal amount of each Term Loan of such Term Loan Lender in
installments according to the amortization schedule set forth in Section 2.3 (or
on such earlier date on which the Loans become due and payable pursuant to
Section 8). The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.15.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(b), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Term Loans,
Revolving Credit Loans or Swing Line Loans, as the case may be, of such Lender,
substantially in the forms of Exhibit G-1, G-2 or G-3, respectively, with
appropriate insertions as to date and principal amount.
2.9 COMMITMENT FEES, ETC. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the
39
period from and including the Closing Date to the last day of the Revolving
Credit Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Credit Commitment of such Lender during
the period for which payment is made, payable quarterly in arrears on the last
day of each March, June, September and December and on the Revolving Credit
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates from time to time agreed to in writing by
the Borrower and the Administrative Agent.
2.10 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; PROVIDED
that no such termination or reduction of Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an amount equal to $500,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect.
2.11 OPTIONAL PREPAYMENTS. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent at least three
Business Days prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; PROVIDED, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein, together
with (except in the case of Revolving Credit Loans which are Base Rate Loans and
Swing Line Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and Revolving Credit Loans shall be in an aggregate
principal amount not less than $500,000. Partial prepayments of the Term Loans
shall be applied to remaining installments thereof in any order selected by the
Borrower. Partial prepayments of Swing Line Loans shall be in an aggregate
principal amount not less than $500,000.
2.12 MANDATORY PREPAYMENTS. (a) Unless the Required Prepayment
Lenders shall otherwise agree:
(i) if any Capital Stock shall be issued by Holdings, the
Borrower or any of their respective Subsidiaries, an amount equal to
50% of the Net Cash Proceeds thereof shall be applied on the date of
such issuance toward the prepayment of the Term Loans as set forth in
Section 2.12(d); PROVIDED, HOWEVER, that the foregoing requirements of
this paragraph (a) (i) shall not apply to (x) any Capital Stock of
Holdings issued to the Primary Investors or Weston Presidio
40
Capital or to the directors, officers or employees of Holdings or any
of its Subsidiaries in order to finance Capital Expenditures and
acquisitions otherwise permitted by this Agreement and (y) sales of
Capital Stock of Holdings, after the Closing Date, to directors,
officers or employees of Holdings, the Borrower or any Subsidiary in
connection with permitted employee compensation and incentive
arrangements;
(ii) if any Indebtedness shall be incurred by Holdings, the
Borrower or any of their respective Subsidiaries, an amount equal to
100% of the Net Cash Proceeds thereof shall be applied on the date of
such incurrence toward the prepayment of the Term Loans as set forth in
Section 2.12(d), PROVIDED, HOWEVER, that the foregoing requirements of
this paragraph (a)(ii) shall not apply to any Indebtedness incurred in
accordance with Section 7.2 as in effect on the date of this Agreement.
(b) Unless the Required Prepayment Lenders shall otherwise agree,
if on any date Holdings, the Borrower or any of their respective Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or Recovery Event (or, in
the event of damage by casualty, the date the repair or restoration of the
relevant Property is completed) then, unless a Reinvestment Notice shall be
delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Term Loans as set forth in Section 2.12(d);
PROVIDED, that, notwithstanding the foregoing, (i) the aggregate Net Cash
Proceeds of Asset Sales and Recovery Events that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$1,000,000 in any fiscal year of the Borrower, or $2,000,000 in any fiscal year
of the Borrower immediately succeeding a fiscal year of the Borrower as of the
last day of which the Consolidated Leverage Ratio is less than or equal to 4.0
to 1.0, and (ii) on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Term Loans as set forth in Section
2.12(d); and PROVIDED FURTHER, that notwithstanding the foregoing, such Net Cash
Proceeds which are not subject to a Reinvestment Notice shall not be required to
be applied toward the prepayment of the Term Loans until the date upon which the
aggregate amount of such Net Cash Proceeds received by Holdings, the Borrower
and their respective Subsidiaries and not previously applied toward the
prepayment of the Term Loans shall exceed $1,000,000.
(c) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Borrower commencing with the fiscal year ending
March 31, 2005, there shall be Excess Cash Flow, the Borrower shall, on the
relevant Excess Cash Flow Application Date, apply the ECF Percentage of such
Excess Cash Flow toward the prepayment of the Term Loans as set forth in Section
2.12(d). Each such prepayment shall be made on a date (an "EXCESS CASH FLOW
APPLICATION DATE") no later than three months after the date on which the
financial statements of the Borrower referred to in Section 6.1(a), for the
fiscal year with respect to which such prepayment is made, are required to be
delivered to the Lenders.
(d) Amounts to be applied in connection with prepayments made
pursuant to this Section 2.12 shall be applied to the prepayment of the Term
Loans. The application of any prepayment pursuant to this Section 2.12 shall be
made first to Base Rate Loans and second to Eurodollar Loans. Each prepayment of
the Loans under this Section 2.12 shall be accompanied
41
by accrued interest to
the date of such prepayment on the amount prepaid. Partial prepayments of the
Term Loans pursuant to this Section 2.12 shall be applied in the order set forth
in Section 2.18
(e) If, at any time the Total Revolving Extensions of Credit
exceeds the lesser of (A) the Borrowing Base in effect on such date and (B) the
Total Revolving Credit Commitments, the Borrower shall repay the Revolving
Credit Loans to the extent of such excess, PROVIDED that if the aggregate
principal amount of Revolving Credit Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions satisfactory to the Administrative Agent.
(f) The Borrower agrees that during each calendar year there shall
be a period of at least 30 consecutive days during which there are no Revolving
Extensions of Credit outstanding.
2.13 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent at least two Business Days' prior irrevocable notice of
such election, PROVIDED that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election (which notice shall specify the length of the initial
Interest Period therefor), PROVIDED that no Base Rate Loan under a particular
Facility may be converted into a Eurodollar Loan (i) when any Event of Default
has occurred and is continuing and the Administrative Agent or the Majority
Facility Lenders in respect of such Facility have determined in its or their
sole discretion not to permit such conversions or (ii) after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, PROVIDED that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and PROVIDED, FURTHER,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Base Rate Loans
on the last day of such then expiring Interest Period. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
42
2.14 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF EURODOLLAR TRANCHES.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $2,500,000 or a whole multiple of $500,000
in excess thereof and (b) no more than ten Eurodollar Tranches shall be
outstanding at any one time.
2.15 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin (it being understood that Eurodollar Loans bear
interest from and including the first day of each Interest Period to but not
including the last day of such Interest Period).
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 2.15
PLUS 2% or (y) in the case of Reimbursement Obligations, the rate applicable to
Base Rate Loans under the Revolving Credit Facility PLUS 2%, and (ii) if all or
a portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate applicable to
Base Rate Loans under the relevant Facility PLUS 2%.
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this Section
2.15 shall be payable from time to time on demand.
2.16 COMPUTATION OF INTEREST AND FEES. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
43
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.15(a) and the manner of
performing any required calculation hereunder.
2.17 INABILITY TO DETERMINE INTEREST RATE. If prior to the first
day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period, the Administrative Agent shall
give telecopy or telephonic notice thereof to the Borrower and the relevant
Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans under the relevant Facility requested to be made on the
first day of such Interest Period shall be made as Base Rate Loans, (y) any
Loans under the relevant Facility that were to have been converted on the
first day of such Interest Period to Eurodollar Loans shall be continued as
Base Rate Loans and (z) any outstanding Eurodollar Loans under the relevant
Facility shall be converted, on the first day of such Interest Period, to
Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans under the relevant Facility shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans under the relevant Facility to Eurodollar Loans.
2.18 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Term Loan Percentages or Revolving
Credit Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made PRO RATA
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Loan Lenders (except as otherwise provided in Section 2.18(d)).
Except as otherwise provided in Section 2.11, as among the Term Loans,
prepayments shall be applied 75% ratably to the respective remaining
installments thereof and 25% in the direct order to the respective next four
installments thereof (or, to the extent that the aggregate principal amount of
the next four installments of the Term Loan Facility is less than such 25%, the
excess shall be applied ratably to the respective remaining installments
thereof). Amounts prepaid on account of the Term Loans may not be reborrowed.
44
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be made
PRO RATA according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) Notwithstanding anything to the contrary in Section 2.12 or
2.18, so long as any Revolving Credit Loans are outstanding, each Term Loan
Lender may, at its option, decline up to 100% of the portion of any mandatory
payment applicable to the Term Loans of such Lender; accordingly, with respect
to the amount of any mandatory prepayment described in Section 2.12 that is
allocated to Term Loans (such amounts, the "TERM LOAN PREPAYMENT AMOUNT"), at
any time when Revolving Credit Loans remain outstanding, the Borrower will, in
lieu of applying such amount to the prepayment of Term Loans, on the date
specified in Section 2.12 for such prepayment, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Term Loan Lender a notice
(each, a "PREPAYMENT OPTION NOTICE") as described below. As promptly as
practicable after receiving such notice from the Borrower, the Administrative
Agent will send to each Term Loan Lender a Prepayment Option Notice, which shall
be in the form of Exhibit H, and shall include an offer by the Borrower to
prepay on the date (each a "PREPAYMENT DATE") that is five Business Days after
the date of the Prepayment Option Notice, the relevant Term Loans of such Lender
by an amount equal to the portion of the Prepayment Amount indicated in such
Lender's Prepayment Option Notice as being applicable to such Lender's Term
Loans. On the Prepayment Date (i) the Borrower shall pay to the Administrative
Agent the aggregate amount necessary to prepay that portion of the outstanding
relevant Term Loans in respect of which Term Loan Lenders have accepted
prepayment as described above (such Lenders, the "ACCEPTING LENDERS"), and such
amount shall be applied to reduce the Term Loan Prepayment Amounts, with respect
to each Accepting Lender and (ii) the Borrower shall pay to the Administrative
Agent an amount equal to 100% of the portion of the Term Loan Prepayment Amount
not accepted by the Accepting Lenders, and such amount shall be applied to the
prepayment of the Revolving Credit Loans without a reduction in the Revolving
Credit Commitments.
(e) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Payment Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
45
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.18(f) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans under the relevant Facility (in lieu of interest otherwise
provided for hereunder), on demand, from the Borrower.
(g) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective PRO RATA shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.19 REQUIREMENTS OF LAW. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.20 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
46
and the result of any of the foregoing is to increase, relative to the date
hereof, the cost to such Lender, by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining Eurodollar Loans
or issuing or participating in Letters of Credit, or to reduce, relative to the
date hereof, any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.19, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction;
PROVIDED that the Borrower shall not be required to compensate a Lender pursuant
to this paragraph for any amounts incurred more than six months prior to the
date that such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor; and PROVIDED FURTHER that, if the circumstances giving
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section 2.19 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section 2.19 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.20 TAXES. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES")
47
or Other Taxes are required to be withheld from any amounts payable to the
Administrative Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, PROVIDED,
HOWEVER, that the Borrower shall not be required to increase any such amounts
payable to any Lender with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender's failure to comply with the requirements of
paragraph (d) or (e) of this Section, (ii) that are United States withholding
taxes imposed on amounts payable to such Lender (including United States
withholding taxes with respect to amounts payable under this Section 2.20) under
laws in effect at the time the Lender becomes a party to this Agreement, except
to the extent that such Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to Section 2.20(a) or (iii) that is imposed as a
result of an event occurring after the Lender becomes a Lender other than a
change in law or regulation or the introduction of any law or regulation or a
change in interpretation or administration of any law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or 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 or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.20 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(d) Each Lender (or Participant) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "NON-U.S. LENDER") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" a statement substantially in the form of
Exhibit I and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower
48
at any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.20(d), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.20(d) that
such Non-U.S. Lender is not legally able to deliver.
(e) If the Administrative Agent or any Lender receives a refund in
respect of Non-Excluded Taxes or Other Taxes paid by the Borrower, which in the
good faith judgment of such Lender is allocable to such payment, it shall
promptly pay such refund, together with any other amounts paid by the Borrower
in connection with such refunded Non-Excluded Taxes or Other Taxes, to the
Borrower, net of all out-of-pocket expenses of such Lender incurred in obtaining
such refund, PROVIDED, HOWEVER, that the Borrower agrees to promptly return such
refund to the Administrative Agent or the applicable Lender, as the case may be,
if it receives notice from the Administrative Agent or applicable Lender that
such Administrative Agent or Lender is required to repay such refund. Each of
the Administrative Agent and each Lender agrees that it will contest such
Non-Excluded Taxes, Other Taxes or liabilities if (i) the Borrower furnishes to
it an opinion of reputable tax counsel acceptable to the Administrative Agent or
such Lender to the effect that such Non-Excluded Taxes or Other Taxes were
wrongfully or illegally imposed and (ii) the Administrative Agent or such Lender
determines, in sole discretion, that it would not be disadvantaged or prejudiced
in any manner whatsoever as a result of such contest.
2.21 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
OVER (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section 2.21
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.22 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be
49
cancelled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Base Rate Loans on the respective last
days of the then current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such conversion of a Eurodollar
Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, the Borrower shall pay to such Lender such amounts,
if any, as may be required pursuant to Section 2.21.
2.23 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.19 or 2.20(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; PROVIDED, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and PROVIDED, FURTHER, that nothing in this Section 2.23 shall
affect or postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to Section 2.19 or 2.20(a).
2.24 REPLACEMENT OF LENDERS UNDER CERTAIN CIRCUMSTANCES. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 2.19 or 2.20 or (b) defaults
in its obligation to make Loans hereunder, with a replacement financial
institution; PROVIDED that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Default or Event of Default shall have occurred and
be continuing at the time of such replacement, (iii) prior to any such
replacement, such Lender shall have taken no action under Section 2.23 so as to
eliminate the continued need for payment of amounts owing pursuant to Section
2.19 or 2.20, (iv) the replacement financial institution shall purchase, at par,
all Loans and other amounts owing to such replaced Lender on or prior to the
date of replacement, (v) the Borrower shall be liable to such replaced Lender
under Section 2.21 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of
Section 10.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.19 or 2.20, as the case may be,
and (ix) any such replacement shall not be deemed to be a waiver of any rights
which the Borrower, the Administrative Agent or any other Lender shall have
against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Revolving
Credit Lenders set forth in Section 3.4(a), agrees to issue letters of credit
("LETTERS OF CREDIT") for the account of the Borrower on any Business Day during
the Revolving Credit Commitment Period in such form as may be approved from time
to time by the Issuing Lender; PROVIDED that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance (i) the L/C Obligations would exceed the L/C Commitment, (ii) the
aggregate amount of the Available Revolving Credit Commitments would be less
than zero or (iii) the Total Revolving Extensions
50
of Credit would exceed the Borrowing Base then in effect. Each Letter of Credit
shall (i) be denominated in Dollars and (ii) expire no later than the earlier of
(x) the first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Revolving Credit Termination Date, PROVIDED that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 COMMISSIONS, FEES AND OTHER CHARGES. (a) The Borrower will pay
a commission on all outstanding Letters of Credit at a per annum rate equal to
the Applicable Margin then in effect with respect to Eurodollar Loans under the
Revolving Credit Facility, shared ratably among the Revolving Credit Lenders and
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date. In addition, the Borrower shall pay to the Issuing Lender for its own
account a fronting fee of 1/4 of 1% per annum, payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and customary
costs and expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C PARTICIPATIONS. (a) The Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts
51
and purchases from the Issuing Lender, on the terms and conditions hereinafter
stated, for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Revolving Credit Percentage in the Issuing
Lender's obligations and rights under each Letter of Credit issued hereunder and
the amount of each draft paid by the Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Lender that,
if a draft is paid under any Letter of Credit for which the Issuing Lender is
not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to
the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans under the Revolving Credit
Facility. A certificate of the Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
PRO RATA share of such payment in accordance with Section 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its PRO RATA share
thereof; PROVIDED, HOWEVER, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees
to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this Section from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until
52
payment in full at the rate set forth in Section 2.15(c). Each drawing under any
Letter of Credit shall (unless an event of the type described in clause (i) or
(ii) of Section 8(f) shall have occurred and be continuing with respect to the
Borrower, in which case the procedures specified in Section 3.4 for funding by
L/C Participants shall apply) constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.5 of Base Rate Loans
(or, at the option of the Administrative Agent and the Swing Line Lender in
their sole discretion, a borrowing pursuant to Section 2.7 of Swing Line Loans)
in the amount of such drawing. The Borrowing Date with respect to such borrowing
shall be the date of such drawing.
3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards or care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 APPLICATIONS. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the
53
Borrower hereby jointly and severally represent and warrant to the
Administrative Agent and each Lender that:
4.1 FINANCIAL CONDITION. (a) (i) The unaudited pro forma
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at
September 30, 2003 (including the notes thereto) (the "HOLDINGS PRO FORMA
BALANCE SHEET"), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect (as if such events had occurred on September 30,
2003) to (i) the consummation of the Transactions, (ii) the Loans to be made on
the Closing Date and the use of proceeds thereof, (iii) the payment of fees and
expenses in connection with the foregoing and (iv) material acquisitions
consummated during the last two fiscal years of Holdings. The Holdings Pro Forma
Balance Sheet has been prepared based on the best information available to
Holdings as of the date of delivery thereof, and presents fairly in all material
respects on a PRO FORMA basis the estimated financial position of Holdings and
its consolidated Subsidiaries as at September 30, 2003, assuming that the events
specified in the preceding sentence had actually occurred on such date, prepared
in accordance with Regulation S-X under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). The unaudited PRO FORMA consolidated statement of
operations of Holdings and its Subsidiaries for the six-month period ended
September 30, 2003 (including the notes thereto) (the "HOLDINGS PRO FORMA INCOME
STATEMENT"; collectively with the Holdings Pro Forma Balance Sheet, the
"HOLDINGS PRO FORMA FINANCIAL STATEMENTS"), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events had
occurred on the first day of such six-month period) to (i) the consummation of
the Transactions, (ii) the Loans to be made on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Holdings Pro Forma Income Statement has been prepared based
on the best information available to Holdings as of the date of delivery
thereof, and presents fairly in all material respects on a PRO FORMA basis the
estimated consolidated financial condition of Holdings and its consolidated
Subsidiaries as at September 30, 2003 and the consolidated results of their
operations for the six-month period then ended assuming that the events
specified in the preceding sentence had actually occurred on the first day of
such six-month period, prepared in accordance with Regulation S-X under the
Securities Act.
(ii) The unaudited PRO FORMA consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at September 30, 2003 (including
the notes thereto) (the "BORROWER PRO FORMA BALANCE SHEET"), copies of which
have heretofore been furnished to each Lender, has been prepared giving effect
(as if such events had occurred on September 30, 2003) to (i) the consummation
of the Transactions, (ii) the Loans to be made on the Closing Date and the use
of proceeds thereof, (iii) the payment of fees and expenses in connection with
the foregoing and (iv) material acquisitions consummated during the last two
fiscal years of the Borrower. The Borrower Pro Forma Balance Sheet has been
prepared based on the best information available to the Borrower as of the date
of delivery thereof, and presents fairly in all material respects on a PRO FORMA
basis the estimated financial position of the Borrower and its consolidated
Subsidiaries as at September 30, 2003, assuming that the events specified in the
preceding sentence had actually occurred on such date, prepared in accordance
with Regulation S-X under the Securities Act. The unaudited PRO FORMA
consolidated statement of operations of the Borrower and its Subsidiaries for
the six-month period ended September 30, 2003 (including the notes thereto) (the
"BORROWER PRO FORMA INCOME STATEMENT"; collectively with the Borrower Pro Forma
Balance Sheet, the "BORROWER PRO FORMA FINANCIAL STATEMENTS"), copies of which
have
54
heretofore been furnished to each Lender, has been prepared giving effect (as if
such events had occurred on the first day of such six-month period) to (i) the
consummation of the Transactions, (ii) the Loans to be made on the Closing Date
and the use of proceeds thereof and (iii) the payment of fees and expenses in
connection with the foregoing. The Borrower Pro Forma Income Statement has been
prepared based on the best information available to the Borrower as of the date
of delivery thereof, and presents fairly in all material respects on a PRO FORMA
basis the estimated consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at September 30, 2003 and the consolidated results
of their operations for the six-month period then ended assuming that the events
specified in the preceding sentence had actually occurred on the first day of
such six-month period, prepared in accordance with Regulation S-X under the
Securities Act.
(b) (i) The audited consolidated balance sheets of Holdings and
its consolidated Subsidiaries as at March 31, 2001, March 31, 2002 and March 31,
2003, and the related consolidated statements of income and of cash flows for
the fiscal years ended March 31, 2001, March 31, 2002 and March 31, 2003,
reported on by and accompanied by an unqualified report from Deloitte & Touche
LLP present fairly in all material respects the consolidated financial condition
of Holdings and its consolidated Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at September 30, 2003, and the
related unaudited consolidated statements of income and cash flows for the
six-month period ended on such date, present fairly in all material respects the
consolidated financial condition of Holdings and its consolidated Subsidiaries
as at such date, and the consolidated results of its operations and its
consolidated cash flows for the six-month period then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firms of accountants and disclosed therein). Holdings and its
Subsidiaries do not have any material Guarantee Obligations, material contingent
liabilities or material liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, which are not reflected in the most recent
financial statements (including the notes thereto) referred to in this paragraph
(b)(i). During the period from March 31, 2003 to and including the date hereof,
there has been no Disposition by Holdings or any of its Subsidiaries of any
material part of its business or Property.
(ii) The audited consolidated balance sheets of the Borrower and
its consolidated Subsidiaries as at March 31, 2001, March 31, 2002 and March 31,
2003, and the related consolidated statements of income and of cash flows for
the fiscal years ended March 31, 2001, March 31, 2002 and March 31, 2003
reported on by and accompanied by an unqualified report from Deloitte & Touche
LLP present fairly in all material respects the consolidated financial condition
of the Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at September 30, 2003, and the
related unaudited consolidated statements of income and cash flows for the
six-month period ended on such date, present fairly in all material respects the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such
55
date, and the consolidated results of its operations and its consolidated cash
flows for the six-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). The Borrower and its Subsidiaries do not
have any material Guarantee Obligations, material contingent liabilities or
material liabilities for taxes, or any long-term leases or unusual forward or
long-term commitments, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, which are not reflected in the most recent financial statements
(including the notes thereto) referred to in this paragraph (b)(ii). During the
period from March 31, 2003 to and including the date hereof, there has been no
Disposition by the Borrower or any of its Subsidiaries of any material part of
its business or Property.
4.2 NO CHANGE. Since March 31, 2003 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of Holdings,
the Borrower and their respective Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification, except where the failure to be so qualified could
not reasonably be expected to have a Material Adverse Effect, and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Transactions and the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.19. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or conveyance or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
56
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any material Contractual Obligation of Holdings, the
Borrower or any of their respective Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
No Requirement of Law or Contractual Obligation applicable to the Borrower or
any of its Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
4.6 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Holdings or the Borrower, threatened by or against Holdings,
the Borrower or any of their respective Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
4.7 NO DEFAULT. Neither Holdings, the Borrower nor any of their
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of Holdings, the Borrower
and their respective Subsidiaries has title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other Property, and none of such Property is
subject to any Lien except as permitted by Section 7.3. Schedule 1.1B lists, as
of the Closing Date, each parcel of owned real property and each leasehold
interest in real property in respect of which aggregate annual rent payments in
excess of $250,000 are payable, in each case, located in the United States and
held by the Borrower or any of its Subsidiaries.
4.9 INTELLECTUAL PROPERTY. Each of Holdings, the Borrower and each
of their respective Subsidiaries owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted.
Schedule 4.9 sets forth all of the applications for registration and registered
Intellectual Property owned or licensed by each of Holdings, the Borrower and
each of their respective Subsidiaries on the Closing Date. No material claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does Holdings or Borrower know of any valid basis for any such
claim. The use of Intellectual Property by Holdings, the Borrower and their
respective Subsidiaries does not infringe on the rights of any Person in any
material respect.
4.10 TAXES. Each of Holdings, the Borrower and each of their
respective Subsidiaries has filed or caused to be filed all Federal, state and
other material tax returns which are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its Property and all other taxes, fees or other charges imposed on
it or any of its Property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and
57
with respect to which reserves in conformity with GAAP have been provided on the
books of Holdings, the Borrower or their respective Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of Holdings and the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans or
Letters of Credit will be used for "buying" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U as
now and from time to time hereafter in effect or for any purpose which violates
the provisions of the Regulations of the Board. If requested by any Lender or
the Administrative Agent, the Borrower will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
4.12 LABOR MATTERS. There are no strikes or other labor disputes
against Holdings, the Borrower or any of their respective Subsidiaries pending
or, to the knowledge of Holdings or the Borrower, threatened that (individually
or in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the Borrower
and their respective Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be expected to
have a Material Adverse Effect. All payments due from Holdings, the Borrower or
any of their respective Subsidiaries on account of employee health and welfare
insurance that (individually or in the aggregate) could reasonably be expected
to have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of Holdings, the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
which has resulted or could reasonably be expected to result in a material
liability under ERISA, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to
58
regulation under any Requirement of Law (other than Regulation X of the Board)
which limits its ability to incur Indebtedness.
4.15 SUBSIDIARIES. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of Holdings at the date hereof.
4.16 USE OF PROCEEDS. The proceeds of the Term Loans shall be used
to finance the Transactions and to pay related fees and expenses; and any
remaining proceeds of the Term Loans shall be used to finance the general
capital needs and general corporate purposes of the Borrower. The proceeds of
the Revolving Extensions of Credit shall be used to finance the general capital
needs and general corporate purposes of the Borrower.
4.17 ENVIRONMENTAL MATTERS. (a) The facilities and properties
owned, leased or operated by Holdings, the Borrower or any of their respective
Subsidiaries (the "PROPERTIES") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law, except in either
case insofar as such violation or liability, or any aggregation thereof, could
not reasonably be expected to result in the payment of a Material Environmental
Amount.
(b) The Properties and all operations at the Properties are in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
Holdings, the Borrower or any of their respective Subsidiaries (the "BUSINESS")
which could materially interfere with the continued operation of the Properties
or impair the fair saleable value thereof in an amount equaling or exceeding a
Material Environmental Amount. As of the Closing Date, neither Holdings, the
Borrower nor any of their respective Subsidiaries has assumed any liability of
any other Person under Environmental Laws.
(c) Neither Holdings, the Borrower nor any of their respective
Subsidiaries has received or is aware of any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Properties or the Business, nor does Holdings or the Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened, except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that could reasonably
be expected to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or to a
location which could give rise to liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable Environmental
Law, except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, could not reasonably be expected to
result in the payment of a Material Environmental Amount.
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(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of Holdings and the Borrower, threatened,
under any Environmental Law to which Holdings, the Borrower or any of their
respective Subsidiaries is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business, except insofar as such proceeding, action,
decree, order or other requirement, or any aggregation thereof, could not
reasonably be expected to result in the payment of a Material Environmental
Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of Holdings, the Borrower or any of their respective Subsidiaries
in connection with the Properties or otherwise in connection with the Business,
in violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws, except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, could not reasonably
be expected to result in the payment of a Material Environmental Amount.
4.18 ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. The projections and PRO FORMA financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.19 SECURITY DOCUMENTS. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement in which a security interest may be perfected by filing a financing
statement, when financing statements in appropriate form are filed in the
offices specified on Schedule 4.19(a), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
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title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person.
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the amendments to the Mortgages referred to in Section 5.1(a)
are filed in the offices specified on Schedule 4.19(b), each such Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage),
in each case prior and superior in right to any other Person.
4.20 SOLVENCY. Each Loan Party is, and after giving effect to the
Transactions and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21 SENIOR INDEBTEDNESS. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Guarantor under the Guarantee and
Collateral Agreement constitute "Guarantor Senior Indebtedness" of such
Guarantor under and as defined in the Senior Subordinated Note Indenture.
4.22 REGULATION H. As of the Closing Date, no Mortgage encumbers
improved real property which is located in an area that has been identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968. If, after the Closing Date, any Mortgage encumbers
improved real property which is located in an area that has been identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards, then flood insurance made available under the National Flood Insurance
Act of 1968 has been obtained, if such insurance is available.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of
each Lender to make the initial extension of credit requested to be made by it
is subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have received
(i) this Agreement, executed and delivered by a duly authorized officer of
Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the
Borrower and each Subsidiary Guarantor and (iii) an amendment (or an
amendment and restatement), in form and substance satisfactory to the
Administrative Agent, to each Mortgage existing on the Closing Date,
executed and delivered by a duly authorized officer of each party thereto.
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(b) RATABLE HOLDINGS. The Lenders and the lenders under the
Existing Credit Agreement shall have made such payments among themselves as
directed by the Administrative Agent with the result that on the Closing
Date the Revolving Credit Commitments are held ratably by the Revolving
Credit Lenders and the Term Loans are held ratably by the Term Loan
Lenders.
(c) PRO FORMA FINANCIAL STATEMENTS; FINANCIAL STATEMENTS. The
Lenders shall have received (i) the Pro Forma Financial Statements, (ii)
audited consolidated financial statements of each of Holdings and the
Borrower referred to in the first sentence of each of subsections 4.1(b)(i)
and 4.1(b)(ii) and (iii) unaudited interim consolidated financial
statements of each of Holdings and the Borrower for each fiscal month and
quarterly period ended subsequent to the date of the latest applicable
financial statements delivered pursuant to clause (ii) of this paragraph
and, in the case of quarterly financial statements, such quarterly period
ending at least 45 days prior to the Closing Date, and, in the case of
monthly financial statements, such month ending at least 30 days prior to
the Closing Date, and such financial statements shall be reasonably
satisfactory to the Administrative Agent.
(d) APPROVALS. All material governmental and third party approvals
(including landlords' and other consents) necessary in connection with the
Transactions, the continuing operations of Holdings, the Borrower and their
respective Subsidiaries and the transactions contemplated hereby shall have
been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Transactions or the financing contemplated
hereby.
(e) RELATED AGREEMENTS. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Administrative Agent),
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of such documents or instruments as may be
reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other
material contract to which the Loan Parties may be a party.
(f) FEES. The Lenders, the Administrative Agent and the Arrangers
shall have received all fees required to be paid, and all expenses for
which invoices have been presented, on or before the Closing Date.
(g) PROJECTIONS. The Lenders shall have received satisfactory
projections for fiscal years 2004-2010.
(h) SOLVENCY ANALYSIS. The Lenders shall have received a
reasonably satisfactory solvency opinion from an independent valuation firm
satisfactory to the Administrative Agent which shall document the solvency
of each of the Borrower and its subsidiaries and Holdings and its
subsidiaries after giving effect to the Transactions.
(i) LIEN SEARCHES. The Administrative Agent shall have
received the results of a recent lien search in each of the jurisdictions
where assets of the Loan Parties are located,
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and such search shall reveal no liens on any of the assets of Holdings or
its Subsidiaries except for liens permitted by Section 7.3 or liens to be
discharged on or prior to the Closing Date in a manner satisfactory to the
Administrative Agent.
(j) CONSOLIDATED EBITDA. The Administrative Agent and the
Syndication Agent shall have received satisfactory evidence that the
Consolidated EBITDA of the Borrower for the twelve-month period ended on
September 30, 2003 is equal to or greater than $58,000,000; PROVIDED THAT,
the calculation of Consolidated EBITDA for purposes of this Section 5.1(j)
shall include on a PRO FORMA basis the Consolidated EBITDA of any Person or
bookstore location acquired or disposed of by Holdings or its Subsidiaries
during such period, including the effect of identified business synergies,
for such period (assuming the consummation of each such acquisition and the
incurrence or assumption of any Indebtedness in connection therewith
occurred on the first day of such period).
(k) CLOSING CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C, with
appropriate insertions and attachments.
(l) LEGAL OPINIONS. The Administrative Agent shall have received
the following executed legal opinions:
(i) the legal opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to Holdings and the Borrower, substantially in the
form of Exhibit F; and
(ii) the legal opinion of local counsel in Kansas.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(m) PLEDGED STOCK; STOCK POWER; PLEDGED NOTES. The Administrative
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
(n) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Administrative Agent to be filed, registered or recorded
in order to create in favor of the Administrative Agent, for the benefit of
the Lenders, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall be in proper form for filing,
registration or recordation.
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(o) TITLE INSURANCE; FLOOD INSURANCE. (i) The Administrative Agent
shall have received in respect of each Mortgaged Property a mortgagee's
title insurance policy (or policies) or marked up unconditional binder for
such insurance. Each such policy shall (A) be in an amount satisfactory to
the Administrative Agent; (B) be issued at ordinary rates; (C) insure that
the Mortgage insured thereby creates a valid first Lien on such Mortgaged
Property free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the benefit of the
Lenders as the insured thereunder; (E) be in the form of ALTA Loan Policy -
1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies or such other
form of loan policy as is authorized in the state in which the Mortgaged
Property is located); (F) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request and (G) be
issued by title companies reasonably satisfactory to the Administrative
Agent (including any such title companies acting as co-insurers or
reinsurers, at the option of the Administrative Agent). The Administrative
Agent shall have received evidence satisfactory to it that all premiums in
respect of each such policy, all charges for mortgage recording tax, and
all related expenses, if any, have been paid.
(ii) If requested by the Administrative Agent, the Administrative
Agent shall have received (A) for each Mortgaged Property which is located
in a designated flood zone, a policy of flood insurance which (1) covers
any parcel of improved real property which is encumbered by any Mortgage
(2) is written in an amount not less than the outstanding principal amount
of the indebtedness secured by such Mortgage which is reasonably allocable
to such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (3) has a term ending not
later than the maturity of the Indebtedness secured by such Mortgage and
(B) confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.
(iii) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (i) above and a copy of all
other material documents affecting the Mortgaged Properties.
(p) INSURANCE. The Administrative Agent shall be satisfied with
the insurance program to be maintained by Holdings and its Subsidiaries and
shall have received satisfactory insurance certificates with respect
thereto.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
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(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Holdings and the Borrower shall and
shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent and
each Lender:
(a) (i) within 90 days after the end of each fiscal year of
Holdings, a copy of the audited consolidated balance sheet of Holdings and
its consolidated Subsidiaries as at the end of such year and the related
audited consolidated statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
independent certified public accountants of nationally recognized standing;
and
(ii) within 90 days after the end of each fiscal year of the
Borrower, a copy of the audited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such year and the
related audited consolidated statements of income and of cash flows for
such year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of
the audit, by independent certified public accountants of nationally
recognized standing;
(b) (i) not later than 45 days after the end of each of the first
three quarterly periods of each fiscal year of Holdings, the unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated
statements of income and of cash flows for such quarter and the portion of
the fiscal year through the end of such quarter, setting forth in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and
(ii) not later than 45 days after the end of each of the first
three quarterly periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and of cash flows for such quarter and
the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible
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Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Administrative
Agent and each Lender, or, in the case of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate containing all
information necessary for determining compliance by Holdings, the Borrower
and their respective Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year
of the Borrower, as the case may be and (y) to the extent not previously
disclosed to the Administrative Agent, a description of any change in the
jurisdiction of organization of any Loan Party and a listing of any
applications for registration and registered Intellectual Property acquired
by any Loan Party since the date of the most recent list delivered pursuant
to this clause (y) (or, in the case of the first such list so delivered,
since the Closing Date);
(c) (i) as soon as available, and in any event no later than 45
days after the end of each fiscal year of Holdings, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of Holdings and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of projected
cash flow, projected changes in financial position and projected income),
and, as soon as available, significant revisions, if any, of such budget
and projections with respect to such fiscal year (collectively, the
"HOLDINGS PROJECTIONS"), which Holdings Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Holdings Projections are based on reasonable estimates, information and
assumptions and that such Responsible Officer has no reason to believe that
such Holdings Projections are incorrect or misleading in any material
respect; and
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(ii) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of projected
cash flow, projected changes in financial position and projected income),
and, as soon as available, significant revisions, if any, of such budget
and projections with respect to such fiscal year (collectively, the
"BORROWER PROJECTIONS"), which Borrower Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Borrower Projections are based on reasonable estimates, information and
assumptions and that such Responsible Officer has no reason to believe that
such Borrower Projections are incorrect or misleading in any material
respect;
(d) (i) within 45 days after the end of each fiscal quarter of
Holdings, a narrative discussion and analysis of the financial condition
and results of operations of Holdings and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, as compared to the portion of the
Holdings Projections covering such periods and to the comparable periods of
the previous year; and
(ii) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Borrower Projections covering such periods and to the comparable
periods of the previous year;
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture or the Holdings Discount Debentures Indenture;
(f) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Borrower sends to
the holders of any class of its debt securities or public equity securities
and within five days after the same are filed, copies of all financial
statements and reports which Holdings or the Borrower may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(g) no later than 12 Business Days following each fiscal month of
the Borrower, a completed Borrowing Base Certificate setting forth the
Borrowing Base as of the close of business on the last day of such fiscal
month, or, so long as the Total Revolving Extensions of Credit exceed
$25,000,000, no later than 3 Business Days following each week, a completed
Borrowing Base Certificate setting forth the Borrowing Base as of the close
of business on the last day of such week, and at any other time requested
by the Administrative Agent when the Administrative Agent reasonably
believes that the most recently delivered Borrowing Base Certificate is
materially inaccurate, as soon as
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reasonably available but in no event later than 5 Business Days after such
request, a completed Borrowing Base Certificate setting forth the Borrowing
Base as of the date so requested, and at any additional time at the option
of the Borrower, a completed Borrowing Base Certificate setting forth the
Borrowing Base as of the date so selected by the Borower, in each case with
supporting documentation and additional reports with respect to the
Borrowing Base as the Administrative Agent may reasonably request; and
(h) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of Holdings, the Borrower or their respective Subsidiaries, as the
case may be.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE, ETC. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all Property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its Property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a)
(i) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (ii)
permit representatives of any Lender upon reasonable prior written notice to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records during the Borrower's normal business hours and as
often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of Holdings, the Borrower and their
respective Subsidiaries with officers and employees of Holdings, the Borrower
and such Subsidiaries and with their independent certified public accountants.
(b) The Borrower will permit any representatives designated by the
Administrative Agent (including employees of the Administrative Agent or any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct
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evaluations and appraisals of the Borrower's computation of the Borrowing Base
and the assets included in the Borrowing Base and such other assets and other
financial information and properties of the Borrower as the Administrative Agent
may require, as often as reasonably requested by the Administrative Agent and
with the consent of the Borrower, such consent not to be unreasonably withheld;
PROVIDED, however, that the Administrative Agent shall not be entitled to
conduct such evaluations and appraisals more frequently than once per year
unless (x) an Event of Default has occurred and is continuing or (y) the
Administrative Agent reasonably determines in consultation with the Borrower
that a material event or material change has occurred with respect to the Loan
Parties, their inventory practices or the performance of the Collateral and that
as a result of such event or change more frequent evaluations or appraisals are
required to effectively monitor the Borrowing Base, in which case the Borrower
will permit the Administrative Agent to conduct such evaluations and appraisals
at such reasonable times and as often as may be reasonably requested, in each
case so long as any Revolving Credit Loans or Letters of Credit shall be
outstanding or shall have been requested by the Borrower hereunder. The Borrower
shall pay all fees, including internally allocated fees and expenses of
employees of the Administrative Agent, and expenses as to which invoices have
been furnished of any such representatives retained by the Administrative Agent
to conduct any such evaluation or appraisal, including the reasonable fees and
expenses associated with collateral monitoring services performed by the
Collateral Agent Services Group of the Administrative Agent. To the extent
required by the Administrative Agent as a result of any such evaluation,
appraisal or monitoring, the Borrower also agrees to modify or adjust the
parameters for including Eligible Inventory and Eligible Accounts Receivable in
the Borrowing Base as the Administrative Agent shall reasonably require based
upon the results of such evaluation and appraisal, provided that the
Administrative Agent shall specify to the Borrower in writing the reasons for
any such additional adjustments.
(c) In the event that historical accounting practices, systems or
reserves relating to the components of the Borrowing Base are modified in a
manner that is adverse to the Lenders in any material respect, the Borrower
agrees to maintain additional reserves (for purposes of computing the Borrowing
Base) in respect of the components of the Borrowing Base and make other
adjustments (which may include maintaining additional reserves, modifying the
advance rates or modifying the eligibility criteria for the components of the
Borrowing Base) to the computation of the Borrowing Base, in each case, as
reasonably requested by the Administrative Agent and with the consent of the
Borrower, which consent shall not be unreasonably withheld, to provide for such
modification.
6.7 NOTICES. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of their respective
Subsidiaries or (ii) litigation, investigation or proceeding which may
exist at any time between Holdings, the Borrower or any of their respective
Subsidiaries and any Governmental Authority, which in either case, if not
cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
69
(c) any litigation or proceeding affecting Holdings, the Borrower
or any of their respective Subsidiaries in which the amount involved is
$1,000,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i)
the occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan;
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect;
(f) as soon as possible after a Responsible Officer of the
Borrower knows or reasonably should know thereof, the failure to make any
rental payment when due and payable with respect to any property leased by
the Borrower or any of its Domestic Subsidiaries at which Inventory of the
Borrower or any of its Domestic Subsidiaries is located; and
(g) any sale or other disposition by the Primary Investors of any
Capital Stock having ordinary voting power in the election of directors of
Holdings.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Holdings, the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 INTEREST RATE PROTECTION. In the case of the Borrower, within
90 days after the Closing Date, enter into Interest Rate Protection Agreements
to the extent necessary to provide that at least 50% of the aggregate principal
amount of the non-revolving long-term Indebtedness of Holdings and its
Subsidiaries is subject to either a fixed interest rate or interest rate
protection for a period of not less than two years, which Interest Rate
Protection Agreements shall have terms and conditions reasonably satisfactory to
the Administrative Agent.
70
6.10 ADDITIONAL COLLATERAL, ETC. (a) With respect to any Property
acquired after the Closing Date by Holdings, the Borrower or any of their
respective Subsidiaries (other than (x) any Property described in paragraph (b),
(c) or (d) below and (y) any Property subject to a Lien expressly permitted by
Section 7.3(g)) as to which the Administrative Agent, for the benefit of the
Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent deems necessary or advisable
in order to grant to the Administrative Agent, for the benefit of the Lenders, a
security interest in such Property and (ii) take all actions necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a perfected first priority security interest in such Property, including without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.
(b) With respect to any interest in any real property having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by Holdings, the Borrower or any of their respective
Subsidiaries (other than any such real property subject to a Lien expressly
permitted by Section 7.3(g)), promptly (i) execute and deliver a first priority
Mortgage in favor of the Administrative Agent, for the benefit of the Lenders,
covering such real property, (ii) if requested by the Administrative Agent,
provide the Lenders with (x) title and extended coverage insurance covering such
real property in an amount at least equal to the purchase price of such real
estate (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with such
mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by Holdings
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), the Borrower or
any of its Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is owned by
Holdings, the Borrower or any of their respective Subsidiaries, (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Holdings, the Borrower or such Subsidiary, as the case may
be, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement and (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected
first priority security interest in the Collateral described in the Guarantee
and Collateral Agreement with respect to such new Subsidiary (subject to any
existing liens on such Collateral securing Indebtedness existing at the time
such new Subsidiary is created or acquired, so long as such Indebtedness was not
incurred in anticipation of such creation or
71
acquisition and such Lien is not spread to encumber additional property of such
Subsidiary), including, without limitation, the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent, and (iv) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by Holdings, the Borrower or any of their
respective Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is owned by
Holdings, the Borrower or any of their respective Subsidiaries (provided that in
no event shall more than 65% of the total outstanding Capital Stock of any such
new Subsidiary be required to be so pledged), (ii) deliver to the Administrative
Agent the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
Holdings, the Borrower or such Subsidiary, as the case may be, and take such
other action as may be necessary or, in the opinion of the Administrative Agent,
desirable to perfect the Lien of the Administrative Agent thereon, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Holdings and the Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly:
7.1 FINANCIAL COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
Holdings ending with any fiscal quarter ending on the dates set forth below to
exceed the ratio set forth below opposite such fiscal quarter:
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
-------------- --------------
December 31, 2003 5.25 to 1.0
March 31, 2004 5.25 to 1.0
72
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
-------------- --------------
June 30, 2004 5.25 to 1.0
September 30, 2004 5.25 to 1.0
December 31, 2004 5.25 to 1.0
March 31, 2005 4.75 to 1.0
June 30, 2005 4.75 to 1.0
September 30, 2005 4.75 to 1.0
December 31, 2005 4.75 to 1.0
March 31, 2006 4.25 to 1.0
June 30, 2006 4.25 to 1.0
September 30, 2006 4.25 to 1.0
December 31, 2006 4.25 to 1.0
March 31, 2007 3.75 to 1.0
June 30, 2007 3.75 to 1.0
September 30, 2007 3.75 to 1.0
December 31, 2007 3.75 to 1.0
March 31, 2008 3.50 to 1.0
June 30, 2008 3.50 to 1.0
September 30, 2008 3.50 to 1.0
December 31, 2008 3.50 to 1.0
March 31, 2009 and thereafter 3.25 to 1.0
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
Holdings ending with any fiscal quarter ending on the dates set forth below to
be less than the ratio set forth below opposite such fiscal quarter:
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
-------------- --------------
December 31, 2003 2.50 to 1.0
March 31, 2004 2.50 to 1.0
June 30, 2004 2.50 to 1.0
September 30, 2004 2.50 to 1.0
December 31, 2004 2.50 to 1.0
March 31, 2005 2.50 to 1.0
June 30, 2005 2.50 to 1.0
September 30, 2005 2.50 to 1.0
December 31, 2005 2.50 to 1.0
March 31, 2006 2.75 to 1.0
June 30, 2006 2.75 to 1.0
September 30, 2006 2.75 to 1.0
December 31, 2006 2.75 to 1.0
March 31, 2007 3.00 to 1.0
73
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
-------------- --------------
June 30, 2007 3.00 to 1.0
September 30, 2007 3.00 to 1.0
December 31, 2007 3.00 to 1.0
March 31, 2008 3.25 to 1.0
June 30, 2008 3.25 to 1.0
September 30, 2008 3.25 to 1.0
December 31, 2008 3.25 to 1.0
March 31, 2009 and thereafter 3.50 to 1.0
; PROVIDED, that for the purposes of determining the Consolidated Interest
Coverage Ratio for the fiscal quarters of Holdings ending December 31, 2003,
March 31, 2004 and June 30, 2004, Consolidated Interest Expense for the relevant
period shall be deemed to equal Consolidated Interest Expense for such fiscal
quarter (and, in the case of the latter two such determinations, all fiscal
quarters commencing after September 30, 2003) MULTIPLIED BY 4, 2 and 4/3,
respectively.
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of Holdings ending with any fiscal quarter ending on the dates
set forth below to be less than the ratio set forth below opposite such fiscal
quarter:
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
-------------- --------------
December 31, 2003 1.25 to 1.0
March 31, 2004 1.25 to 1.0
June 30, 2004 1.25 to 1.0
September 30, 2004 1.25 to 1.0
December 31, 2004 1.25 to 1.0
March 31, 2005 1.25 to 1.0
June 30, 2005 1.25 to 1.0
September 30, 2005 1.25 to 1.0
December 31, 2005 1.25 to 1.0
March 31, 2006 1.30 to 1.0
June 30, 2006 1.30 to 1.0
September 30, 2006 1.30 to 1.0
December 31, 2006 1.30 to 1.0
March 31, 2007 1.35 to 1.0
June 30, 2007 1.35 to 1.0
September 30, 2007 1.35 to 1.0
December 31, 2007 1.35 to 1.0
March 31, 2008 1.40 to 1.0
June 30, 2008 1.40 to 1.0
September 30, 2008 1.40 to 1.0
December 31, 2008 1.40 to 1.0
74
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
-------------- --------------
March 31, 2009 1.45 to 1.0
June 30, 2009 1.45 to 1.0
September 30, 2009 1.45 to 1.0
December 31, 2009 1.45 to 1.0
March 31, 2010 and thereafter 1.50 to 1.0
; PROVIDED, that for the purposes of determining the Consolidated Fixed Charge
Coverage Ratio for the fiscal quarters of Holdings ending December 31, 2003,
March 31, 2004 and June 30, 2004, Consolidated Interest Expense and scheduled
payments on account of principal of Indebtedness of Holdings and its
Subsidiaries for the relevant period shall be deemed to equal Consolidated
Interest Expense and scheduled payments on account of principal of Indebtedness
of Holdings and its Subsidiaries for such fiscal quarter (and, in the case of
the latter two such determinations, all fiscal quarters commencing after
September 30, 2003) MULTIPLIED BY 4, 2 and 4/3, respectively.
7.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) Indebtedness secured by Liens permitted by Section 7.3(g) in
an aggregate principal amount not to exceed $5,000,000 at any one time
outstanding;
(d) Capital Lease Obligations in an aggregate principal amount not
to exceed $5,000,000 at any one time outstanding;
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(e) and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof);
(f) guarantees made in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary Guarantor;
(g) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$110,000,000, (ii) any refinancing thereof with an issuance of debt
securities of Holdings or the Borrower, PROVIDED that such securities
(excluding the interest rate) are (x) taken as a whole, at least as
favorable to Holdings, the Borrower and the Lenders as the Senior
Subordinated Notes and (y) at least as subordinated to payment of the
Obligations as the Senior Subordinated Notes and (iii) Guarantee
Obligations of Holdings and of any Subsidiary Guarantor in respect of such
Indebtedness of the Borrower; PROVIDED that such Guarantee Obligations are
subordinated to the obligations of such Guarantor under the Loan Documents
to the same extent as are
75
the obligations of the Borrower in respect of the Senior Subordinated Notes
or, if applicable, such refinancing securities;
(h) (i) Indebtedness of Holdings in respect of the Holdings
Discount Debentures in an aggregate principal amount not to exceed
$76,000,000, (ii) any refinancing thereof with (x) the proceeds of a
substantially concurrent issuance of new common equity by Holdings or (y)
an issuance of debt securities of the Borrower or Holdings, PROVIDED that
such securities (excluding the interest rate) are (A) taken as a whole, at
least as favorable to Holdings, the Borrower and the Lenders as the
Holdings Discount Debentures and (B) at least as subordinated to payment of
the Obligations as the Holdings Discount Debentures (in the case of a
refinancing with an issuance of debt securities by Holdings) or the Senior
Subordinated Notes (in the case of a refinancing with an issuance of debt
securities by the Borrower), as applicable and (iii) Guarantee Obligations
of Holdings and of any Subsidiary Guarantor in respect of such Indebtedness
of the Borrower in the case of a refinancing with an issuance of debt
securities of the Borrower; PROVIDED that such Guarantee Obligations are
subordinated to the obligations of such Guarantor under the Loan Documents
to the same extent as are the obligations of the Borrower in respect of the
Senior Subordinated Notes or, if applicable, any refinancing securities
permitted by Section 7.2(g)(ii);
(i) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount at any one time outstanding
(for the Borrower and all Subsidiaries) not to exceed $15,000,000 LESS the
aggregate principal amount of Indebtedness incurred pursuant to clauses (c)
and (d) above at such time; and
(j) Indebtedness of the Borrower in respect of Interest Rate
Protection Agreements.
Notwithstanding the foregoing, no Subsidiary of Holdings will create, incur,
assume or suffer to exist any Guarantee Obligation in respect of any
Indebtedness of Holdings.
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of Holdings, the Borrower or
their respective Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
76
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(e), PROVIDED that no
such Lien is spread to cover any additional Property after the Closing Date
and that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition
of fixed or capital assets, PROVIDED that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other than
the Property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into
by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) Liens not otherwise permitted by this Section 7.3 so long as
neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined as of
the date such Lien is incurred) of the assets subject thereto exceeds (as
to the Borrower and all Subsidiaries) $1,000,000 at any one time;
(k) any covenants, easements, restrictions, encumbrances and
exceptions contained in any mortgagee's title insurance policy delivered in
connection with the Existing Credit Agreement or referred to in Section
5.1(o)(i); and
(l) any existing leases or subleases of all or any portion of a
Mortgaged Property and any renewals and extensions thereof, any leases or
subleases entered into upon the expiration or termination of any such lease
or sublease, and any leases or subleases hereafter entered into of all or
any portion of a Mortgaged Property not required by the Borrower for the
operation of its business.
7.4 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business except:
77
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (PROVIDED that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor (PROVIDED that the Wholly Owned Subsidiary Guarantor
shall be the continuing or surviving corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor.
7.5 LIMITATION ON SALE OF ASSETS. Dispose of any of its Property
or business (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor or the sale or issuance
of the Borrower's Capital Stock to Holdings, in each case, so long as such
Capital Stock is pledged to the Administrative Agent for the benefit of the
Lenders to the extent required by the Guarantee and Collateral Agreement;
and
(e) the sale of other assets at fair market value provided that
(i) such assets have a fair market value not to exceed $2,000,000 for any
fiscal year of the Borrower and not exceeding $5,000,000 in the aggregate
from the Closing Date and (ii) the consideration received by Holdings, the
Borrower and their respective Subsidiaries for each such sale of assets
shall not be less than 75% cash, PROVIDED, that the requirements of Section
2.12(d) are complied with in connection therewith.
7.6 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other
than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
Holdings, the Borrower or any of their respective Subsidiaries or any warrants
or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Holdings, the
Borrower or any of their respective Subsidiaries (collectively, "RESTRICTED
PAYMENTS"), except that:
(a) any Subsidiary of the Borrower may make Restricted Payments to
the Borrower or any Wholly Owned Subsidiary Guarantor (and if such
Subsidiary is not a Wholly Owned Subsidiary of the Borrower, to its other
holders of Capital Stock on a pro
78
rata basis, PROVIDED that any such Restricted Payment to such other holders
of Capital Stock be attributable only to cash flows of such Subsidiary);
(b) so long as no Default or Event of Default shall have occurred
and be continuing after giving effect to the payment of any such dividend
or investment, the Borrower may pay dividends to Holdings or make
investments in Holdings to permit Holdings to pay cash interest on the
Holdings Discount Debentures or any refinancing thereof permitted by
Section 7.2(h)(ii) or to permit Holdings to make any payments permitted by
Section 7.9(a)(ii) in an amount not to exceed the amount of interest
required to be paid in cash by the terms of the Holdings Discount
Debentures Indenture or any refinancing thereof permitted by Section
7.2(h)(ii) or the amount of such payment made pursuant to Section
7.9(a)(ii), as applicable;
(c) the Borrower may pay dividends to Holdings or make investments
in Holdings to permit Holdings to (i) pay corporate overhead expenses
incurred in the ordinary course of business not to exceed $250,000 in any
fiscal year and (ii) pay any taxes which are due and payable by Holdings
and the Borrower as part of a consolidated group;
(d) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may pay dividends to Holdings or make
investments in Holdings to permit Holdings to purchase Holdings' common
stock or common stock options from present or former officers or employees,
or the estate, heirs or legatees of such former officers or employees, of
Holdings, the Borrower or any of their respective Subsidiaries upon the
death, disability or termination of employment of such officer or employee,
PROVIDED, that the aggregate amount of payments under this paragraph (d)
after the Closing Date shall not exceed $1,000,000 per annum and $2,000,000
in the aggregate, net of any cash proceeds received by Holdings and
contributed to the Borrower in connection with resales of any common stock
or common stock options so purchased; and (e) (i) the Borrower may pay
dividends or otherwise make an advance to Holdings on the Closing Date in
an aggregate amount not to exceed $36,500,000 to be used by Holdings solely
to finance the Stock Repurchase and related fees and expenses and (ii)
Holdings may consummate the Stock Repurchase.
7.7 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure, except:
(a) in any fiscal year, Capital Expenditures of the Borrower and
its Subsidiaries in the ordinary course of business not exceeding the
amount set forth below opposite such fiscal year:
FISCAL YEAR CAPITAL EXPENDITURES
----------- --------------------
2004 $6,500,000
2005 8,500,000
79
FISCAL YEAR CAPITAL EXPENDITURES
----------- --------------------
2006 8,500,000
2007 9,500,000
2008 11,000,000
2009 13,000,000
2010 14,000,000
; PROVIDED, that (i) 100% of any such amount not so expended in the fiscal
year for which it is permitted, may be carried over for expenditure in the
next succeeding fiscal year and (ii) Capital Expenditures made pursuant to
this clause (a) during any fiscal year shall be deemed made, FIRST, in
respect of amounts carried over from the prior fiscal year pursuant to
subclause (i) above and, SECOND, in respect of amounts permitted for such
fiscal year as provided above;
(b) in addition to the amounts permitted by clause (a) above,
Capital Expenditures of the Borrower and its Subsidiaries in the ordinary
course of business not exceeding an aggregate of $2,000,000 in the
aggregate from the Closing Date; and
(c) Capital Expenditures permitted pursuant to Section 7.8.
7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a material part of a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of Holdings, the Borrower or
its Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for Holdings, the Borrower and its Subsidiaries not to
exceed $500,000 at any one time outstanding;
(e) advances by the Borrower to Holdings on the Closing Date in an
aggregate amount not to exceed the amount, if any, by which $36,500,000
exceeds the aggregate amount of any dividends paid by the Borrower pursuant
to Section 7.6(e), such advances to be used by Holdings solely to finance
the Stock Repurchase and related fees and expenses;
(f) investments made by the Borrower or any of its Subsidiaries
with the proceeds of any Reinvestment Deferred Amount;
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(g) investments by Holdings, the Borrower or any of its
Subsidiaries in the Borrower or any Person that, prior to such investment,
is a Wholly Owned Subsidiary Guarantor; and
(h) acquisitions by the Borrower or any of its Subsidiaries of the
Capital Stock of, or assets of, entities engaged in similar lines of
business as the Borrower and its Subsidiaries on the Closing Date, PROVIDED
that (i) the aggregate purchase price for all such acquisitions occurring
after the Closing Date shall not exceed $25,000,000, (ii) [INTENTIONALLY
OMITTED], (iii) no Default or Event of Default shall have occurred or be
continuing after giving effect to any such acquisition, (iv) no
Indebtedness shall be assumed by the Borrower or any of its Subsidiaries in
connection with any such acquisition except to the extent otherwise
permitted pursuant to this Agreement and (v) the Borrower shall be in PRO
FORMA compliance with the covenants set forth in Section 7.1 after giving
effect to any such acquisition;
(i) investments existing on the Closing Date and listed on
Schedule 7.8;
(j) investments and advances made by the Borrower in Holdings to
the extent permitted by Section 7.6(b), (c), (d) or (e); and
(k) other investments in an aggregate amount not to exceed $5
million at any one time outstanding.
7.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS, ETC.
(a) Make or offer to make any payment, prepayment, repurchase,
redemption or defeasance of or otherwise defease or segregate funds with respect
to the Senior Subordinated Notes or the Holdings Discount Debentures (other than
scheduled interest payments required to be made in cash), except (i) in
connection with the issuance of any refinancing Indebtedness permitted by
Section 7.2(g)(ii) or Section 7.2(h)(ii) or from the proceeds of a substantially
concurrent issuance of new common equity of Holdings and (ii) so long as (A) no
proceeds of Revolving Extensions of Credit are used to make such payment,
prepayment, repurchase, redemption, defeasance or segregation of funds, except
in aggregate amount not to exceed the portion of the Optional Payment Amount
which has been applied to the prepayment of Revolving Credit Loans pursuant to
Section 2.18(d) and (B) after giving pro forma effect to such payment,
prepayment, repurchase, redemption, defeasance or segregation of funds, (I) the
Consolidated Senior Leverage Ratio of Holdings is less than 2.00 to 1, (II)
Holdings is in pro forma compliance with the financial covenants set forth in
Section 7.1 and (III) no Default or Event of Default shall have occurred and be
continuing, in an aggregate amount since the Closing Date for the Senior
Subordinated Notes, the Holdings Discount Debentures and any refinancing
Indebtedness permitted by Section 7.2(g)(ii) and Section 7.2(h)(ii) not in
excess of the Optional Payment Amount;
(b) amend, modify, waive or otherwise change, or consent or agree
to any amendment, modification, waiver or other change to, any of the terms of
the Senior Subordinated Notes or the Holdings Discount Debentures or any
refinancing Indebtedness permitted by
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Section 7.2(g)(ii) or Section 7.2(h)(ii) (other than any such amendment,
modification, waiver or other change which (i) would extend the maturity or
reduce the amount of any payment of principal thereof or which would reduce the
rate or extend the date for payment of interest thereon and (ii) does not
involve the payment of a consent fee);
(c) designate any Indebtedness other than the Obligations as
"Designated Senior Indebtedness" for the purposes of the Senior Subordinated
Note Indenture or any refinancing Indebtedness permitted by Section 7.2(g)(ii)
or Section 7.2(h)(ii); or
(d) amend its certificate of incorporation in any manner
determined by the Administrative Agent to be adverse to the Lenders without the
prior written consent of the Required Lenders.
7.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings,
the Borrower or any Wholly Owned Subsidiary Guarantor) unless such transaction
is (a) otherwise permitted under this Agreement, (b) in the ordinary course of
business of Holdings, the Borrower or such Subsidiary, as the case may be, and
(c) upon fair and reasonable terms no less favorable to Holdings, the Borrower
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
7.11 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by Holdings, the Borrower or any of
their respective Subsidiaries of real or personal property owned by Holdings,
the Borrower or any of their respective Subsidiaries on the Closing Date which
has been or is to be sold or transferred by Holdings, the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of Holdings, the Borrower or such Subsidiary. Notwithstanding the
foregoing, the Borrower or any its Subsidiaries may enter into any such
arrangement described in the immediately preceding sentence with respect to any
property acquired by the Borrower or such Subsidiary after the Closing Date to
the extent otherwise permitted pursuant to this Agreement, PROVIDED that such
arrangement is entered into within 90 days after such property is acquired by
the Borrower or such Subsidiary.
7.12 LIMITATION ON CHANGES IN FISCAL PERIODS. Permit the fiscal
year of the Borrower to end on a day other than March 31 or change the
Borrower's method of determining fiscal quarters.
7.13 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into or suffer to
exist or become effective any agreement which prohibits or limits the ability of
Holdings, the Borrower or any of their respective Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its Property or revenues, whether
now owned or hereafter acquired, to secure the Obligations or, in the case of
any guarantor, its obligations under the Guarantee and Collateral Agreement,
other than (a) this Agreement and the other Loan Documents, (b) the Holdings
Discount Debentures Indenture and the Senior Subordinated Note Indenture or any
refinancing
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thereof permitted by Section 7.2(g) or Section 7.2(h) and (c) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).
7.14 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distributions in respect of any Capital Stock of
such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any
other Subsidiary of the Borrower, (b) make loans or advances to the Borrower or
any other Subsidiary of the Borrower or (c) transfer any of its assets to the
Borrower or any other Subsidiary of the Borrower, except for such encumbrances
or restrictions existing under or by reason of (i) any restrictions existing
under the Loan Documents, the Holdings Discount Debentures Indenture or the
Senior Subordinated Note Indenture or any refinancing thereof permitted by
Section 7.2(g) or Section 7.2(h) and (ii) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary.
7.15 LIMITATION ON LINES OF BUSINESS. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
which are related, ancillary or complementary thereto.
7.16 [INTENTIONALLY OMITTED].
7.17 LIMITATION ON ACTIVITIES OF HOLDINGS. In the case of Holdings,
notwithstanding anything to the contrary in this Agreement or any other Loan
Document, (a) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than those
incidental to its ownership of the Capital Stock of the Borrower, (b) incur,
create, assume or suffer to exist any Indebtedness or other liabilities or
financial obligations, except (i) nonconsensual obligations imposed by operation
of law, (ii) pursuant to the Loan Documents to which it is a party, (iii)
obligations with respect to its Capital Stock and (iv) the Holdings Discount
Debentures or any refinancing thereof permitted by Section 7.2(h)(ii), (c) own,
lease, manage or otherwise operate any properties or assets (including cash
(other than cash received from the Borrower in accordance with Sections 7.6 and
7.8(e) pending application in the manner contemplated by said Sections) and cash
equivalents) other than the ownership of shares of Capital Stock of the Borrower
or (d) own the Capital Stock of any Subsidiary (other than the Borrower and its
Subsidiaries). Notwithstanding the foregoing, Holdings may refinance the
Holdings Discount Debentures to the extent permitted by Sections 7.2 and 7.9.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable
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hereunder or under any other Loan Document, within five days after any such
interest or other amount becomes due in accordance with the terms hereof;
or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) Any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with
respect to Holdings and the Borrower only), Section 6.7(a) or Section 7; or
(d) any Loan Party shall default in the observance or performance
of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of 30
days; or
(e) Holdings, the Borrower or any of their respective Subsidiaries
shall (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation, but
excluding the Loans) on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; PROVIDED, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute an Event of Default unless, at such time,
one or more defaults, events or conditions of the type described in clauses
(i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $2,500,000; or
(f) (i) Holdings, the Borrower or any of their respective
Subsidiaries shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or Holdings, the
Borrower or any of their respective Subsidiaries shall make a general
assignment for
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the benefit of its creditors; or (ii) there shall be commenced against
Holdings, the Borrower or any of their respective Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
Holdings, the Borrower or any of their respective Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part
of its assets which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) Holdings, the
Borrower or any of their respective Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
Holdings, the Borrower or any of their respective Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or not waived, shall exist with respect to any Plan
or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected
to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of their respective Subsidiaries involving in
the aggregate a liability (not paid or fully covered by insurance as to
which the relevant insurance company has acknowledged coverage) of
$2,500,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
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(j) (i) Any Person or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) other than the
Primary Investors (A) shall have acquired beneficial ownership of a greater
percentage of Holdings' voting common stock than is then held by the
Primary Investors or (B) shall obtain the power (whether or not exercised)
to elect a majority of the Borrower's or Holdings' directors (for purposes
of this clause (i), and clause (ii)(B) below, any shares of voting stock
that are required to be voted for a nominee of any Primary Investor shall
be deemed to be held by such Primary Investor for purposes of determining
the voting power held by any Person); or (ii) (A) the board of directors of
the Borrower or Holdings shall not consist of a majority of Continuing
Directors; as used in this paragraph "CONTINUING DIRECTORS" shall mean the
directors of the Borrower or Holdings, as the case may be, on the Closing
Date and each other director, if such other director's nomination for
election to the board of directors of Holdings is recommended by a majority
of the then Continuing Directors or (B) the Primary Investors shall cease
to be able to elect a majority of the board of directors of Holdings or,
through Holdings, the Borrower; or (iii) the Primary Investors shall cease
to own legally and beneficially at least 51% of each outstanding class of
Capital Stock having ordinary voting power in the election of directors of
Holdings; or (iv) Holdings shall cease to own legally and beneficially 100%
of each class of Capital Stock of the Borrower, free of Liens (other than
Liens created by the Security Documents); or (v) a "change of control" as
defined in the Senior Subordinated Note Indenture or the Holdings Discount
Debentures Indenture shall occur; PROVIDED that, notwithstanding any of the
foregoing, in the event that the Senior Subordinated Notes or the Holdings
Discount Debentures are refinanced or modified in a manner permitted under
this Agreement and the change of control provision in the applicable
indenture with respect to such refinancing or modification is eliminated or
includes Weston Presidio Capital as a "permitted holder", then for purposes
of this Section 8(j) only Weston Presidio Capital shall be a "Primary
Investor"; or
(k) The Senior Subordinated Notes, any refinancing thereof, any
refinancing of the Holdings Discount Debentures pursuant to Section
7.2(h)(ii)(y) or the guarantees of any of the foregoing shall cease, for
any reason, to be validly subordinated to the Obligations or the
obligations of the Guarantors under the Loan Documents, as the case may be,
as provided in the Senior Subordinated Note Indenture or any other
applicable documentation, or any Loan Party shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower or
Holdings, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Majority Revolving Credit Facility
Lenders, the Administrative Agent may, or upon the request of the Majority
Revolving Credit Facility Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the consent of the Required
86
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower, declare the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by Holdings and
the Borrower.
SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
87
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the Loan
Parties), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of the Required Lenders (or, if so specified by this Agreement, all Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.
9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender, Holdings or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
88
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereinafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by Holdings or the Borrower
and without limiting the obligation of Holdings or the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; PROVIDED that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
which are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent's gross negligence or willful
misconduct. The agreements in this Section 9.7 shall survive the payment of the
Loans and all other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent was not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the
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same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring Agent's
resignation as Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
9.10 AUTHORIZATION TO RELEASE LIENS. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Borrower or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 10.1.
9.11 DOCUMENTATION AGENT AND SYNDICATION AGENT. Neither the
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(with the written consent of the Required Lenders) the Administrative Agent and
each Loan Party party to the relevant Loan Document may, from time to time, (a)
enter into written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of
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Default and its consequences; PROVIDED, HOWEVER, that no such waiver and no such
amendment, supplement or modification shall (i) forgive the principal amount or
extend the final scheduled date of maturity of any Loan, extend the scheduled
date of any amortization payment in respect of any Term Loan, reduce the stated
rate of any interest, fee or letter of credit commission payable hereunder or
extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Revolving Credit Commitment, in each
case without the consent of each Lender directly affected thereby; (ii) amend,
modify or waive any provision of this Section 10.1 or reduce any percentage
specified in the definition of Required Lenders or Required Prepayment Lenders,
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release Holdings or all or substantially
all of the Subsidiary Guarantors from their obligations under the Guarantee and
Collateral Agreement, in each case without the written consent of all Lenders;
(iii) reduce the percentage specified in the definition of Majority Facility
Lenders without the written consent of all Lenders under each affected Facility;
(iv) amend, modify or waive any provision of Section 9 without the written
consent of the Administrative Agent; (v) amend, modify or waive any provision of
Section 3 without the written consent of the Issuing Lender; (vii) amend, modify
or waive any provision of Section 2.6 or 2.7 or increase or decrease the amount
of Swing Line Commitment without the written consent of the Swing Line Lender;
(viii) amend or modify the definition of "Borrowing Base", "Eligible Accounts
Receivable", "Eligible Inventory" or "Over Advance Amount", in each case without
the consent of the Majority Revolving Credit Lenders, (ix) amend, modify or
waive any condition precedent set forth in Section 5.2 with respect to any
extensions of credit under the Revolving Credit Facility without the written
consent of the Majority Revolving Credit Lenders or (x) amend, modify or waive
any provision of Sections 2.18(a), (b), (c) or (d) without the written consent
of each Lender adversely affected thereby or, with respect to Sections 2.18(e),
(f) or (g) without the written consent of the Majority Facility Lenders in
respect of each Facility adversely affected thereby. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Loan Parties, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received by a responsible officer of the addressee, addressed as follows in the
case of Holdings, the Borrower and the Administrative Agent, and as set forth in
an administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter notified by
the respective parties hereto:
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Holdings: NBC Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
The Borrower: Nebraska Book Company, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
The Administrative Agent: JPMorgan Chase Bank
Bank Loans and Agency Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; PROVIDED that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; PROVIDED that approval of such procedures may be
limited to particular notices or communications.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or
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statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
10.5 PAYMENT OF EXPENSES. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable documented
out-of-pocket costs and expenses incurred in connection with the preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees, disbursements and other charges of counsel to the
Administrative Agent (with such counsel to include no more than one local
counsel in each applicable jurisdiction so long as such counsel are engaged with
the Borrower's prior written consent), (b) to pay or reimburse each Lender and
the Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents,
including, without limitation, the reasonable fees, disbursements and other
charges of one counsel (and the allocated fees and expenses of in-house counsel)
to each Lender and of counsel to the Administrative Agent, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender and the Administrative Agent and their respective officers,
directors, employees, affiliates, agents and controlling persons (each, an
"indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of Holdings, the Borrower any of
their respective Subsidiaries or any of the Properties and the reasonable fees,
disbursements and other charges of one counsel (and the allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), PROVIDED, that the Borrower shall have no obligation
hereunder to any indemnitee with respect to indemnified liabilities (i) to the
extent such indemnified liabilities are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such indemnitee or (ii) arising from a
lawsuit or administrative proceeding against such indemnitee if the Borrower was
not given notice of such lawsuit or administrative proceeding and an opportunity
to participate in the defense thereof at its own expense. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to so waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any indemnitee. The agreements in this Section
shall survive repayment of the Loans and all other amounts payable hereunder.
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10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby (including any Affiliate of the Issuing Lender that issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees (each, an "ASSIGNEE") all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitments and the Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably delayed or withheld)
of:
(A) the Borrower, PROVIDED that no consent of the Borrower shall
be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund (as defined below) or, if an Event of Default has occurred
and is continuing, any other Person; and
(B) the Administrative Agent, PROVIDED that no consent of the
Administrative Agent shall be required for an assignment of all or any
portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved
Fund.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender, an Affiliate
of a Lender or an Approved Fund or an assignment of the entire remaining
amount of the assigning Lender's Commitments or Loans under any Facility,
the amount of the Commitments or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (or, in the case of
Term Facility, $1,000,000) unless each of the Borrower and the
Administrative Agent otherwise consent, PROVIDED that (1) no such consent
of the Borrower shall be required if an Event of Default under Section 8(a)
or (f) has occurred and is continuing and (2) such amounts shall be
aggregated in respect of each prospective Lender and its Affiliates or
Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500 (treating multiple or simultaneous
assignments by or to two or more Approved Funds or two or more funds that
are engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of business that are
managed by the same investment advisor or Affiliated advisors as a single
assignment); and
(C) the Assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an administrative questionnaire.
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For the purposes of this Section 10.6, "APPROVED FUND" means any Person
(other than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender; PROVIDED that, for purposes of proviso (2) of
clause (b)(ii)(A) above, in connection with an assignment to a prospective
Lender not previously a Lender, the term "Lender" as it is used in clauses (a),
(b) and (c) of this paragraph shall mean such prospective Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.19, 2.20, 2.21 and 10.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 10.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.
(iv) The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amount of
the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an Assignee, the Assignee's completed
administrative questionnaire (unless the Assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
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(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "PARTICIPANT") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); PROVIDED that (A) such Lender's obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; PROVIDED that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 10.1 and (2) directly
affects such Participant. Subject to paragraph (c)(ii) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.19, 2.20 and 2.21 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.7(b) as though it were a Lender, provided such
Participant shall be subject to Section 10.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.19 or 2.20 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. Any Participant that is a Non-U.S. Lender
shall not be entitled to the benefits of Section 2.20 unless such Participant
complies with Section 2.20(d).
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; PROVIDED that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such Lender
as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (d) above.
(f) Notwithstanding the foregoing, any Conduit Lender may assign
any or all of the Loans it may have funded hereunder to its designating Lender
without the consent of the Borrower or the Administrative Agent and without
regard to the limitations set forth in Section 10.6(b). Each of Holdings, the
Borrower, each Lender and the Administrative Agent hereby confirms that it will
not institute against a Conduit Lender or join any other Person in instituting
against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency
or liquidation
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proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Conduit Lender; PROVIDED, however, that each Lender designating any Conduit
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of
forbearance.
10.7 ADJUSTMENTS; SET-OFF. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "BENEFITTED LENDER") shall at any time
receive any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans or the Reimbursement
Obligations owing to such other Lender, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan and/or of the Reimbursement
Obligations owing to each such other Lender, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to Holdings or
the Borrower, any such notice being expressly waived by Holdings and the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender, any
Affiliate thereof or any branch or agency thereof to or for the credit or the
account of Holdings or the Borrower. Each Lender agrees promptly to notify
Holdings, the Borrower and the Administrative Agent after any such setoff and
application made by such Lender, PROVIDED that the failure to give such notice
shall not affect the validity of such setoff and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of Holdings, the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. Each of Holdings and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to Holdings or the Borrower, as the case may be at its address set
forth in Section 10.2 or at such other address of which the Administrative
Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 10.12 any special, exemplary, punitive or consequential
damages.
10.13 ACKNOWLEDGEMENTS. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
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(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to Holdings or the Borrower arising out
of or in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one hand,
and Holdings and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Holdings, the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 CONFIDENTIALITY. The Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; PROVIDED that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Participant or Assignee (each, a "TRANSFEREE") or prospective Transferee
which agrees to comply with the provisions of this Section, (c) to the
employees, directors, agents, attorneys, accountants and other professional
advisors of such Lender or its affiliates, (d) upon the request or demand of any
Governmental Authority having jurisdiction over the Administrative Agent or such
Lender, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) which has been publicly disclosed other than in breach
of this Section 10.15, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender, (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document or
(j) to any direct or indirect contractual counterparty in swap agreements or
such contractual counterparty's professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section).
Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative or other agent of such party) may disclose to
any and all persons, without limitation of any kind, the tax treatment and the
tax structure of the transactions contemplated hereby and all materials of any
kind (including opinions or other tax analyses) relating to such tax treatment
and tax structure. However, no disclosure of any information relating to such
tax treatment or tax structure may be made to the extent nondisclosure is
reasonably necessary in order to comply with applicable securities laws.
10.16 EFFECT OF AMENDMENT AND RESTATEMENT OF THE EXISTING CREDIT
AGREEMENT. (a) This Agreement shall be deemed to be an amendment to and
restatement of the Existing Credit Agreement and the Existing Credit Agreement
as amended and restated hereby shall remain in full force and effect and is
hereby ratified and confirmed in all respects. All extensions
99
of credit under the Existing Credit Agreement on the Closing Date shall remain
outstanding following the Closing Date and shall be continued under this
Agreement, as amended in the manner set forth herein. All references to the
Existing Credit Agreement in any other agreement or document shall, on and after
the Closing Date, be deemed to refer to the Existing Credit Agreement as amended
and restated hereby. The Borrower agrees, acknowledges and affirms that (i) each
of the Security Documents to which it is a party shall remain in full force and
effect and shall constitute security for all extensions of credit pursuant to
the Existing Credit Agreement as amended and restated hereby and (ii) any
reference to the Existing Credit Agreement appearing in any such Security
Document shall on and after the Closing Date be deemed to refer to the Existing
Credit Agreement as amended and restated hereby.
(b) On the Closing Date, each Exiting Lender shall cease to be a
party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
NBC ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
NEBRASKA BOOK COMPANY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
JPMORGAN CHASE BANK,
as Administrative Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
CITICORP NORTH AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇. Wirdnam
----------------------------------
Name: ▇▇▇▇▇ ▇. Wirdnam
Title: Vice President
NATIONAL CITY BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Account Officer
▇▇▇▇▇ FARGO BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Duly Authorized Signatory
▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Manager
ANNEX A
PRICING GRID FOR REVOLVING CREDIT LOANS AND SWING LINE LOANS
============================================================================
Consolidated Applicable Margin for Applicable Margin
Leverage Ratio Eurodollar Loans for Base Rate Loans
----------------------------------------------------------------------------
>4.0 to 1.0 2.75% 1.75%
----------------------------------------------------------------------------
<=4.0 to 1.0 but 2.50% 1.50%
>3.5 to 1.0
----------------------------------------------------------------------------
<=3.5 to 1.0 but 2.25% 1.25%
>3.0 to 1.0
----------------------------------------------------------------------------
<=3.0 to 1.0 2.00% 1.00%
============================================================================
Changes in the Applicable Margin with respect to Revolving Credit Loans and
Swing Line Loans resulting from changes in the Consolidated Leverage Ratio shall
become effective on the date (the "ADJUSTMENT Date") on which financial
statements are delivered to the Lenders pursuant to Section 6.1 (but in any
event not later than the 45th day after the end of each of the first three
quarterly periods of each fiscal year or the 90th day after the end of each
fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified above,
then, until such financial statements are delivered, the Consolidated Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 4.0 to 1.
In addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.0 to 1. Each determination of the
Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of Holdings ending at
the end of the period covered by the relevant financial statements.
SCHEDULE 1.1A
COMMITMENTS
SCHEDULE 1.1B
MORTGAGED PROPERTY
SCHEDULE 4.4
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
SCHEDULE 4.9
INTELLECTUAL PROPERTY
SCHEDULE 4.15
SUBSIDIARIES
SCHEDULE 4.19(a)
UCC FILING JURISDICTIONS
SCHEDULE 4.19(b)
MORTGAGE FILING JURISDICTIONS
SCHEDULE 7.2(e)
EXISTING INDEBTEDNESS
SCHEDULE 7.3(f)
EXISTING LIENS